Percentage of net worth tied up in house

[LOL!]

For those that are under 10% of NW in a house you either (a) live in a very low cost area or (b) you have one helluva NW. On the coasts, near big cities, "nice" homes are at least $700,000 and more like $900,000 to $1,000,000 at a minimum, which translates to $7 to $10 million Net Worth.

Either way good for you!

I guess you are not including the big cities on the Gulf Coast.

When we refinanced through an online lender, the mortgage broker said our home would be worth over a million dollars where she lived in San Diego. It ain't in San Diego and it ain't worth over a million dollars.

 

[Rambler]

Not retired yet. Rough estimate is that home is currently a tad over 16%. It will be around 12-14% when we punch out in about 925 days (knock on wood), assuming the value of the port rises but RE values languish. Home is free and clear.

R

 

[Moemg]

My house represents 18% of my net worth and it is fully paid for .

 

[golfnut]

House is 22% of our net worth. Still paying the mortgage (and debating if we should pay the d*** thing off-about a $60,000 balance).

 

[growing_older]

Am I in trouble? My house is about 65% of my NW. I was hoping to bring that down to about 50% by building up invested assets, at which point the 4% SWR rule makes me FI. I know I could try to sell the house and rent, which would allow me to live on 4% immediately, but I was trying to reach FI with mostly my current lifestyle. Sounds like I have way more tied up in the house than the successful ERs here.

 

[scrabbler1]

For those that are under 10% of NW in a house you either (a) live in a very low cost area or (b) you have one helluva NW. On the coasts, near big cities, "nice" homes are at least $700,000 and more like $900,000 to $1,000,000 at a minimum, which translates to $7 to $10 million Net Worth.

Either way good for you!

....or we live in a type of housing which is low-cost. For me, I live in a studio apartment in a large co-op complex , an apartment which is worth about $100k. I have about $1M in investments, hence the apartment's share of my NW is about 9%.

 

[W2R]

Am I in trouble? My house is about 65% of my NW. I was hoping to bring that down to about 50% by building up invested assets, at which point the 4% SWR rule makes me FI. I know I could try to sell the house and rent, which would allow me to live on 4% immediately, but I was trying to reach FI with mostly my current lifestyle. Sounds like I have way more tied up in the house than the successful ERs here.

It doesn't matter what the other early retirees do - - what matters is that you are happy in retirement. The fact that many of us have a smaller percentage of our net worth in our homes, should only make you think, "Would I have a happier life if I did that?" But your decision should depend on the answer to that question, not on what we choose to do.

 

[W2R]

For those that are under 10% of NW in a house you either (a) live in a very low cost area or (b) you have one helluva NW. On the coasts, near big cities, "nice" homes are at least $700,000 and more like $900,000 to $1,000,000 at a minimum, which translates to $7 to $10 million Net Worth.

Either way good for you!

Different strokes for different folks. I would simply refuse to live in an area where a nice home costs nearly a million dollars. I know from experience living in such areas that I wouldn't get the value out of it. (Someone else might). To me that seems absolutely ludicrous when I could live in a much nicer home for a fraction of the price, in a perfectly enjoyable location with lower housing costs. Each to his/her own. We all make consumer choices and then live with them.

 

[Nova]

It doesn't matter what the other early retirees do - - what matters is that you are happy in retirement. The fact that many of us have a smaller percentage of our net worth in our homes, should only make you think, "Would I have a happier life if I did that?" But your decision should depend on the answer to that question, not on what we choose to do.

+1...can't add a thing to that!

 

[NW-Bound]

House is 22% of our net worth. Still paying the mortgage (and debating if we should pay the d*** thing off-about a $60,000 balance).

Don't try to hide behind your smiley!

In your mere 45th post, you already tried to stir up trouble by bringing up the m*rtg*g* controversy. If that's not reason for censure by the mods, I don't know what is.



Just kidding of course.

I have always thought lively discussions are fun. But then, I stayed away from the political forum, back when it was still open.

 

[LARS]

Am I in trouble? My house is about 65% of my NW. I was hoping to bring that down to about 50% by building up invested assets, at which point the 4% SWR rule makes me FI. I know I could try to sell the house and rent, which would allow me to live on 4% immediately, but I was trying to reach FI with mostly my current lifestyle. Sounds like I have way more tied up in the house than the successful ERs here.

You are only in trouble if (a) your expenses are too great relative to your remaining 50% of NW AND more importantly to your income (ie pension payment and SS); and (b) if so, you are not prepared to modify your expenses over time or eventually move to a less expensive house.

 

[calmloki]

For those that are under 10% of NW in a house you either (a) live in a very low cost area or (b) you have one helluva NW. On the coasts, near big cities, "nice" homes are at least $700,000 and more like $900,000 to $1,000,000 at a minimum, which translates to $7 to $10 million Net Worth.

Either way good for you!

We're around 8.5% housing/net worth ratio; don't live in New Yahk City or right on the ocean in Carmel. Kinda like our house though, and cannot fathom having having a "nice" home that represents $700 - $1000k of debt or net worth. Maybe that's why a bunch of people are in trouble with the drop in housing value.

