House Value to Net Worth %

[ikubak]

12% Paid cash for it about 14 years ago and then spent about 100K more to get it the way she likes it.

 

[FlaGator]

~17%.

Like some others, it isn't something I think about often. When it's time to move, it will sell for what it's worth and I'll buy what I need - maybe just an urn

ETA - Thinking about a worse case of needing to liquidate to survive, home equity after sales costs could be relevant. In my case, it's about 3% of NW. Highly leveraged on the house to maintain liquidity and investable assets.

 

[joeea]

Curious about where the average person is in terms the value of your house relative to your net worth. Our house represents 21% of our net worth. As we prepare for retirement, I am calibrating financial assets needed to support retirement and am interested in the general house to net worth ratio. Thanks

We have two homes. In today's market, the equity in those homes comprises about 28% of our overall net worth.

But why does it matter? Are you planning to sell your home to support your retirement? If so, how do you know what your home will actually sell for somewhere down the line? And how do you know what it will cost to rent (or purchase them home in which you want to retire)?

For me, I exclude my homes from any retirement calculations, since they aren't relevant (any more than the net value of our cars).

 

[Spanky]

6.98%

 

[cathy63]

~25%

 

[Perryinva]

I don't understand these 8 & 10% responses. If your house is worth $400k, then your non home assets are from 4.6 to 3.6M? (assume house fully paid) Really?


Also, what value do you use to add a pension to your assets? The equal of a 4% SWR? So is $60k in pension the same as $1.5M in assets?

 

[beachfire]

Agree. I exclude my house from my evaluation of what I need to retire. I am just evaluating if I am an outlier in terms how much of a house we will have in retirement.

 

[Perryinva]

We have two homes. In today's market, the equity in those homes comprises about 28% of our overall net worth....

For me, I exclude my homes from any retirement calculations, since they aren't relevant (any more than the net value of our cars).

No really. Typically the more expensive home (or car) costs more in yearly taxes per year, higher utilities and maintenance. So while it isn't a retirement asset, per se, it is indeed a significant cost consideration in determining the real income needed in retirement.


And the asset evaluation and retirement income required to support a large home with a large mortgage is certainly totally different than a fully paid off one.

 

[FIREmenow]

I don't understand these 8 & 10% responses. If your house is worth $400k, then your non home assets are from 4.6 to 3.6M? (assume house fully paid) Really?

Also, what value do you use to add a pension to your assets? The equal of a 4% SWR? So is $60k in pension the same as $1.5M in assets?

Yes, really. Although, in my case, the "house" is a rural 1000sqft townhouse valued at a small fraction of the $400K number you have above. It's called LBYM. No pension added in for me.

 

[pj.mask]

I imagine the goal is to see if you are spending too much on a house. Assume the 10% people live in somewhat lower COL (seen many nice houses for $200k)

Ours is about 30% but we're early in career and the focus was close to work. To us it is less than 2 years gross earnings so that made us feel more comfortable.

20 min to work is much better than an hour.

 

[SpinDr]

At about 30%.

 

[Mo Money]

8.55%

 

[FlaGator]

I don't understand these 8 & 10% responses. If your house is worth $400k, then your non home assets are from 4.6 to 3.6M? (assume house fully paid) Really?


Also, what value do you use to add a pension to your assets? The equal of a 4% SWR? So is $60k in pension the same as $1.5M in assets?

Maybe the house is worth $200K? Maybe there's more wealth here than people let on .

What I can't figure out is how someone can put a value on their house so precise (in a market as illiquid as housing) they can come up with a percentage that includes a decimal......

I have done pension calculations like that for people that don't feel wealthy even though they have a fat 5 figure COLA'd pension, but not substantial cash. They've been shocked to know they are "millionaires"

 

[GravitySucks]

Not counting the house itself in net worth then ~9

 

[W2R]

Agree. I exclude my house from my evaluation of what I need to retire. I am just evaluating if I am an outlier in terms how much of a house we will have in retirement.

I guess a lot would depend on your local housing prices, family size, personal preference, and obviously the size of your nest egg.

Some retirees live in areas where homes cost a lot. They have to pay relatively high prices for their homes and to put such a high percentage of their nest eggs into housing. But really, they are paying for location too, not just the bricks and mortar. Many find that location can add a lot to retirement satisfaction.

 

[swakyaby]

About 10%.

Current home is large enough, nice enough, and located well enough that we don't want a more expensive home. It would just require more "stuff" to fill.

 

[nativenewenglander]

10% I feel there are better places to invest than a single family home.

 

[bigcmagor]

11% on our main home and an additional 13% on the second one. One will eventually be sold to pad the portfolio and trim expenses.

 

[athena53]

6.2%.

 

[RE2Boys]

About 7%

 

[RetireAge50]

24%

 

[USGrant1962]

Residence ~12%
Summer place ~2.5%

 

[kcowan]

Actual 8%
Including imputed value of rental penthouse 70%!
Luckily we use that money to generate returns instead.

 

[freedomatlast]

Approximately 10%. Plenty of room with 4100 SF and relatively low taxes.

 

[Perryinva]

Some markets (like where I live) are not illiquid, and selling prices quite predictable, at least within, $20-30k, on above average homes, not mega homes.


I think there is a lot more silent wealth (and not so silent) here than other retirement forums. It makes sense on the lower end of the housing cost spectrum, now that I think about it. If someone has a $400k nest egg and SS as their only FIRE income, then they may be living on $40k a year, tax free, in a LCOL area, so a $40k condo would make sense.


I fully understand LBYM, and of course, home costs are wildly different all over. I guess, now that I think about it more, it depends on age, how long retired, not retired etc.


As an example, some one that is not a spendthrift and saves 15%, makes an inflation adjusted $100k/yr their career, their home is typically worth in the $300 - 400k range, and paid off when they retire. They didn't pay that, but that's what its worth now. I don't know any ERs that have $4M saved and only made $100k. $4M is a basic $160k income in retirement. So presumably they would have retired far sooner then 60% more than their w*rking salary would have been. But then, if they are 80 years old, their accounts could have grown to easily exceed what their home appreciation did.


I'm just surprised at so many single digit percentages of home/total assets. I would have guessed 15 -20% as a good low average.