What percent of net worth is ideal for home?

[CRLLS]

As others have already said, I don't not consider my home as an "investible" asset. It is part of my net worth, but that means nothing to me or anyone else except our heirs. So long as your income can safely cover all of your expenses for now and the foreseeable future, the value of your home is meaningless.

 

[RunningBum]

I recall a thread a while back where folks answered "what percent of your NW is your home?" and IIRC around 15% was the most common answer. But, as expected, the answers varied widely.

This one, perhaps:
https://www.early-retirement.org/fo...as-percent-of-nw-during-retirement-67806.html

and on the first page of that thread you'll find a link to an even earlier thread on the topic.

 

[brett]

Does it not depend on your NW?

The answer might be very different if your NW is $10M or if it is sub $1M.

Plus different lifestyles that people of all incomes may enjoy.

 

[kcowan]

When you're are young, they recommend maximum 30%. When you are our age, it is usually much lower unless your home represents a special joy rather than traveling our owning cars.

 

[HawkeyeNFO]

Depends on location. Living in NYC would likely force one's housing as a percentage of net worth to be much higher than if they lived in Cleveland.

 

[Gumby]

I don't see how it matters at all, the only thing that might count would be the expenses on the home: Upkeep, taxes, utilities, etc., which will all be bigger with a bigger/pricier house, cutting more out of your SWR every year.

I agree with this. The value of our house is irrelevant per se. We bought it 30 years ago because we liked it and could afford it. We still like it and can afford it. I don't expect to leave until we are physically unable to remain in it. For the OP, I would focus on the carrying costs rather than the value.

 

[RunningBum]

When you're are young, they recommend maximum 30%. When you are our age, it is usually much lower unless your home represents a special joy rather than traveling our owning cars.

I think that's more like mortgage payment : income when you are young. I doubt many people wait to buy a house until it is only 30% of their NW. Many have to buy a house that's many times their net worth if they are just starting out.

 

[W2R]

When you're are young, they recommend maximum 30%. When you are our age, it is usually much lower unless your home represents a special joy rather than traveling our owning cars.

My home (a.k.a. "my Dream House") really DOES represent a special joy for me, rather than traveling or owning cars. I love this house and have lived here for eight wonderful years so far. I hope to continue living here for the rest of my days.

Depending on how much I assume my home is presently worth, it's somewhere between 16%-20%. It's only 1500 sf but I have zero desire for anything bigger. It is older (built in 1965) but the older features (such as the old fashioned pastel tile bathrooms) are dear to me, due to nostalgia for an era long gone.

My recommendation to the thread originator is to find a home that you love among those available for a price that feels reasonable to you.

 

[Koolau]

My home (a.k.a. "my Dream House") really DOES represent a special joy for me, rather than traveling or owning cars. I love this house and have lived here for eight wonderful years so far. I hope to continue living here for the rest of my days.

Depending on how much I assume my home is presently worth, it's somewhere between 16%-20%. It's only 1500 sf but I have zero desire for anything bigger. It is older (built in 1965) but the older features (such as the old fashioned pastel tile bathrooms) are dear to me, due to nostalgia for an era long gone.

My recommendation to the thread originator is to find a home that you love among those available for a price that feels reasonable to you.

Hear, hear!

When W2R describes her relationship with her home I begin to get jealous! I love my condo in Hawaii, but that's mostly due to me being IN Hawaii. The only really "outstanding" thing about our very average condo is the "million dollar view - that didn't cost that much."

I'm actually much more like W2R when it comes to the old family homestead. I just love it. It used to be a slum and very uncomfortable in many ways. We've upgraded it, but mostly, it's just plain HOME!

 

[RetiredAt49]

Hear, hear!



When W2R describes her relationship with her home I begin to get jealous! I love my condo in Hawaii, but that's mostly due to me being IN Hawaii. The only really "outstanding" thing about our very average condo is the "million dollar view - that didn't cost that much."



I'm actually much more like W2R when it comes to the old family homestead. I just love it. It used to be a slum and very uncomfortable in many ways. We've upgraded it, but mostly, it's just plain HOME!

Which island? Love to visit but can’t get my wife onboard to make it “home”. We love Kauai.

 

[gayl]

Seems like a semi useless question.
I bought my home in 1976 and its value now is lots higher but has very little bearing on my investible assets.
They are almost totally separate issues...

Agreed. Bought in 1979 and have prop 13. IMHO a more relevant question would be "housing should be what % of monthly fixed income in retirement?" as I cannot count on raises anymore (other than my pension's COLA)

 

[Koolau]

Which island? Love to visit but can’t get my wife onboard to make it “home”. We love Kauai.

I live on Oahu (Honolulu.) If you love Kauai, you might not like Oahu. Oahu (Honolulu especially) is sort of like plunking down in the middle of a mid sized city (like Cincinnati or Nashville) Except it has nice beaches, nearly perfect weather and TRAFFIC.

I love it 'cause it IS a medium sized city with all the things I like about such a city (lots of doctors, hospitals, Wendy's, etc.)

But unless you learn when to drive, the traffic will make you nuts (if you're like me.)

Read the book "So You Want to Live in Hawaii" by Toni Polansy. It will do a better job than I describing the differences among the Islands. Polansy describes the Island in terms of "eras." IIRC, she suggested Oahu as being almost (not quite) contemporary. IIRC she said Kauai was like living in the '50s, Hawaii Island was like the '60s, Maui - '80s. Keep in mind this was around the year 1995 IIRC.

