House cost as % of net worth

[rafapark]

My apologies if this question has been asked before but I did a quick search and could not find the answer. Curious on what % of net worth is a good number to have invested in a house. I am talking primary residence. The reason I ask is that we are retired, 64YOs, we are building a house and it is ending up costing around 15% of our net worth. I was wondering what other people have in a similar situation.

 

[Aerides]

I don't know if there is a rule of thumb, but 15% doesn't sound like anything I'd worry about.

My home is currently valued at about $450k, that's for a SF 3/2 under 2000 sf. If I moved I'd be paying at least $600k for something a little bigger. Average COL area.

If you have a NW of $2m, then 15% is $300k. I'd place any bet that for most folks here with a NW of 2M their home is currently at least $300k.

 

[twaddle]

Let NW be your net worth before house purchase. Let HP be the price of the house.

If you can retire safely on NW-HP, you're good to go. Percentage doesn't matter.

 

[Sunset]

A person's age really determines this to a large degree.
My first house was 560% of my net worth... after monthly expenses I had $20 left over !!

Every year our home (diff home) becomes a smaller % of net worth as our investments go up a lot more than our house does. Our house is worth what we paid 18 yrs ago

 

[Dash man]

Our house is probably around 5.5% of our net worth. We’ve been here twenty years and prices have not appreciated a great deal over that time compared to some places. We’re in the Philly suburbs.

 

[Gumby]

Our home value is approximately 20% of our net worth. Interestingly enough, the real property taxes, insurance, maintenance and repairs on it run about 20% of our spending.

 

[Ronstar]

15% sounds good to me. We are about the same pct, and we are in mid 60’s, but I built the house in 1994.

 

[Mr. Tightwad]

I'm at 30%.

 

[jollystomper]

A person's age really determines this to a large degree.

+1

This is a line item in my annual NW spreadsheet I have going back to 2001. At that time (age 43), House value was over 70% of net worth. At the end of last year, it was less than 14%. So 15% is not an issue.

 

[braumeister]

I don't think there is any general answer, because house prices are incredibly variable depending on where you live. If the price of the house you're building is reasonable for your area, and you can afford it without a stretch, then you're fine.

 

[JRon]

We built a new house 4 years ago that equals 20% of our NW not including the house. We feel comfortable so 15% would be even better.

 

[W2R]

My apologies if this question has been asked before but I did a quick search and could not find the answer. Curious on what % of net worth is a good number to have invested in a house. I am talking primary residence. The reason I ask is that we are retired, 64YOs, we are building a house and it is ending up costing around 15% of our net worth. I was wondering what other people have in a similar situation.

When I bought my Dream Home (back in 2015) it was 16% of my net worth, and the major landscaping project that I did immediately to make it what I wanted, plus the costs of moving and selling my prior home, added another 6%. So, overall the purchase and move into my present home cost me 22% of my 2015 net worth. By now, using Zillow's estimate of its value, it represents 15% of my 2021 net worth.

I am perfectly comfortable with a home of this value, and would have felt OK if it had cost 2-3 times as much. I was very happy that the house that I truly wanted, my Dream Home, did not cost that much.

I am a 72 year old woman living alone, and I am a total homebody. I don't have any desire to travel or spend money on RVs, boats, planes, and so on. But my home is extremely important to me and being able to live in this wonderful home brings me a lot of value as I grow older. I think a lot depends on your understanding of what is important to YOU (not me!).

 

[rafapark]

Thanks

We built a new house 4 years ago that equals 20% of our NW not including the house. We feel comfortable so 15% would be even better.

Yes.That is how I figured. When we started constuction we targeted 10% of our net worth but with all the additions and modifications is now 15%. We are also targeting 15 % to 20% of our total expenses for house expenses when we move.

Thank you all for your responses.

 

[RobbieB]

House is ~10% net worth. House has appreciated 350% in 30 years.

 

[RunningBum]

Let NW be your net worth before house purchase. Let HP be the price of the house.

If you can retire safely on NW-HP, you're good to go. Percentage doesn't matter.

It's really just this simple. That's a whole let better than some almost arbitrary number that doesn't consider age, whether you have a large pension, and so on.

 

[Dtail]

I would think as a general concept 15% is not overly stressful on a budget.
I personally would personally give pause at over 30%.

 

[Dawg52]

I am a 72 year old woman living alone, and I am a total homebody. I don't have any desire to travel or spend money on RVs, boats, planes, and so on. But my home is extremely important to me and being able to live in this wonderful home brings me a lot of value as I grow older. I think a lot depends on your understanding of what is important to YOU (not me!).

Come on....blow that dough!

My combined values on my home and vacation condo is a little over 16% of my NW. I paid a little less on the condo than I did on my house but now the condo is worth a lot more. Not much growth on homes in small town MS.

 

[RunningBum]

I would think as a general concept 15% is not overly stressful on a budget.
I personally would personally give pause at over 30%.

What's the math behind those %s?

 

[Dtail]

What's the math behind those %s?

No exact math, just based on general spending percentages that I and other folks I know have spent on non house needs.

 

[rafapark]

Another calculation we made was that even if the house was 15% of our net worth we still can withdraw 2.5% of our balance for our total yearly expenses. Maybe that is a better calculation.

 

[Car-Guy]

The property my house sits on is worth a lot more than the house itself.... Not sure how to separate the two but together it's well under 10% of my NW.... I never really thought about it much since I've always viewed houses and property as real assets that can be sold and downsized if needed... Like expensive cars, boats, planes, collectables, etc... Just physical assets.

 

[W2R]

Come on....blow that dough!

I'm trying, I'm trying! I guess I am just overly content right now.

 

[RunningBum]

No exact math, just based on general spending percentages that I and other folks I know have spent on non house needs.

Sorry, you did say "generally" for the 15% and "personally" for the 30%. I was going to come back and delete the question.

 

[Amethyst]

Exactly.

I'd take it a step further, though. The bigger the house/higher the cost of living area, the more it's going to eat in maintenance every year, and the more it's going to cost to replace things. We took that into account (although not as much, it turns out, as we should have) more than the house's price.

Let NW be your net worth before house purchase. Let HP be the price of the house.

If you can retire safely on NW-HP, you're good to go. Percentage doesn't matter.

 

[stepford]

Right now we're at 16%, but the houses we aspire to move to in another 2-3 years would likely put us at 30-35%. This doesn't worry us too much. YOLO.