Poll: Primary Home as % of Net Worth

[Midpack]

We’re relocation home shopping (again) and everywhere we want to live is too expensive and everywhere I think homes are reasonable doesn’t fit our wants and needs. So I’m faced with ponying up quite a bit more for our retirement dream house. This has come up in/directly in several threads lately, but I can’t find the last poll on the subject.

Yes I know it all comes down to supporting spending based on our new net worth after a $200K hit, but just wondering what’s typical.

I’m probably being a cheapskate (coupled with fear of buying in a somewhat appreciated market), and DW is being reasonable, but whatever you do - don’t tell her.

For the poll, please use

• Numerator: $ Value of your 1 primary residence (2 homes if you’re a snowbird), but don’t include income properties.
• Denominator: Your $ net worth without primary residence, but please include income/investment properties.
  
• If you’re still working, paying a mortgage - use full value of your home and projected net worth both at retirement. If that’s too far off to project (if you’re younger), please don’t vote?

 

[hesperus]

6% primary only
Did not include second residence, which is just a getaway.
If I did, we'd be just under 9%

edit: no mortgages

 

[RunningBum]

Just curious. Do you want people still working to respond? And is this the full value of the home, or just equity? There was certainly a time when my % would've been well over 100%, using the full value. Not sure if you want to skew the numbers like that.

 

[Midpack]

Just curious. Do you want people still working to respond? And is this the full value of the home, or just equity? There was certainly a time when my % would've been well over 100%. Not sure if you want to skew the numbers like that.

Good question. I’d use full value of home, and your expected net worth both at time of retirement. If you can’t project both, voting will skew the poll. Thanks.

 

[Texas Proud]

Well, the numbers are off a bit but I have already voted..

I am just over 10%, but not to 11%.... so I put mine in the 10% bracket...

 

[Midpack]

Well, the numbers are off a bit but I have already voted..

I am just over 10%, but not to 11%.... so I put mine in the 10% bracket...

Rounding is good. Thanks.

 

[whatnot]

Very timely as we are moving soon as well. And I am trying to determine an appropriate $ amount to spend on new home. I voted and am currently at 9% of current home value to net worth. But we know the cost of homes in the area we want to move to is higher current home. Even though we want to downsize we are looking at pulling additional funds to buy new home. So this poll will give me a nice benchmark...

 

[Ready]

65% here in Southern California. Seems kind of crazy when I have to actually calculate it but it is what it is.

 

[Tallman4123]

11% in northern CT

 

[Red Badger]

20%

 

[jazz4cash]

42% in DC suburbs. Almost as crazy as SoCal. Haven't voted yet.

 

[RobbieB]

10%

But after all the improvements I'll probably be around 13%.

 

[Lsbcal]

We have a high ratio (California real estate) but is this the real figure of merit you want Midpack?

For example, suppose the ratios and income cash flows are the same but:
1) Couple A has a $1M/$2M = 50% home/networth
2) Couple B has a $200k/$400k = 50% home/networth

Seems to me these situations are hugely different and do not take account of retirement spending needs.

 

[6miths]

Isn't denominator incorrect given the title of the thread?

 

[bmcgonig]

We’re relocation home shopping (again) and everywhere we want to live is too expensive and everywhere I think homes are reasonable doesn’t fit our wants and needs. So I’m faced with ponying up quite a bit more for our retirement dream house. This has come up in/directly in several threads lately, but I can’t find the last poll on the subject.

Yes I know it all comes down to supporting spending based on our new net worth after a $200K hit, but just wondering what’s typical.

I’m probably being a cheapskate (coupled with fear of buying in a somewhat appreciated market), and DW is being reasonable, but whatever you do - don’t tell her.

For the poll, please use

• Numerator: $ Value of your 1 primary residence (2 homes if you’re a snowbird), but don’t include income properties.
• Denominator: Your $ net worth without primary residence, but please include income/investment properties.
  
• If you’re still working, paying a mortgage - use full value of your home and projected net worth both at retirement. If that’s too far off to project (if you’re younger), please don’t vote?

For the poll, please use
* Numerator: $ Value of your 1 primary residence (2 homes if you’re a snowbird), but don’t include income properties.
* Denominator: Your $ net worth without primary residence, but please include income/investment properties.


That calculation seems weird just to me. E.g., if your primary residence is worth 1m and your other assets like stocks/bonds are worth 1m then your calculation would yield 100%. Seems like it should be 50% according to your subject title?

