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General Discussion => Welcome and General Discussion => Topic started by: Gone Fishing on May 28, 2015, 09:57:56 AM

Title: Home equity as a percentage of net worth?
Post by: Gone Fishing on May 28, 2015, 09:57:56 AM
You often see a house referred to someone's largest asset.  I was doing a little math and was a little surprised at how little my home equity made up of my net worth (6.5%).  I've always considered home equity to be non-income producing and sought to maximize my investments by not prepaying my mortgage.  That combined with a smaller house to start with and my house is nowhere near my largest asset.  I'm guessing that this is not at all uncommon among mustachians, so what is your home equity as a percentage of your net worth?   
Title: Re: Home equity as a percentage of net worth?
Post by: forummm on May 28, 2015, 10:03:55 AM
If I just take the Zillow estimate, and don't include the cost of selling it, it's probably 3%. I have a very cheap house and a high mortgage balance.
Title: Re: Home equity as a percentage of net worth?
Post by: arebelspy on May 28, 2015, 10:04:50 AM
My primary residence is underwater, so it's a negative percent of my net worth. 

I count it in my net worth, but then it makes for funny situations like when a comparison is asking for net worth "excluding home equity" my number actually rises, instead of falling.  :P
Title: Re: Home equity as a percentage of net worth?
Post by: 2lazy2retire on May 28, 2015, 10:39:20 AM
Always think it best to exclude it - at least from a SWR perspective, but FTR about 16%
Title: Re: Home equity as a percentage of net worth?
Post by: I'm a red panda on May 28, 2015, 10:43:12 AM
I don't consider my home equity when I look at my net worth; but if I do include it, mine is a significant chunk- about 30%. 

I can see how someone in a high cost of living area, especially if they bought a long time ago, and had it almost entirely paid down, would have a lot of their net worth in their home.

Title: Re: Home equity as a percentage of net worth?
Post by: Insanity on May 28, 2015, 10:52:36 AM

I do factor it as part of our net worth as it does have a value associated with it.  Same as my car.   
While we are not underwater, the value has taken about a 10% hit over the last 6-10 months :/
Title: Re: Home equity as a percentage of net worth?
Post by: FIreDrill on May 28, 2015, 10:53:14 AM
I count home equity in our net worth.  Comes out to be about 18% of our NW.
Title: Re: Home equity as a percentage of net worth?
Post by: sol on May 28, 2015, 10:56:19 AM
About 8 percent.
Title: Re: Home equity as a percentage of net worth?
Post by: fiveoh on May 28, 2015, 11:32:51 AM
Around 40%.  I realize it's not really an investment but consider it the "real estate" portion of my portfolio since I have no rental homes, etc
Title: Re: Home equity as a percentage of net worth?
Post by: Camarillo Brillo on May 28, 2015, 11:33:08 AM
10%.
Title: Re: Home equity as a percentage of net worth?
Post by: cautiouspessimist on May 28, 2015, 11:54:38 AM
About 28%, but I'm still a beginner.
Title: Re: Home equity as a percentage of net worth?
Post by: GuitarStv on May 28, 2015, 11:59:50 AM
About 66-70%.  Our home has appreciated a lot since purchasing it, and we'll be finished paying it off next year.
Title: Re: Home equity as a percentage of net worth?
Post by: Ottawa on May 28, 2015, 12:21:40 PM
About 28%.  Not including pension worth.  In which case...16%
Title: Re: Home equity as a percentage of net worth?
Post by: brooklynguy on May 28, 2015, 12:58:40 PM
You often see a house referred to someone's largest asset.

If you are trying to determine the applicability of this statement among mustachians, home equity seems to be the wrong metric (as you said, many of us intentionally carry disproportionately large mortgages relative to our ability to pay them off as compared to the general population).  Shouldn't you have asked about home value as a percentage of total assets?
Title: Re: Home equity as a percentage of net worth?
Post by: sleepyguy on May 28, 2015, 01:04:14 PM
60% or so.
Title: Re: Home equity as a percentage of net worth?
Post by: thd7t on May 28, 2015, 01:08:26 PM
about 35% and falling.
Title: Re: Home equity as a percentage of net worth?
Post by: Gone Fishing on May 28, 2015, 01:16:46 PM
You often see a house referred to someone's largest asset.

If you are trying to determine the applicability of this statement among mustachians, home equity seems to be the wrong metric (as you said, many of us intentionally carry disproportionately large mortgages relative to our ability to pay them off as compared to the general population).  Shouldn't you have asked about home value as a percentage of total assets?

Agreed, but I was more interested in % of net worth "deployed" in income producing assets vs home equity.  The often used statement simply led me to the posted question.  For clarity, feel free to add the words "net of debt" behind the word asset if you would like.
Title: Re: Home equity as a percentage of net worth?
Post by: sisto on May 28, 2015, 01:24:05 PM
This is an interesting topic. For me it's 12%.
Title: Re: Home equity as a percentage of net worth?
Post by: TheAnonOne on May 28, 2015, 01:30:12 PM
20-25% assuming Zillow is anywhere close to accurate... (120k)


I bought it for 73k and owe 69k after a refi added a bit back to the balance. If I assume no growth and sell it at what I bought it for...

.5% -> 1% or so. This is more accurate for me.


Assuming Zillow is correct, this is my fastest growing asset in terms of gains.
Title: Re: Home equity as a percentage of net worth?
Post by: brooklynguy on May 28, 2015, 01:34:15 PM
I was more interested in % of net worth "deployed" in income producing assets vs home equity

On its face, my home equity is probably about 60% of my net worth (even though I'm carrying close to the maximum amount of conforming mortgage possible, and my house is quite small), but it is a two-family property so it is partially an income-producing asset.  The rental income from the second unit covers a huge chunk of my non-mortgage expenses.

Personally, I prefer to just completely exclude home equity from my net worth calculation, because I have no plans to ever sell.  The rental income gets accounted for as a reduction of the expenses that need to be covered by my investment portfolio, and I mentally treat the portion of my home equity allocable to the portion of the house that my family and I occupy as just part of my unitemized safety margin (if the shit hits the fan, we can "downsize" to a cheaper location as a back-up plan of last resort).
Title: Re: Home equity as a percentage of net worth?
Post by: CashFlowDiaries on May 28, 2015, 01:40:04 PM
I just recently started tracking my net worth online and I do include the equity in my primary house in my net worth.  I think it makes sense to add it as it really is money you could have available if you sold it.

My primary house accounts for about 40% of my total net worth. 
Title: Re: Home equity as a percentage of net worth?
Post by: Terrestrial on May 28, 2015, 02:06:24 PM
We are around 25% right now and generally falling as we keep socking away more money and other investments gain value.  Projecting out to FIRE it would comprise about 15% of our N.W. with the house owned outright (paid off mortgage).

I include home equity (minus the theoretical cost to sell our home) in N.W. calc, even though we dont plan on selling it...especially for people with large downpayments this makes sense to me - the day we bought our house $90k went instantly from cash on hand to 'home equity'...but that monetary value didn't just completely disappear.   
Title: Re: Home equity as a percentage of net worth?
Post by: Catbert on May 28, 2015, 02:19:08 PM
About 20%.  I have a paid off house in a HCOL area.
Title: Re: Home equity as a percentage of net worth?
Post by: ltt on May 28, 2015, 02:33:06 PM
17%...no mortgage.
Title: Re: Home equity as a percentage of net worth?
Post by: ozbeach on May 28, 2015, 02:37:41 PM
40%, no mortgage. House prices here in Australia seem way higher than the US. I never count this when calculating FI, SWR etc.
Title: Re: Home equity as a percentage of net worth?
Post by: ketchup on May 28, 2015, 02:53:51 PM
Primary residence equity is about 20% of my net worth.
Title: Re: Home equity as a percentage of net worth?
Post by: Capsu78 on May 28, 2015, 03:07:10 PM
23% with a final payoff in the next 18 months.  (excludes any value in our pensions)
Title: Re: Home equity as a percentage of net worth?
Post by: chubbybunny on May 28, 2015, 03:15:13 PM
I have to admit, I've never actually calculated this before.  Here's mine.

5% primary residence
15% rental properties

brings my real estate equity to about 20% of my net worth.
Title: Re: Home equity as a percentage of net worth?
Post by: Aussiegirl on May 28, 2015, 03:26:43 PM
20% if included in NW calc, but I generally don't include it as it's not income generating. And certainly don't include it for SWR purposes.

We made the decision to pay off the house so we weren't playing a mortgage after RE.  Here in Oz fixed rates generally only go out 5 years max with the loan then converting to variable at the rate of the day (av loan rate over 20 years is about 7.5%).  And housing debt on primary residence is not tax deductible here.
Title: Re: Home equity as a percentage of net worth?
Post by: AJ on May 28, 2015, 03:35:50 PM
4.4%

I like to use Zillow minus 10%, because I figure I would lose 6% to a realtor, 3% to buyers closing costs, and 1% to misc repairs and closing costs if we sold it (and thankfully, Zillow is pretty accurate in our area.)
Title: Re: Home equity as a percentage of net worth?
Post by: TheLazyMan on May 28, 2015, 04:11:58 PM
Mine's about 12%
Title: Re: Home equity as a percentage of net worth?
Post by: mancityfan on May 28, 2015, 04:22:24 PM
25%. House is paid off. I do not include a future pension in my net worth.
Title: Re: Home equity as a percentage of net worth?
Post by: Runner77 on May 28, 2015, 04:43:29 PM
20%, no mortgage.
Title: Re: Home equity as a percentage of net worth?
Post by: EngineerMum on May 28, 2015, 05:08:38 PM
Ours would be around 50%. At least. Housing is expensive here, and DH had bought this house before we met. For a whole host of reasons, it hasn't made sense to sell, but I've definitely been tempted. We have been very housepoor while we were a 1 income family, now that he has a job, it doesn't seem so dire.
Some of the percentages are phenomenal to me - the idea that you could own a house for less than 20% of net worth - assuming most people are not already multimillionaires - when the cheapest 1 bed apartment I can find in my city on a RE website search is over $200k. Even lots out on the urban fringe, the property report I get said that last week there was one lot sold for under $250k, while dozens sold for $500k +. That's just the lot, the house would be an extra few hundred k on top.
Regardless, until we have a huge property crash, assuming we stay in this city (where our families live, so likely) our house will be a significant percentage. I'd say at FIRE, it will probably still be 30%, or more if value continues to rise.
Title: Re: Home equity as a percentage of net worth?
Post by: KungfuRabbit on May 28, 2015, 05:09:17 PM
a little under 10% right now.

Your statement is correct however, i have known multiple people that put every dollar they own into their house down payment.  My one friend has no investments and credit card debt, but then like $40,000 in a house.  So for him 100%, and i am guessing that is a very significant part of the population. 
Title: Re: Home equity as a percentage of net worth?
Post by: Spork on May 28, 2015, 05:12:23 PM
18%, no mortgage. 
Title: Re: Home equity as a percentage of net worth?
Post by: nobodyspecial on May 28, 2015, 05:21:28 PM
Around 50%, paid off and the smallest/cheapest house we could find - but in an insane real-estate price city
Title: Re: Home equity as a percentage of net worth?
Post by: AustralianMustachio on May 28, 2015, 05:30:54 PM
Yes, this number is going to be quite skewed for Australians in comparison to Americans. Especially if they live in Sydney

http://www.realestate.com.au/invest/house-in-sydney,+nsw+2000
Title: Re: Home equity as a percentage of net worth?
Post by: NaturallyHappier on May 28, 2015, 05:39:25 PM
Mine is 23% using Zillow.  No mortgage debt.

Be careful using Zillow.  I track my home value and net worth monthly and in mid 2014 my home value increased significantly for about 6 months then fell again.  If I now look at the historical trend on Zillow, it does not reflect the increase in 2014.  It is as if it never happened, but the values in my spreadsheet were recorded from the Zillow site the day I entered them.

Title: Re: Home equity as a percentage of net worth?
Post by: Eric on May 28, 2015, 05:46:22 PM
0% -- Only paper investments for me thankyouverymuch!
Title: Re: Home equity as a percentage of net worth?
Post by: sol on May 28, 2015, 05:53:55 PM
Some of the percentages are phenomenal to me - the idea that you could own a house for less than 20% of net worth

The question was about equity, not home value.  If you get a zero down mortgage your equity could be zero percent of a multi-million dollar net worth or a $1 net worth.

I'm my case, we bought a house for 20 percent down last year.  The home would sell today for about 30 percent of our net worth, but since our equity in it is less than the purchase price, we only have about 8 percent of our net worth tied up in it.  Would be six percent (20 percent of 30 percent) if we hadn't made any payments over the past year.

Be careful using Zillow.  I track my home value and net worth monthly and in mid 2014 my home value increased significantly for about 6 months then fell again.  If I now look at the historical trend on Zillow, it does not reflect the increase in 2014.

Zillow is constantly backwards adjusting its own former price estimates.  They usually stabilize after about a year, but the newest estimates are always a wild guess based on a small number of recent sales.  In every case I've seen, the newer numbers are too high and will eventually get revised down, which totally makes sense for their business model but is still annoying.
Title: Re: Home equity as a percentage of net worth?
Post by: NaturallyHappier on May 28, 2015, 06:51:38 PM
Some of the percentages are phenomenal to me - the idea that you could own a house for less than 20% of net worth

The question was about equity, not home value.  If you get a zero down mortgage your equity could be zero percent of a multi-million dollar net worth or a $1 net worth.

I'm my case, we bought a house for 20 percent down last year.  The home would sell today for about 30 percent of our net worth, but since our equity in it is less than the purchase price, we only have about 8 percent of our net worth tied up in it.  Would be six percent (20 percent of 30 percent) if we hadn't made any payments over the past year.

Be careful using Zillow.  I track my home value and net worth monthly and in mid 2014 my home value increased significantly for about 6 months then fell again.  If I now look at the historical trend on Zillow, it does not reflect the increase in 2014.

Zillow is constantly backwards adjusting its own former price estimates.  They usually stabilize after about a year, but the newest estimates are always a wild guess based on a small number of recent sales.  In every case I've seen, the newer numbers are too high and will eventually get revised down, which totally makes sense for their business model but is still annoying.

In my case the home is 25 years old and has not been on the market for 15 years, so I am not sure why they have crazy estimates.  Maybe some recent home sales in my area that were way above market....I am guessing.
Title: Re: Home equity as a percentage of net worth?
Post by: bacchi on May 28, 2015, 07:00:10 PM
About 15% and I've taken nearly $100k as cash-out.
Title: Re: Home equity as a percentage of net worth?
Post by: CashFlowDiaries on May 28, 2015, 07:09:17 PM
Mine is 23% using Zillow.  No mortgage debt.

Be careful using Zillow.  I track my home value and net worth monthly and in mid 2014 my home value increased significantly for about 6 months then fell again.  If I now look at the historical trend on Zillow, it does not reflect the increase in 2014.  It is as if it never happened, but the values in my spreadsheet were recorded from the Zillow site the day I entered them.

I hear zillow can be pretty accurate in some cities but for the most part its pretty far off in most cities. I wouldnt use zillow at all where I'm from.  The only way to get an actual estimate of what your home is worth is through actual MLS comparisons of recent houses sold in your neighborhood.
Title: Re: Home equity as a percentage of net worth?
Post by: Spork on May 28, 2015, 07:14:07 PM
Mine is 23% using Zillow.  No mortgage debt.

Be careful using Zillow.  I track my home value and net worth monthly and in mid 2014 my home value increased significantly for about 6 months then fell again.  If I now look at the historical trend on Zillow, it does not reflect the increase in 2014.  It is as if it never happened, but the values in my spreadsheet were recorded from the Zillow site the day I entered them.

I hear zillow can be pretty accurate in some cities but for the most part its pretty far off in most cities. I wouldnt use zillow at all where I'm from.  The only way to get an actual estimate of what your home is worth is through actual MLS comparisons of recent houses sold in your neighborhood.

They don't even notice that I have a house.  I'd say for me they're way off.
Title: Re: Home equity as a percentage of net worth?
Post by: Caoineag on May 28, 2015, 08:25:01 PM
50%, but if I based it off what I paid originally, the equity would only be 10% of my net worth. Rapid appreciation, 15 year mortgage and bought a short sale in a deeply distressed market means its almost rivaling my stocks on the gains. Course, my stocks required far less repairs for those gains so I still like them better as an investment.
Title: Re: Home equity as a percentage of net worth?
Post by: earlyFI on May 28, 2015, 09:04:31 PM
12% of Net worth
No mortgage
I Rent out a portion of my house. The monthly rent covers all my monthly/annual housing expenses (property taxes, repairs, insurance, utilities, Internet, water, sewer/garbage, and HOA fees.. Which include:  cable TV, swimming pool, lawn mowing, snow removal, etc.)
I also have a HELOC @ zero balance which can be used as a safety net or for short term loan at a low interest rate
Title: Home equity as a percentage of net worth?
Post by: CCCA on May 28, 2015, 10:05:11 PM
We don't include home equity as part of our net worth but we own our primary residence and a rental property.

If I were to include the property equity (according to Zillow, which is reasonably accurate in our area) in our net worth, it would amount to 40% of the new net worth. Given the large amount of equity (6 figures) and our high COL in our area, we could FIRE immediately if we moved to a lower COL area.
Title: Re: Home equity as a percentage of net worth?
Post by: Bateaux on May 28, 2015, 10:12:14 PM
I personally think that home value shouldn't be included in net worth for income production calculations unless you make money from it.  We're debt free and real estate accounts for about 15 to 20 percent of our total net worth of about 1.6M
Title: Re: Home equity as a percentage of net worth?
Post by: gooki on May 29, 2015, 03:47:25 AM
80-90%

It is part of my net worth, but it's excluded when calculating a safe withdraw rate.
Title: Re: Home equity as a percentage of net worth?
Post by: Suncoast on May 29, 2015, 04:42:22 AM
9% for me, assuming home value equal to price I purchased it for last year.
Title: Re: Home equity as a percentage of net worth?
Post by: RetiredAt63 on May 29, 2015, 06:13:58 AM
Vaguely roughly 5% - based on net value (rough guess) and net worth (basing pension on what it would cost to buy the equivalent annuity).  But I am retired, so my house should not be a big % of my net worth, or what do I have to live on?

I think it is useful to put net value of a house in net worth, because it is an asset, even if a not very liquid one in anything but a hot market.  If you end up selling it and investing the proceeds, that is income that is available for rent.
Title: Re: Home equity as a percentage of net worth?
Post by: GuitarStv on May 29, 2015, 06:26:58 AM
80-90%

It is part of my net worth, but it's excluded when calculating a safe withdraw rate.

Sweet, someone with more cash in their shack than me!
Title: Re: Home equity as a percentage of net worth?
Post by: Bardo on May 29, 2015, 07:18:07 AM
5.2% (I'm precise with my net worth numbers).  That said, I have a chunk of liquid investments that will be dedicated, along with the equity in my current house, towards paying cash for a new house when I retire in a year or so. 

Title: Re: Home equity as a percentage of net worth?
Post by: spokey doke on May 29, 2015, 07:23:28 AM
Paid off.
Not included in NW.
About 11% of stache.
Title: Re: Home equity as a percentage of net worth?
Post by: happy on May 29, 2015, 07:42:22 AM
80-90%

It is part of my net worth, but it's excluded when calculating a safe withdraw rate.

Sweet, someone with more cash in their shack than me!

Now there's 2 people with more house than I : I'm at 63%
Title: Re: Home equity as a percentage of net worth?
Post by: Thedudeabides on May 29, 2015, 07:46:49 AM

Paid off.
Not included in NW.
About 11% of stache.

Why don't you include it in your NW?
Title: Re: Home equity as a percentage of net worth?
Post by: Cougar on May 29, 2015, 07:57:36 AM

Mine's low, about 8%; but I'm surrounded by houses and townhouses going for 500,000 to several million in an older condo complex. it'll go up when I go fire an actually get a house and not just a place to commute to work and back, but its a good neighborhood so I stay until then. I will not pay to live in more house than I need to go to work and back.
Title: Re: Home equity as a percentage of net worth?
Post by: arebelspy on May 29, 2015, 07:59:12 AM
...seriously?  I'm the only one under water so far, everyone else is positive percentages?  :D
Title: Re: Home equity as a percentage of net worth?
Post by: I'm a red panda on May 29, 2015, 08:25:57 AM
...seriously?  I'm the only one under water so far, everyone else is positive percentages?  :D

My house was bought in the last 2 years, so well past when the market went sour. 

