Home to net worth %??

[astromeria]

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.

 

[youbet]

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

edited for inability to think straight.........

 

[Nords]

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...

 

[rrspike]

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).

 

[kowski]

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 it’s 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 nation’s declining home sales on slowly rising mortgage interest rates.

Area agents and homeowners point to the local economy — Port Huron’s unemployment rate is about 50% higher than the state unemployment rate.

People simply aren’t 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.

 

[Zipper]

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!

 

[kumquat]

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.

 

[RE2Boys]

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

RE2Boys

 

[jphripjah]

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.

 

[getoutearly]

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"?

 

[Martha]

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.

 

[LOL!]

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.

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.

 

[free4now]

I'm about 50%. Living in the SF Bay Area is expensive.

 

[donheff]

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.

 

[dusk_to_dawn]

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.

 

[MonarchDon]

5 years ago when I bought my house (put 20% down) it was only 25% of my net worth and then prices went up about 20% per year. Now my (paid for) house is 50% of my total net worth. Is that bad ? I'm pretty happy even though the %% don't look as good as they did 5 years ago I am much better off now.

 

[tryan]

16% here where NW includes the house.

 

[justin]

House = 100% of net worth.

Purchased house three years ago for a little less than 1x current annual salary.

I'm 26 though and have a lot of debt. Lots of assets minus lots of debt equals a smallish net worth. The house is below average in cost for the area and I bought it at ~30% off from the surplus property department of the city.

 

[SteveR]

House is 16% of networth. We don't count it for retirement income purposes since we will not be using the equity from it to live on. Once we downsize in a few years whatever is left over after we buy a new home will be invested or just used to live on to avoid cashing out other investments.

 

[SteveR]

Double post........darn network!

 

[jclarksnakes]

12% of our networth which includes the value of the house.
jc

 

[Under FIRE]

Home as % of Net Worth = 14%

Home + Vacant Lot (technically a "home" category asset as it generates no returns beyond intrinsic value appreciation, if any) as % of Net Worth = 27%

Bought the home cash 10 yrs ago. Somehow, I sleep better under a mortgage-free roof. Bought the land for $154k at 10% down 15 yrs ago. Paid it off a couple of yrs back and the plot has doubled in value. Secured a $250k credit line on the vacant lot to consolidate petty debts and have paid this off too. The credit line remains just in case.

 

[FIRE'd@51]

Yes. A paid off house should be included in net worth.

Yes. Liquid assets should be double or more of the house value.

This seems about right. If we assume a 4% SWR and use the old rule of thumb that housing costs should be about 1/4 of your gross income; and futhermore assume that property taxes, insurance, and maintenance run about 2% per year of the house's value, we get Zipper's result.

Example:

liquid net worth = $1,000,000

4% SWR = $40,000

1/4 of SWR = $10,000

Value of house = $10,000/0.02 = $500,000

 

[ladelfina]

Just coincidentally, our house is about 33% of net worth - owned outright.
But I certainly can't say that that % figure is what it "should" be. We could live OK in a house worth less.. it depends, too, on whether the value is realistic or due a hot market that could go down soon.

The thread about the NJ housing prices and RE taxes was scary!

I got sucked into a blog called whyihatedc.. the guy showed this house:

I was walking in my hood the other day and passed by a house that was for sale, and I thought to myself, "Self, knowing this neighborhood, we obviously would not be able to afford that house." But if I could, this place would be perfect. It's nothing fancy; just a little three-bedroom job, clearly built a long time ago, near Metro, basically equidistant between my office and my wife's school. It probably needs some fixing up, but it's a nice old little house where I could, on a day like today, grill up some hamburgers in the yard while listening to a ball game on the radio.

Out of morbid curiousity, I looked up the house's listing on the "information superhighway," figuring the asking price would be in the $350K-$450K range.

Wrong. $665,000.

For real. Oh, and it's a 73-year-old house.

http://whyihatedc.blogspot.com

What is the world coming to?

 

[jeff2006]

The thread about the NJ housing prices and RE taxes was scary!
. . . .

What is the world coming to?

A few rich people will do great. For lots of other people who are now middle class -- a move further toward serfdom/wage-slavery, especially young people trying to support a family. Working couple, long hours, child care expenses, education expenses, health-care expenses, and so forth, with very little in the way of economic rights or a safety net.