OTOH, don't stay in $250/night hotel rooms either, so maybe we're just a couple country mice and don't know how to live. I'm ok with that.

 

[NW-Bound]

...and cannot fathom having having a "nice" home that represents $700 - $1000k of debt or net worth...

Same here. So I spread that amount to 2 houses to feel less "guilty". It's that mind game thing again.

But some people here have so much more money, and I understand how they feel comfortable even with a $2M mansion. Hey, you cannot take it with you, right?

 

[LARS]

don't live in New Yahk City or right on the ocean in Carmel.

Now you are talking way north of $1,000,000. All needs are relative, but in NYC you are talking easily $2 million for my idea of a modest apartment (3 bedroom). Not familiar with "right on the ocean in Carmel" but I assume that is multiples of my NYC number.

It's all relative...

 

[bbbamI]

As I replied earlier, our house is 11% of our Total Net Worth....but we didn't necessarily plan for it to be that way....that's just the way it played out in retirement.

When we bought our house 16 years ago, we bought the nicest house we could afford on one salary (we were both working). Since Megacorp relocated us, all the moving expenses were paid and we got a $15k bonus...we used that as the down payment.

The houses that have sold on our block recently have doubled in price since we've moved here. I sit in my house, free and clear and cringe at the thought of the mortgages people are paying around me..

 

[growing_older]

Originally Posted by growing_older
Am I in trouble? My house is about 65% of my NW.

Oh boy. Now I'm quoting myself. That really may get me into trouble.

Actually what I meant by does a high % of my net worth in housing get me in trouble was, that this seems different from what the majority of successful ER people are doing. Am I making my path towards FI and possible ER more difficult by having too much capital tied up in the house? Probably.

I got into this position by buying a house that appreciated a lot and didn't deflate too much in the crash. It was never a designed strategy to have so much money tied up in the house and since I still mostly think of it based on what I paid for it, it doesn't seem to be demanding extra expensive upkeep just because it would be pricey to buy now.

Seeing so many people successfully ER is inspiring and one of the things I like most about this place. Knowing that so many did it by keeping housing equity much much lower than I have makes me wonder if there is a problem with my strategy and if I should make adjustments.

 

[zedd]

Sold our McMansion last year and invested the proceeds. The return although not stellar beat what real estate returned over the same period. Renting now and with zero debt am not motivated at all to sink any money into real estate. Having said that and knowing that one should never say never, we have earmarked 15% of our net worth should the right deal/location become apparent.

 

[bbbamI]

Seeing so many people successfully ER is inspiring and one of the things I like most about this place. Knowing that so many did it by keeping housing equity much much lower than I have makes me wonder if there is a problem with my strategy and if I should make adjustments.

Well, it's like everything else...it depends.

When you get to the point where you're sick of working, look at your funds and see if you can retire comfortably living in your current house. If not, then sell the house and move to a less expensive one.

If you want to stay in your current home and you don't have enough funds...keep working.

We retired on Total Net Funds....not Total Net Worth.

 

[packrat44]

While our 3 houses represent about 16% of NW it was not planned that way. Once 1 house that was recently placed on the market is sold this will drop to about 11%.

We retired on Total Net Funds....not Total Net Worth.

Ditto. Our pensions and SS should cover all/most normal living expenses with the investments available for backup security.

 

[golfnut]

Don't try to hide behind your smiley!

In your mere 45th post, you already tried to stir up trouble by bringing up the m*rtg*g* controversy. If that's not reason for censure by the mods, I don't know what is.



Just kidding of course.

I have always thought lively discussions are fun. But then, I stayed away from the political forum, back when it was still open.

And I probably read every thread on the mortgage payoff subject and still can't decide which way to go! It does make for some interesting reading though.

 

[Ronstar]

Our house is 20-25% of our net worth. We may downsize when I cant take care of it anymore. 20 years from now may be a good time to get something smaller and increase our portfolio from house sale proceeds.

 

[kumquat]

When you ask what percentage of our NW is tied up in our houses are you referring to the value of our houses our our equity in our houses? The reason I ask is that currently our paid for house represents about 9% of NW. When I bought my first house, my equity in it was about 70% of NW, but the value of the house was about 200% of my NW.

 

[Rustic23]

As I said ours is well over 50%, however, housing cost, mortgage + taxes is less than 12% of annual income. For me this is a much more telling figure. I live on annual income, rather that is from SS, pension or investments.

However, as many have said, it is a personal thing. Housing is just one variable in the retirement equation. When you add it all up being content with your lifestyle is what counts.

edited:
After reading the post below, one might look at percent non-discretionary expenses. But heck, if it works for you, that's what counts.

 

[IndependentlyPoor]

Our annual income has been all over the map since retiring 5 years ago. With interest rates near zero, it is looking pretty bad right now. However, our rent (utilities included) is 26% of our withdrawal + pension. That is a bigger percentage than I would like, but there it is.

 

[Dog]

Our home (paid off) represents about 30% of our current net worth. Does not include FERS pension or SS. Still working (6 more years) and building NW.