(The house we owned at that time was worth so little that it basically didn't change value.)
Title: Re: Home equity as a percentage of net worth?
Post by: Kris on May 29, 2015, 08:28:04 AM
I don't count it at all, partly because I don't really know how much equity I have.  I assume it's around $10-20,000, though (bought at the height of the market in 2006, not sure how much I could sell for today).  So, that doesn't feel like enough for me to bother including in my NW, especially because I'm not sure of it. 
Title: Re: Home equity as a percentage of net worth?
Post by: Davids on May 29, 2015, 08:28:18 AM
Mine is 20% of my net worth. One should really look at the numbers and not percentage as say for example of home equity makes up say more than half your net worth, that may be fine because perhaps your home had appreciated greatly in value and at the same time home equity as a low or 0% of net worth may not be that great.  It's all about the physical numbers, not necessarily percentages.
Title: Re: Home equity as a percentage of net worth?
Post by: Terrestrial on May 29, 2015, 09:19:17 AM
...seriously?  I'm the only one under water so far, everyone else is positive percentages?  :D

I somewhat feel your pain - we bought our first house at a bad time ('07) and were in that situation for quite a while. 

Fortunately a few years ago we were able to save enough to upgrade while the market was still low and turn our underwater house into a rental to pay the mortgage for a while.  We actually just sold that one a couple months ago - it had recovered some to the point where we at least had positive equity on it at the time of sale (barely, after commissions), but we still lost money on the whole from the purchase price. 

 
Title: Re: Home equity as a percentage of net worth?
Post by: arebelspy on May 29, 2015, 09:24:09 AM
I'm okay with it, it was a stupid purchase.. I'm just very surprised that of dozens of other responses, no one else is underwater.  I'd have figured a few would be.
Title: Re: Home equity as a percentage of net worth?
Post by: thd7t on May 29, 2015, 09:31:14 AM
I'm okay with it, it was a stupid purchase.. I'm just very surprised that of dozens of other responses, no one else is underwater.  I'd have figured a few would be.
Maybe they aren't as secure about it as you are.  Of course, I'm insecure about having a high percent of my NW made up of Home Equity. 
Title: Re: Home equity as a percentage of net worth?
Post by: Caoineag on May 29, 2015, 09:59:38 AM
I'm okay with it, it was a stupid purchase.. I'm just very surprised that of dozens of other responses, no one else is underwater.  I'd have figured a few would be.

My area never had the run up and when the market dropped, it dropped like a rock. Thing is, its screaming hot right now so even people who bought at the height of the market in my area are not underwater. Look up Denver, CO if you want to get an idea of what I am talking about...My neighborhood you can sell over one weekend if you want to...
Title: Re: Home equity as a percentage of net worth?
Post by: Villanelle on May 29, 2015, 10:20:47 AM
Very roughly it is about 30-40%.  We don't live in it anymore, however, and it is now a rental. 

As for not being underwater, we are down about $57,000 from the purchase price, which isn't so bad considering that at one point, we were down about $150,000.  But we put a lot down and have owned it for about 8 years and have a <30 year loan, so we still have a decent amount of equity. 

(And while those numbers and the *very* roughly half a million dollar price tag sound Fancypants, this is a high COLA area where a >2000sqft townhouse costs that much.)
Title: Re: Home equity as a percentage of net worth?
Post by: Kris on May 29, 2015, 10:22:47 AM
I'm okay with it, it was a stupid purchase.. I'm just very surprised that of dozens of other responses, no one else is underwater.  I'd have figured a few would be.

My house hasn't regained all of its value since I bought it in 2006, but I did throw enough money at the mortgage that I'm no longer underwater on the loan.  I bought it for $209,000, and I'd say I could sell it for about $160-170 today.
Title: Re: Home equity as a percentage of net worth?
Post by: Jack on May 29, 2015, 10:27:30 AM
I bought after the crash, so my home value has increased somewhere between 50% and 150% of what I paid. Between that and the fact that my student loan balance is a little bit higher than my investment balance, my home equity is (weirdly) potentially higher than my net worth!
Title: Re: Home equity as a percentage of net worth?
Post by: frugalnacho on May 29, 2015, 10:34:18 AM
About 67%.  We have 2 houses.  They have both appreciated since we purchased them.
Title: Re: Home equity as a percentage of net worth?
Post by: Roots&Wings on May 29, 2015, 11:14:42 AM
0%

Sold for a loss 4 years ago. One of the best decisions I ever made.
Title: Re: Home equity as a percentage of net worth?
Post by: soccerluvof4 on May 29, 2015, 11:51:03 AM
Figuring if I had to sell it quickly-16%.
Title: Re: Home equity as a percentage of net worth?
Post by: I'm a red panda on May 29, 2015, 11:58:47 AM
I bought after the crash, so my home value has increased somewhere between 50% and 150% of what I paid. Between that and the fact that my student loan balance is a little bit higher than my investment balance, my home equity is (weirdly) potentially higher than my net worth!

