I was thinking about this today. If I had cash equal to my total assets to allocate today, would I really choose to invest 24% of it in residential real estate? Probably not. But there you have it.
I see this point. But people choose where they live for a variety of reasons... family, employment, etc. I moved back to San Diego 15 years ago... and was in total sticker shock on the price of homes compared to the Philly burbs where we were coming from. But my family was here, and I had a job that allowed us to afford a house here.
Once we paid off the house (12 years after we purchased), it became a non-issue.
I think the market value of my house is obscene... it's a 50 year old tract home worth a HUGE amount of money. But it was cheaper when we bought... and it's a comfortable, paid for, house to live in.
+1I can only speak for myself.... But my retirement plan did not include "spending" my house or using my house for anything but shelter. Since it's paid off - the expense is just the normal expenses of owning a home - maintenance, upgrades, taxes, insurance.... Those are the same among similar size houses whether the house is in a high COLA or low COLA.
All that said - owning an expensive house outright gives me a robust "Plan B" option if the market tanks, one or both of us ends up in extended long term care, or some other catastrophic event. It gives me confidence to forgo the LTC insurance.
I was thinking about this today. If I had cash equal to my total assets to allocate today, would I really choose to invest 24% of it in residential real estate? Probably not. But there you have it.
I was thinking about this today. If I had cash equal to my total assets to allocate today, would I really choose to invest 24% of it in residential real estate? Probably not. But there you have it.
See the table in this article that shows median net worth by age, with and without home equity included. Data is from US Census Bureau and it makes me wonder how so many can survive a long life or retirement with these numbers:
Americans' Average Net Worth by Age -- How Do You Compare? -- The Motley Fool
....
Are these results fodder for those who say you shouldn't pay off your mortgage?
Or is that a can of worms
Wow. Those numbers are the polar opposite of the poll results. Once again, this forum is shown to be far [-]from representative[/-] superior.
All that said - owning an expensive house outright gives me a robust "Plan B" option if the market tanks, one or both of us ends up in extended long term care, or some other catastrophic event. It gives me confidence to forgo the LTC insurance.
That's how ridiculous the housing market has been in Vancouver over the last two decades.
We're in Seattle. Bought our little 1940's house in 1998, and the mortgage is paid off. The insane RE market here has put us in the >50% category on the poll. We are surrounded by $500k tear-downs; every day it seems there's a new hole in the ground somewhere in the neighborhood. I don't see it changing any time soon, especially with the new tax on foreign buyers in B.C. Seattle becomes No. 1 U.S. market for Chinese homebuyers | The Seattle Times
We have already purchased (in 2011) our retirement condo in Anacortes, WA and are renting it out for current income. Seattle is starting to drive us crazy with the traffic and prices, but we can't seem to leave our wonderful little house, which we love. First we thought we would move when we FIRE'd. Then when the kid went off to college. Now we're staying as long as the dog is still around (no fenced yard at the condo).
If we sold we would have the freedom and $$ to travel more, and we want to do that before we are tied down with parents to care for, or too decrepit ourselves to enjoy travel. First world problems.
I could totally do retirement in Anacortes, as I understand it is sunny there, unlike Seattle. I would like a place with lots of sunshine and nice water views, not too hot. Anacortes seems to meet those requirements.
I can only speak for myself.... But my retirement plan did not include "spending" my house or using my house for anything but shelter. Since it's paid off - the expense is just the normal expenses of owning a home - maintenance, upgrades, taxes, insurance.... Those are the same among similar size houses whether the house is in a high COLA or low COLA.
That's kind of the way I treat the decision, but the fact that it's paid-off isn't an air-tight reason never to get leveraged again...there might be a reason some day. But as mentioned, this is getting dangerously close to the pay-off / don't pay-off can of worms. But back to my original comment, I'd say if I found I was in the top % in this poll, I'd seriously consider reducing equity and become more involved with other asset classes.Once we paid off the house (12 years after we purchased), it became a non-issue.
.. But back to my original comment, I'd say if I found I was in the top % in this poll, I'd seriously consider reducing equity and become more involved with other asset classes.
Selling an expensive home might work out well if the sudden need for resources is caused by a big increase in expenses (LTC, etc). But if it's due to a market downturn, it might not work out as well. It looks like a lot of oldsters have a lot of their net worth in their homes. If everybody decides at once to sell and move in with the kids, be a renter or to downsize, it might be tough on some RE market segments.
From DFW_M5's link: