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Re: Home to net worth %??
Old 08-17-2006, 08:30 AM   #21
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Re: Home to net worth %??

Quote:
Originally Posted by LOL!
If you are 65 years old, it might be the other way around: Net worth $2.5MM, home value $250K.
We are doing even better. House % is zero. We rent because it was a better economic deal for us when we downsized. It has been a good financial decision so far. I agree with the comment about age being a major factor.

I also think that someone in their 40s with kids and good earnings can easily justify 50% (or more depending on the state) IF they agree to downsize when they are empty nesters. I have seen too many people who get trapped by all their stuff and stay in a large expensive place way beyond the useful period for such extravagance.
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Re: Home to net worth %??
Old 08-17-2006, 08:33 AM   #22
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Re: Home to net worth %??

Quote:
I like this little nugget from the book "The Millionaire Next door" -
"If you're not yet wealthy but want to be someday, never purchase a home that requires a mortgage that is more than twice your household's total annual realized income" (page 68)
I knew I had read something like that somewhere. *Thanks for that.

This new house is right at 2X my annual income, so I guess that's OK.

I'm currently only at only 4% of net worth with my existing home, and it is paid for. *If I do this new house, I'll be at 14% of net worth counting the entire purchase price. *Counting only the "equity" (my downpayment of 25%), it would actually be the same at 4%. *That's interesting............

I'm not retired now and I still have good income coming in; it's just WAY more house than I'm used to. *However, I plan to pay it off in 10 years so I should be in good shape. *Plus, if I get in a bind somehow I do have the assets to pay it off if I had to, so I guess I'm covered there.

I guess I'm just a cheapskate who has been living in a cheap paid off house and it's freaking me out to pay so much for a house.
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Re: Home to net worth %??
Old 08-17-2006, 08:48 AM   #23
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Re: Home to net worth %??

Quote:
So, lemme get this straight.* You're trying to inject financial reality into a marital housing situation.
LOL.* I just realized that's EXACTLY what I'm doing.* Maybe that's why my lovely wife is always mad at me lately.

But seriously, you can't just completely throw caution to the wind and go crazy buying a house, right?* I don't consider a house in my market a very good investment (especially this sucker, which will be much harder to unload since it is at the highest price level in my not-very-affluent area).* *So, I keep looking at the opportunity cost of what I could buy with the money (stocks).* However, since I'm financing 75% of it my opportunity cost is only on the 25% down payment so I guess that's not so bad.

Can you tell I'm freaking out??
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Re: Home to net worth %??
Old 08-17-2006, 09:05 AM   #24
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Re: Home to net worth %??

19% of net worth if house is included.
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Re: Home to net worth %??
Old 08-17-2006, 10:44 AM   #25
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Re: Home to net worth %??

Quote:
Originally Posted by Zipper
A paid off home, NO MORTGAGE, should be ~ 33% of your net worth.
Oh dear, I knew I was doing something wrong Anybody want to buy 1/3 of a mostly gently used house
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Re: Home to net worth %??
Old 08-17-2006, 10:55 AM   #26
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Re: Home to net worth %??

26% house value/total net worth (including house value)

No mortgage, and total cost of living here--including prop tax & insurance, electricity/gas & water, HOA, home & yard maintenance--is ~$750/month, which makes this a better deal than renting in our town.
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Re: Home to net worth %??
Old 08-17-2006, 11:12 AM   #27
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Re: Home to net worth %??

house estimated market value / financial assets + house estimated market value = 7%.

edited for inability to think straight.........
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Re: Home to net worth %??
Old 08-17-2006, 02:14 PM   #28
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Re: Home to net worth %??

Quote:
Originally Posted by Azanon
Incidally, i just got in a letter from the tax assessor today saying my taxes are going up on it cause they appraised it at 191K now.* * Not sure its worth that.* * Maybe i should challenge that, lol.
I suspect that they actually assessed it instead of appraising it, which is a different method producing different numbers.

The only time I've successfully challenged an assessment was when the RE market was sinking faster than the assessors could keep up. We reduced the assessment but it's a hollow victory to convince people that your home is worth a lot less than they think...
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Re: Home to net worth %??
Old 08-17-2006, 07:46 PM   #29
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Re: Home to net worth %??

Quote:
Originally Posted by Azanon


Incidally, i just got in a letter from the tax assessor today saying my taxes are going up on it cause they appraised it at 191K now.* * Not sure its worth that.* * Maybe i should challenge that, lol.
Get an independent appraisal (a simple call to an RE, or check local listings and/or sales prices). I've challenged the county tax assessor's numbers twice, provided them comps, and had assessment reduced. Hollow victory or not, 1 hour or so of my time was worth a few hundred $ savings each year (which, by the way is compounded).
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Re: Home to net worth %??
Old 08-18-2006, 02:20 PM   #30
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Re: Home to net worth %??