I bet this is true of a lot (most?) of people who own homes and are in debt.

Let's say you have no assets other than your house (true of people with no savings and no investments.) Let's say you bought a house for $240k and put 40k down. You have $40k in equity, owe $200k on the house, $40k in your student loan, $10k on your credit card.
Your home equity 40k > your net worth -210k.
Title: Re: Home equity as a percentage of net worth?
Post by: CommonCents on May 29, 2015, 12:02:53 PM
I bought after the crash, so my home value has increased somewhere between 50% and 150% of what I paid. Between that and the fact that my student loan balance is a little bit higher than my investment balance, my home equity is (weirdly) potentially higher than my net worth!

I bet this is true of a lot (most?) of people who own homes and are in debt.

Let's say you have no assets other than your house (true of people with no savings and no investments.) Let's say you bought a house for $240k and put 40k down. You have $40k in equity, owe $200k on the house, $40k in your student loan, $10k on your credit card.
Your home equity 40k > your net worth -210k.

Except the house is still an asset - it's just an asset with a liability.

Home equity is 40k
Net worth: Assets - Liabilities = 240K house - 200k house mortgage - 40k student loan - 10k credit card = -10k (not -210k)
Title: Re: Home equity as a percentage of net worth?
Post by: thd7t on May 29, 2015, 12:20:20 PM
I bought after the crash, so my home value has increased somewhere between 50% and 150% of what I paid. Between that and the fact that my student loan balance is a little bit higher than my investment balance, my home equity is (weirdly) potentially higher than my net worth!

I bet this is true of a lot (most?) of people who own homes and are in debt.

Let's say you have no assets other than your house (true of people with no savings and no investments.) Let's say you bought a house for $240k and put 40k down. You have $40k in equity, owe $200k on the house, $40k in your student loan, $10k on your credit card.
Your home equity 40k > your net worth -210k.
That looks like a misunderstanding of net worth.  The mortgage debt is secured by the home, so in this case, NW would be -10k.  That's why, if you include mortgage debt in your NW, you should include home value.  Allowing your home to foreclose would eliminate the debt (and the equity).  Stache and NW aren't the same thing, but in terms of NW, a house is an asset.  It doesn't earn anything, but cash has that failing (although I do understand that it is liquid)
Title: Re: Home equity as a percentage of net worth?
Post by: I'm a red panda on May 29, 2015, 12:35:51 PM
Thanks for the correction.  I would still think with high student loans and possible consumer debt it isn't uncommon for equity to be higher than net worth.


So now, my percentage is off that I posted before, but I really don't care enough to fix it.
Title: Re: Home equity as a percentage of net worth?
Post by: golden1 on May 29, 2015, 12:40:55 PM
My home equity is about 1/2 my net worth.   I bought my house in 1999 before house prices climbed dramatically during the bubble, and I was fortunate that unlike many other places in the country, my house value didn't really tank all that much during the financial crisis.   I guess that is one of the benefits of living in a high COL area.   My house is worth twice what I bought it for 16 years ago. 
Title: Re: Home equity as a percentage of net worth?
Post by: Dicey on May 29, 2015, 01:04:00 PM
...seriously?  I'm the only one under water so far, everyone else is positive percentages?  :D
Ah, ARS, I like you so much, I'll de-lurk and play. We just sold my parent's house in SoCal. They purchased it 7/05 for 285,500. It closes today for a purchase price of 227,500. Note that this was an all-cash, no broker sale, so even though Zillow lists the value at 232K, we're still getting a fair market price net/net. The buyer was a neighbor and a probate attorney, so it was an easy transaction.

My parent's house was a new build and there are only three floorplans in their Del Webb development, so Zillow is probably pretty accurate. Before anyone starts boo-hooing, they sold the house we grew up in on 6/05 for 440k. It re-sold 9/14 for 220k. Ouch!

I think the fact that you are standing on your committment to the purchase price is admirable, ARS. IIRC, you're in the absolute epicenter of the real estate meltdown. Eventually, it will come back and you'll be able to enjoy the peaceful slumber of the righteous. Good on you.

