So given the recent financial turmoil and uncertain future...

[Zathras]

If we wanted to sell our house right now, or in the next 2-3 years, yes, I would be worried.
As for retirement plans, I consider the equity of the house as I do SS.
I am making plans for having zero from either. If I have any income from either source, it is gravy. But my retirement will not be affected if neither SS or the house provide income as my retirement is built around not having any income from either source.

 

[W2R]

I do want to sell my house and move later in 2010. Oh well.

Anyway, all my house is to me is a way to keep from having to pay rent, and worry about rent increases. My retirement expenses are lower due to having my house. That, plus quality-of-life issues are the only ways in which my house figures into my ER plans.

I don't expect it to help much if/when I go into assisted living. If every baby boomer is throwing the value of their home into assisted living initial fees, I can only assume that the fees would rise accordingly so it would be a wash. All you younger folks should consider investing in assisted living providers IMO.

 

[ksr]

I think there was a 3-month run-up of 10% just before the peak in Oct-Nov 2007. So if you are down 10% to 15% from the peak, you are likely where you were at in late summer of 2007.

Suppose for a brief 30 seconds tomorrow morning, the stock market was up 10-fold and returned back to today's levels before you could take action, would you go around talking about how you lost 90% of your portfolio value from "the peak"?

This is a very interesting point. My initial reaction was that nobody would have made a life-changing decision based on some intra-day stock levels, but might have based on several months of data. But I started giving it some more thought, and actually pulled out my spreadsheet from 2007. I looked at what was happening during the earlier part of 2007, which BTW were the months leading up to my retirement. And you know what? You're right - I had forgotten how big that "bubble" really was in '07, and how fast everything was rising. It turns out my NW now is about where it was a few months before I retired, and if I thought that was good enough then I should just relax a little bit now. Thanks!

 

[HFWR]

I am surprised that the decline in real estate values isn't more of a drag on people's observations, given home prices are off anywhere from 30 to 60% depending on where you live and how expensive a home you own.

I suppose another way to have asked the question is do you feel better or worse off given the recent "mess" and is that impacting your "plans" for the future (either reduced spending, pushing back ER date, etc.)?

In our own case, we are better off given a decision to exit residential real estate and rent. A combination of smarts and luck as a change in location coincided with the meltdown.

NPOMA...

My house "lost" maybe 10% value from the "peak". Prices didn't bubble much in DFW, but the never-ending glut of homes which kept appreciation down has kept pressure on valuations, too. If I HAD to sell today, I might "lose" more than 10%, due to the recession/credit crunch/housing glut. That would still leave me with a chunk of change, albeit smaller, since I have a fair amount of equity. Then what? Have to live somewhere... Of course, I may do just that in a few years, and convert to something with less maintenance.

As for the "magic number", it has/is shrinking somewhat. My expectations for future growth are "modest", though with what I have now, and early SS, I would have enough (if I were closer to 62). But I ain't getting any younger, and the work bucket is occasionally sloshing over, so the number may shrink more...

NPOMA - numbers pulled out my a$$

 

[brewer12345]

It is interesting the number of posters who are not concerned with the value of their homes.

Clearly, I agree you should not consider it as part of your retirement accounts to fund everyday living. However, a home can be a major asset (to sell/ reverse mortgage) in the event you need to fund end of life type expenses (like assisted living costs).

So in that context I see it as an asset that can be tapped if need be, and so an important leg supporting any retirement “stool". Given that approach, the value of the asset and its potential future value is not to be quickly dismissed.

I think the value of my house is off 15% from the peak. I don't have any immediate plans to sell, I can afford the monthly PITI, and I don't factor the value into my retirement plans. Furthermore, since my HELOC lender honored my borrowing request when the commode was hitting the windmill and even recently agreed to resubordinate when I refi'd the primary mortgage, the house appears to remain good collateral. If the value drops further, I don't expect to give a damn.

 

[Moemg]

It is interesting the number of posters who are not concerned with the value of their homes.

It is not that I am not concerned about the value of my house I routinely beat myself up over not selling at the market high and renting but I didn't . My house is still a large chunk of change that does not figure in my retirement unless needed but will be a nice asset in my will . My house is down about 27% from the market top but as they say " The bigger( more expensive ) you are the harder you fall " .

 

[LARS]

It is not that I am not concerned about the value of my house I routinely beat myself up over not selling at the market high and renting but I didn't . My house is still a large chunk of change that does not figure in my retirement unless needed but will be a nice asset in my will . My house is down about 27% from the market top but as they say " The bigger( more expensive ) you are the harder you fall " .

Didn't mean to suggest anyone should beat themselves up over not selling, or mark to market on a regular basis the value of their home. You DO need a place to live and your home is not an investment. In fact, if more people viewed their homes the way this forum does, we wouldn't have to deal with the foreclosure nightmare currently facing the nation: a not small part of the economic mess.

I was just trying to understand how others viewed a decline in value in their primary residence and how it affected or not their view on spending.

Notwithstanding this forum, I would imagine many are adjusting their savings/expenditure plans, no longer relying on outside gains in their homes.

 

[brewer12345]

LARS, FWIW, if I had not just done a refi (and had to get an appraisal) I would not have more than a vague sense of my home's value. I am a lot more focused on how fast the mortgage balance is declining than on what the value does.

I agree that those who had pie-in-the-sky ideas about home values are likely no longer counting on equity to finance their retirements. But I don't imagine that many forum denizens were planning on that.

 

[LOL!]

Our home value is a small fraction of our net worth and really doesn't figure into any of our retirement numbers. Never has. Never will.

 

[rescueme]

Our home value is a small fraction of our net worth and really doesn't figure into any of our retirement numbers. Never has. Never will.

Same here. It's a place to live, and enjoy our retirement lifestyle. Nothing more - nothing less (and yes, it is paid for )...

Its estimated value is carred in our "estate gross net worth" number - different from our "retirement assets gross net worth" number...

 

[traineeinvestor]

Likewise, we are not intending to rely on our home to fund our retirement but it is part of our net worth and can be used (one way or another) should the need arise.

I had to get a formal valuation done when I borrowed against our home to invest in my employer earlier this year. I was pleasantly surprised to find that the mortgagee value was high enough to allow me to borrow the full amount needed. Now that I am paying down the mortgage and have no plans to redraw or to sell, the value is largely irrelevant to our financial position.