How much of your net worth does your home represent?

[W2R]

I was inspired by this post on another thread, to wonder: what percentage of your net worth is the value of your home?

In computing net worth, include portfolio, pension and/or SS, resale value of your house(s) and belongings, and so on. Subtract the mortgage and any other debt.

Use a realistic resale price as the value of your home. Don't subtract the mortgage because I am interested in the actual value of what you are living in. If you have more than one home, pick the one you consider to be your main home. If you don't have a main home, pick that option.

Mine comes out to less than 7%, but I am looking for a more expensive home that I might like. The house I made an offer on last month, but didn't get, would have been 10% had my offer been accepted, or 11% had I paid the asking price.

I hope this thread isn't a duplicate of a previous thread; I didn't find a poll like this when I did a search, anyway.

 

[Midpack]

Mine was the same % as yours before the recent runup, now we're closer to 6%. But it's highly unlikely our poll bracket will change even if we relocate.

But that won't last...

 

[Amethyst]

Since I can't spend or invest my house, and we have no plans to sell it and then invest the proceeds while doling them out bit by bit to a landlord, I don't include house value in net worth calculations.

I do, however, think in terms of ratio - House value:investable assets. Naturally, that would be a larger percentage.

Amethyst

 

[Meadbh]

About 7%.

 

[FIREd]

0% currently as we rent. But our former home in the south was about 7% of NW. If we decide to purchase again (on the west coast this time), it would probably be closer to 20%.

 

[HFWR]

About 21% not including any SS or pension. Around 10% using rough estimate of the NPV of SS/pension.

 

[jkern]

My is about 35%. I live in a high cost area (SF Bat Area).

 

[MooreBonds]

Am right at about 11%, 37 year old pre-FIRE single guy. Long-term plan is to get married and possibly build a modest dream-home....which would approximately double the house value. Net Worth probably won't double with that, so long-term FIRE home % of Net Worth would probably settle in at about 17%-18%.

 

[nun]

My 2 family is about a third of my net worth, but the rental property downstairs produces $1200/month in rent so the capital is producing income.

 

[Hyper]

Approx 13%, I think anyway. The tax assessor obviously thinks it's much higher!!!

 

[Live And Learn]

Interesting poll - thanks for creating it !

We downsized last year to reduce the run rate before ER. Current home is 6% of total NW.

As Amethyst does, I don't include the homevalue in my portfolio calculations. I'm counting on it for LTC funding of the second person of the family.

 

[Tortoise]

Ours is just under 25%, but we live where home valuations are crazy. Comps on our street just sold for over $800k, so I used $800k for the value of our house. We do not have a mortgage or any other debt.

I did not include SS in our net worth, because I don't know what our SS, in total, is worth. I have read it is like having $300k in bonds, but I think the amount can vary by quite a lot depending on how much was paid in and how long you live. I am currently getting SSDI payments of >$2500/month, but I do not expect to live more than another 5-to-10 years. So does that mean it's worth $2500(/mo)*12(mo/yr)*10(yrs) = $300k to me? My wife will probably get the max SS payment when she reaches her FRA in more than 25 years. Her grandfather on her father's side is coming up on 100 years old, and her grandmother on her mother's side is in her late 80s, so her longevity looks good. What is her SS worth today as a lump sum?

 

[W2R]

Ours is just under 25%, but we live where home valuations are crazy.

Those who are living in SF, Manhattan, or other areas where the cost of housing is high, should not feel bad about this poll! You are paying for location (location, location, location) as well as for the house when you buy a house. These are simply choices that we all make; some prefer to spend money to be in a certain location, with various advantages, and others might prefer to spend more on travel or other expenses. There is no One True Way to spend money.

That said, this poll is encouraging me to think that 10%-11% isn't an unusually huge amount to spend on my next home, even here where home prices are lower. I am SUCH a homebody, that it makes sense for me to spend more on my home than some. Honestly I would spend up to 16% without batting an eye, if I had to and if I could recoup that much on resale. But here, I don't have to and would never get it back on resale of a house small enough for just me.

 

[calmloki]

Since we have a bunch of rental property I discounted their value by what our sale cost and taxes would cost and reduced our net worth accordingly. Having done so our main Oregon house would be about 5.5% of our net worth. Add in the SoCal house and we bump up to maybe 11-12% in home value. I entered 5-10% going with your rules.

 

[Taxman59]

About 8%, not counting some future inflows that are guaranteed. Including the npv of those (not SS), 4%+/-


Sent from my iPad using Early Retirement Forum

 

[ABQ2015]

My percentage was 14% including future pension/SS. Without considering those, it would be about 35%. Not because my house is so expensive but because my 401K not that great. But it is a nice house and in a good neighborhood. I'm also a homebody and get a lot of pleasure out of my home and yard. Like to cook, sit on my patio and drink coffee or a beer, and just hang out with my pets.

 

[rodi]

A big percentage. Between 30 and 40%. It's all about location... the house is a 2000sf 1960's "leave it to beaver" style house... not some McMansion. But it's freeway close, in central San Diego, 10 minutes to the beach, and in a good school boundary. It's also close to UCSD and the job centers of Mira Mesa and Kearny Mesa neighborhoods.

I based the valuation on 3 recent transactions. All were on my block, and the same basic model. Two had additions over the past 20 years, and were updated nicely more recently, plus those two were on the other side of the street which had a deep canyon behind them - so the lots are double the size of my lot. (1/2 acre vs 1/4 acre). One sold (closed) for $940k, one is currently a pending sale for a list of $940k.

The house next door is pending with a sales price of $725k. It was NOT fixed up other than new windows and new HVAC in the last 10 years. It has the original 1960's kitchen and bathrooms. It went pending in less than a week and the rumor is that there was a bidding war - so I fully expect it to close at $730 or higher. The owners are awesome people - original owners, but it was time to move to assisted living. The family was interested in selling quickly without doing the update/remodel prior to sale. I hope the new owners are as awesome as the old ones.

My house is more updated than the next door house but still needs to have the bathrooms updated. We also have an income producing 700sf granny flat behind our house. I put my value in the same ballpark as the higher end houses because of the granny flat. We have very good rental income from it which helps support my retirement habit.

I agree with others that I don't use my home value in my retirement calculations. It's not a spendable asset. But it is my plan b/c/d/e/f for extended market downturn or extended long term care expenses.

I did not use SS/Pension/NPV of rental cash flow from the granny flat in my ratio.... although I obviously included the real-estate value of the granny flat in that part of the calculation.

 

[foxfirev5]

Primary residence only -14%. Including lake cottage -22%. Normally I don't include these in my investments but they do contribute to net worth.

 

[Senator]

I am at ~9% taking conservative values of my RE. It could be less.

 

[pb4uski]

About 21% not including any SS or pension. Around 10% using rough estimate of the NPV of SS/pension.

Similar here. I don't include my small pension or SS in my net worth and using my net worth measure it is 16%, so if I include SS and pension I suspect it would be about 10%.

 

[nash031]

30-35%. We're still accumulating, but it's interesting to think about.

3.5 years ago when we purchased our house, it accounted for ~1/3 based on the down payment alone.

About 2 years ago, it accounted for about 1/3 because we paid down a HELOC we'd used to avoid a "jumbo mortgage." So HE almost doubled, but so had our invested stash.

Now, we've just made payments as usual, but continue accumulating and it's dropped below 1/3 but probably right around 30%. As home equity goes up slowly, so does our investment account more rapidly. By the time we turn 40, I would estimate our HE will be <25% of NW, and by target retirement age, I'm guessing closer to 20%.

Then we'll sell, move and pay cash in a less expensive area. As rodi said, it's all about location. Our house is the smallest stand-alone in the area, but it's still above median price for the county and like quadruple the median price of places in "flyover country." Hopefully the market springs ahead and our HE grows over the next five years or so, helping the ER dream right along!

 

[bjorn2bwild]

I have been a fleet footed renter for the past 13 years - so 0% NW, or 12% of gross earned income for rent.
If I settle down and buy a residence again, it will be a home on acreage - I would be OK with up to 20% of NW at that time.

 

[mickeyd]

Never thought about it before but I guess that the number is <10%.

 

[Jackanory]

If Zillow is to be believed, then it's over 30% -- closing in on 3 times what I paid for it back in '98.

 

[rodi]

The San Diego posters seem to all be around/above 30%. I don't think it means we've got smaller nest eggs, or bigger houses... just means we live in a pricey area. Median sales price (vs list price) is $466k for San Diego metro per zillow
San Diego Home Prices and Home Values - Zillow

I know Nash is in one of the priciest neighborhoods in the county. Mine isn't quite as pricey - but still much more expensive than a reasonable person would expect. I was fortunate to purchase the home I grew up in - and transfer the original Prop13 tax rate from my dad. That's the one thing that made this home affordable with two professional incomes. (That and a huge downpayment.)