ShokWaveRider
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Our home is 15% of our total net worth. HOWEVER, I still only use the original price we paid, and not the current value which is significantly more.
Our home is 15% of our total net worth. HOWEVER, I still only use the original price we paid, and not the current value which is significantly more.
Our home is 15% of our total net worth. HOWEVER, I still only use the original price we paid, and not the current value which is significantly more.
It's obviously your choice to use the original price. But do you use the original price of your other net-worth components (equities, bonds, fixed)? Just curious how it works so YMMV.
No current value as that is real money, and not an asset. We do not count any other asset as part of our net worth either, just our home. Homes go up and down, and you have to live somewhere. If one uses current value, it is merely speculation, it can take weeks or months to close a home and things can change fast. Our home is worth what I paid for it to me, unless it goes down of course. But as it is worth 3 x what we paid I think it is a good bet.
Our home is 15% of our total net worth. HOWEVER, I still only use the original price we paid, and not the current value which is significantly more.
Possibly, but housing prices (and rents) historically are extremely sticky barring an outside number of foreclosures, which with the best class of buyers in history the last 2.5 years and more home equity as a % of house than ever, combined with a job market that would need to “lose” 6 million posted jobs just to bring the job market in balance, this seems highly unlikely. People tend to stay out and not move if they feel like their house has lost value recently, even if you huge from 3 years ago, which reduces supply, which keeps pricing high. The only other thing that would normally bring pricing down is heavy new home builds but the cost to build a new home is way higher than existing stock, so builders will pare back quickly if prices drop at all. Long story short, I don’t see it dropping. It didn’t in Canada, europe or Australia after their huge run ups in the 90s and 00s
..showing that 114,706 single-family houses and condominiums in the United States were flipped in the first quarter. Those transactions represented 9.6 percent of all home sales in the first quarter of 2022, or one in 10 transactions – the highest level since at least 2000. The latest total was up from 6.9 percent, or one in every 14 home sales in the nation during the fourth quarter of 2021, and from 4.9 percent, or one in 20 sales, in the first quarter of last year.
...
But the report also shows that as home sales by investors spiked, typical raw profits on those deals remained below where they were a year ago, and in a more striking trend, profit margins dipped to their lowest point since 2009.
Well if you want to play that way, I'm at 3%, but I have been in my home for 27 years. That makes a significant difference.
My 70 year old house that I bought 40 years ago is not worth what it would sell for today. Actually the value is in the land. When the day comes a buyer will just knock it down and build another McMansion. That is what all my new neighbors have done with all the old original houses on my street. I'm glad I don't have to look for housing these days.
Cheers!
Same here for about 7 years while we lived in a McMansion in a suburb and an acreage in the outskirts of the suburb. Last year we switched. Although we stopped counting our acreage home from the Networth which is not entirely accurate. The large land portion of our homestead CAN be counted as an investment but only if we ever decide to sell it! If I count the entire equity of the acreage then our home represents about 25% of Networth.Our situation was once a bit complicated. The last several years before FIRE, we counted our townhouse in the Islands as an investment and our house on the mainland as just our residence. Soon after FIRE, we moved to the townhouse in the Islands and began selling our house on the mainland. So the two properties switched (asset vs residence.) THAT changed our % quite a bit even though our net worth hardly changed at all. YMMV