 

[GalaxyBoy]

Right now we're at about 12%, but we've been looking for a new home for over two years without much luck. Since I've come into an inheritance, we've earmarked that money plus the equity we have now for a cash purchase. So that will likely put us in a higher bracket, but we don't need that money to meet expenses and we SO want a better home than we have now (especially better neighbors - right now we have a rear neighbor who seems to have started running a junkyard).

Our problem is finding a right-sized house for two people that has nice construction, finishes, and a rational floor plan that also affords one-level living to allow us to age in place. We can find nice houses that are 4k sq ft, but there doesn't seem to be anything in the middle range below that and above spec starter houses.

We keep looking.

 

[ABQ2015]

Very timely as we are moving soon as well. And I am trying to determine an appropriate $ amount to spend on new home. I voted and am currently at 9% of current home value to net worth. But we know the cost of homes in the area we want to move to is higher current home. Even though we want to downsize we are looking at pulling additional funds to buy new home. So this poll will give me a nice benchmark...

Same situation for me. Originally I had planned to spend an extra $50-100K to move to the PNW but it is now starting to look like it will cost more unless I am willing to seriously compromise on my next home. My poll vote would be 35% but that is not meaningful to the OP since the bulk of my income is pension and SS and normally not included in net worth. The investments are for discretionary income mostly earmarked for travel. Also I'm older than most at age 62, have no need to leave an inheritance, and am sort of a homebody. I'm traveling some this first year of retirement but really enjoy my time at home so a nice house in a good location might be worth the extra money.

 

[NYEXPAT]

0% here in South America as we rent our apartment and rent out our primary residence.

 

[audreyh1]

We could buy another residence. Or buy a fancier place than where we are living. But it is not a priority at the moment. We're so busy doing other things.

I joke to myself that I'll just pony up the big bucks when we pick a continuous care type place. And maybe we'll even keep this as a winter place for a while.

But gosh - if you can afford it, why not ante up for something great now while you can afford it? So what if it's a bit less for your daughter! Sound like she has already had much generosity directed her way and is doing very well standing on her own two feet in spite of the legs up she's been given. I expect she'll end up very well off regardless.

 

[W2R]

OK, I hope I did it right. I came up with 17.6% using my best estimate of the house's present selling price, and this was the number I voted for in the poll.

When I bought my home in 2015, the percentage of net worth was 15.7%. We have had a bit of a (very localized) housing bubble in my immediate neighborhood since then.

 

[pb4uski]

.... That calculation seems weird just to me. E.g., if your primary residence is worth 1m and your other assets like stocks/bonds are worth 1m then your calculation would yield 100%. Seems like it should be 50% according to your subject title?

That's because it is wierd. Let's say that someone had $2m in investments, a $1m home with a $0.7m mortgage.... their net worth would be $2.3m.

I think the more logical answer would be that their primary residence is $0.3m of their $2.3m net worth or 13%. Or alternatively, their home is 33% of their assets ($1m/$3m).

Under this definition it is $1m numerator over a $1.3m denominator, or 77%!

 

[MichaelB]

That's because it is wierd. Let's say that someone had $2m in investments, a $1m home with a $0.7m mortgage.... their net worth would be $2.3m.

I think the more logical answer would be that their primary residence is $0.3m of their $2.3m net worth or 13%. Or altrnatively, their home is 33% of their assets ($1m/$3m).

Under this definition it is $1m numerator over a $1.3m denominator, or 77%!

Weird, but it's only one response and not likely to skew the poll results. As of now, 3/4 of all responses are in only 3 ranges, and if the outliers are discarded it's even more concentrated.

 

[W2R]

65% here in Southern California. Seems kind of crazy when I have to actually calculate it but it is what it is.

I haven't lived in Southern California since 1984, but based on what I can tell from a distance, I don't think it sounds crazy at all. Every place has its pros and cons, advantages and disadvantages.

 

[flintnational]

About 13% in metro Atlanta. Our house value is up and our investment values are down. Investments do not include the value of our pensions.

 

[phil1ben]

Because the respondents all have very different net worths, I do not believe the results are helpful. I don't really have an issue with someone with a 30MM net worth having 30% tied-up in personal residences but my opinion is different for someone with a 1MM net worth.

For the results to be helpful, I think the pool would have to be comprised of people having similar net worths.