 

[cyber888]

Constructed my house 20 years ago at around $350K. It's almost double that value now if I sell it. But I just plan to live in it.
So, I'm more concern about my investments and liquid assets.

 

[kgtest]

RE is currently 44% of our total NW. Earlier it was higher prior to us selling a townhome we rented. We put that dough in the market, and hit the 20th floor here in June, averaging a return of 20% in under a year vs the roughly 8 to 10% I would get ROI running the property.

I have leveraged Real Estate combined with equity investing to really guarantee a financially free future.

It was hard work owning real estate and I am not in a hurry to get back into property management, so just managing the money in equities for a few years seems appealing.

Eventually, I will by a condo with an ocean view in Florida. But with the insurance situation and hurricanes I am not trying to make things too complicated.

I may end up buying in Maui. Wailea area.

 

[Rianne]

I don't have a target. It happens to be about 7%.

Yep, this is my comfort zone. We paid 7% of our net worth for our paid-off home. The value is up ~ $100K since we bought. We have no plans to move.

 

[Tadpole]

I own my house outright. It will cost me 25% of my total fixed spending this year for predictable expenses (property tax, insurance, utilities, yardwork). This is before unpredictable expenses like new roofs, furnaces, appliances and costly maintenance. It wouldn't surprise me if someone more diligent and responsible than myself spent up to 50% of their yearly expenses on home ownership.

 

[HawkeyeNFO]

My home equity is 28% of my net worth. My mortgage payment (PITI) is about 44% of my monthly expenses. And with a 2.75% interest rate, I have no interest at all in paying it off early.

 

[Stormy Kromer]

I live in my grandpa's old farmstead built in 1873. I bought out the estate when he passed for fair cash money. I remodeled and updated myself in 2020 during covid when I lost my j**B. Well..... every 150 years or so you have to do something.

I am lucky that DW likes living here, it's a great time. The farm would be worth more if the house wasn't on it according to the appraisers. The appraisers don't pay my bills..... So I'm costing my net worth by living here. Hell, its fun.....I'm not moving to town. I'll post a picture when I figure out how.

 

[TheWizard]

My home (a.k.a. "my Dream House") really DOES represent a special joy for me, rather than traveling or owning cars. I love this house and have lived here for eight wonderful years so far. I hope to continue living here for the rest of my days.

Depending on how much I assume my home is presently worth, it's somewhere between 16%-20%. It's only 1500 sf but I have zero desire for anything bigger. It is older (built in 1965) but the older features (such as the old fashioned pastel tile bathrooms) are dear to me, due to nostalgia for an era long gone.

My recommendation to the thread originator is to find a home that you love among those available for a price that feels reasonable to you.

Not only that, but you're not too far from Acme Oyster House when the urge hits...

 

[Surewhitey]

We moved 2 streets over from DD & 2GKs in 2015 for about 27% of net worth, then sold it 2.5 years later for another 1 street over. This one was about 20% of NW.

It's now valued at 19% after almost double the purchase price (and savings going up)

My house expenses (no mortgage) are about 9-10% of modest total spending. Taxes and insurance...

We are definitely in the smallest house we'll ever live in, but it's just right for 2. Add in 2 sisters and MIL, and I'm going camping for a long weekend. We've made our space perfect after a few updates & 300 sq ft covered, screened patio. Unless the multi generation living is guaranteed, I'd keep it simple, myself.

 

[Koolau]

I live in my grandpa's old farmstead built in 1873. I bought out the estate when he passed for fair cash money. I remodeled and updated myself in 2020 during covid when I lost my j**B. Well..... every 150 years or so you have to do something.

I am lucky that DW likes living here, it's a great time. The farm would be worth more if the house wasn't on it according to the appraisers. The appraisers don't pay my bills..... So I'm costing my net worth by living here. Hell, its fun.....I'm not moving to town. I'll post a picture when I figure out how.

Forget the appraisers! If you like it and suits your needs - it's HOME.

 

[W2R]

Not only that, but you're not too far from Acme Oyster House when the urge hits...

You're so right! Not only Acme Oyster House, but also using Google maps I counted 80-90 restaurants within a half mile from us.

That's one thing I love about my home; just about everything we could possibly need or want is less than 1-2 miles away. And best of all, Frank is right next door.

 

[gayl]

I own my house outright. It will cost me 25% of my total fixed spending this year for predictable expenses (property tax, insurance, utilities, yardwork). This is before unpredictable expenses like new roofs, furnaces, appliances and costly maintenance. It wouldn't surprise me if someone more diligent and responsible than myself spent up to 50% of their yearly expenses on home ownership.

12.5% here

 

[W2R]

12.5% here

27% here. 9% of that is utilities, which I'd have to pay even if I was renting the house (I bought it instead, and it's paid off). But in my case I can happily omit travel and most other big discretionary expenses because I enjoy living in this house so very, very much.

 

[Dash man]

Our primary home is about 7% of our net worth. We paid it off back in 2010 to get ready for retirement. Two townhomes that our two boys and their families live in total another 7%. Our two vacation homes would be another 15% total. No mortgages but lots of property taxes!