Area home owners, especially those who own homes worth more than $180,000, are struggling to sell them.

Houses sit on the market longer. Real estate agents say five years ago, six months was a long time to have a house up for sale. Now itís not.

Last year, 31% of Michigan homes listed for sale sold. Through April, 21% of listed homes had been sold, according to MiReal Source, a multiple listing service.

In April 2005, total Michigan home sales amounted to $1.2 billion. In April 2006, realtors had sold $943 million worth of homes.

Nationally, experts blame the nationís declining home sales on slowly rising mortgage interest rates.

Area agents and homeowners point to the local economy ó Port Huronís unemployment rate is about 50% higher than the state unemployment rate.

People simply arenít willing to take the risk and buy a home, especially a higher-priced home, said Bruce Brock, who has had his Fort Gratiot home for sale for at least two years.
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Re: Home to net worth %??
Old 08-18-2006, 05:05 PM   #31
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Re: Home to net worth %??

kowski, "Pt. Urine" is about an hour from us.

A paid off house will let you ride out a housing market decline.

Just like it offset a financial market decline a few years ago.

Net Worth should continue to rise as housing/financial assets balance each other.

Retirees SHOULD NOT BE carrying a MORTGAGE!
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Re: Home to net worth %??
Old 08-18-2006, 07:28 PM   #32
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Re: Home to net worth %??

I don't know what the ratio should be but our ratio of
net-worth(including home)/home-value > 10, probably about 12.

We do live in an area of low cost housing. FI here RE just waiting.
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Re: Home to net worth %??
Old 08-19-2006, 09:29 AM   #33
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Re: Home to net worth %??

12% of net worth in house, fully paid for.

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Re: Home to net worth %??
Old 08-19-2006, 10:56 AM   #34
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Re: Home to net worth %??

I am not FI or RE. I have been working to pay down my mortgage. My house is almost paid off and my home equity is about 60% of my net worth.
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Re: Home to net worth %??
Old 08-19-2006, 12:40 PM   #35
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Re: Home to net worth %??

Quote:
Originally Posted by Dude
I like this little nugget from the book "The Millionaire Next door" -
"If you're not yet wealthy but want to be someday, never purchase a home that requires a mortgage that is more than twice your household's total annual realized income" (page 68)
What is "realized Income"?
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Re: Home to net worth %??
Old 08-19-2006, 03:00 PM   #36
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Re: Home to net worth %??

My guess is that it is the net income that comes from employment, cashed in assets, interest and dividends. It would not include appreciation unless the appreciated asset was sold and the cash was in hand.
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Re: Home to net worth %??
Old 08-19-2006, 03:28 PM   #37
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Re: Home to net worth %??

Realized income is income that you get -- whether taxable or not.* As opposed to unrealized income, such as when your mutual fund goes up 200%, but you don't sell it.* If you sold it, you would have realized capital gains (i.e. realized income) and have to pay taxes.* Interest from tax-exempt bonds is realized income.

Quote:
Originally Posted by Zipper

A paid off house will let you ride out a housing market decline.

...

Retirees SHOULD NOT BE carrying a MORTGAGE!
Amazingly, a non-paid off house will let you ride out a housing market decline as well.* If a retiree's cash-flow and tax situation allows for a mortgage, why not have one?* You know, a lot of folks have a sub-5% interest rate on their mortgages.* It is just good money sense to borrow money at a low rate and get a higher return elsewhere.* That's what banks do.* And you can do it, too.* Even if you are retired.
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Re: Home to net worth %??
Old 08-19-2006, 06:14 PM   #38
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Re: Home to net worth %??

I'm about 50%. Living in the SF Bay Area is expensive.
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Re: Home to net worth %??
Old 08-20-2006, 07:56 AM   #39
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Re: Home to net worth %??

Quote:
Originally Posted by astromeria
No mortgage, and total cost of living here--including prop tax & insurance, electricity/gas & water, HOA, home & yard maintenance--is ~$750/month, which makes this a better deal than renting in our town.
Now that brings up a discusion I bet has been beaten to death here in threads from before I joined. That $750/mth is only cheaper than rent if rent on an equivalent place would be $750 + what you could get in a sensible SWR rate from the equity returned if the house was sold.

Don't get me wrong -- I have a house without a mortgage; I also have a weekend house (now there is a costly 'investment'). But when I think about the possibility of moving or downsizing it looks to me like selling the casa, investing the proceeds, and renting in the new location is the way to go. The high property tax rates for new purchases in some of the areas I like make renting particularly attractive.
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Re: Home to net worth %??
Old 08-21-2006, 01:13 PM   #40
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Re: Home to net worth %??

30.7%, house is paid for. I remember when I paid off my first car and I thought, hmm...I'll never have another car payment; next time I'll just pay cash. Now I have the same feeling about houses. I can't imagine ever having a house payment again.
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