As to the OP's question, we're in the middle of our first house flip, so I have no idea how to calculate this. We live in a paid-for >$1M clown house and own a rental property with about 50% equity (not the flip), I'd guess it's around 50% overall. Hey, CA real estate is expensive! Since the 50% of our NW that's not real estate is still a (to me) big-ass number, I'm not too worried about the actual percentage. I just know it's enough.
Title: Re: Home equity as a percentage of net worth?
Post by: BlueHouse on May 29, 2015, 01:04:45 PM
...seriously?  I'm the only one under water so far, everyone else is positive percentages?  :D

To be fair, ARS, you are willing to be leveraged a bit more than the average Joe.  I'm not technically underwater because of a 20% down payment + above minimum payments for 5 years, but my condo is still valued at about $50k less than what I paid for it.  And despite all the advice to sell it immediately (because I'm renting it out at a loss), I'm still holding hoping for it to bounce back. 
Title: Re: Home equity as a percentage of net worth?
Post by: arebelspy on May 29, 2015, 01:14:17 PM
...seriously?  I'm the only one under water so far, everyone else is positive percentages?  :D
Ah, ARS, I like you so much, I'll de-lurk and play.

Yay! :)  Bummer about the parent's house.

I think the fact that you are standing on your committment to the purchase price is admirable, ARS. IIRC, you're in the absolute epicenter of the real estate meltdown. Eventually, it will come back and you'll be able to enjoy the peaceful slumber of the righteous. Good on you.

I'm definitely paying my debts, which includes a full mortgage on a property not worth that, but it won't come back, we're going to sell before then, so we'll probably come out of pocket ~25k when we sell (rather than do a short sale or walk away or whatever).  Oh well, pretty small in the grand scheme of things.  :)

To be fair, ARS, you are willing to be leveraged a bit more than the average Joe.

Am I?  I'm at 30% LTV currently (aka equivalent to a 70% down payment on my whole portfolio).  I never put down less than 25% on any investment property.

You might be assuming things that aren't true...  :)
Title: Re: Home equity as a percentage of net worth?
Post by: aspiringnomad on May 29, 2015, 01:29:05 PM
about 35% and falling.

Same.
Title: Re: Home equity as a percentage of net worth?
Post by: BlueHouse on May 29, 2015, 02:40:41 PM
To be fair, ARS, you are willing to be leveraged a bit more than the average Joe.

Am I?  I'm at 30% LTV currently (aka equivalent to a 70% down payment on my whole portfolio).  I never put down less than 25% on any investment property.

You might be assuming things that aren't true...  :)
You are correct, I did assume.  My apologies there.  From previous posts on why you don't want to pay down your mortgage early, I've made many assumptions, and clearly I was mistaken.  You do not seem to be as risk tolerant as I had thought. 
Interesting. 
Title: Re: Home equity as a percentage of net worth?
Post by: NotJen on May 29, 2015, 02:53:50 PM
about 35% and falling.

Same.
Another 35%-er.  No mortgage, and I assume value is no more than my purchase price.

This has already dropped 3% since Jan 1!
Title: Re: Home equity as a percentage of net worth?
Post by: arebelspy on May 29, 2015, 03:14:32 PM
You are correct, I did assume.  My apologies there.  From previous posts on why you don't want to pay down your mortgage early, I've made many assumptions, and clearly I was mistaken.  You do not seem to be as risk tolerant as I had thought. 
Interesting.

No worries.  :)

I'm very risk tolerant (aggressive, even, when one is early on in their accumulation phase), but it has to come at the right price and make sense.  There are times it does, and doesn't, and very much depends on the situation.

But yes, paying down one's primary residence at a sub-4% rate that's fixed for 30 years?  I think that's almost always sub-optimal.  :)
Title: Re: Home equity as a percentage of net worth?
Post by: monarda on May 29, 2015, 03:15:46 PM
Including rental properties, either 50% or 15% depending on how to calculate

50% if NW= primary residence equity / [cash+ securities + total equity in all properties- outstanding mortgage balance of all properties]

15% if leave out mortgage balances...  = primary residence equity/ [cash+ securities+ total equity in all properties]
Title: Re: Home equity as a percentage of net worth?
Post by: Rural on May 30, 2015, 05:27:44 AM
Mine is 23% using Zillow.  No mortgage debt.

Be careful using Zillow.  I track my home value and net worth monthly and in mid 2014 my home value increased significantly for about 6 months then fell again.  If I now look at the historical trend on Zillow, it does not reflect the increase in 2014.  It is as if it never happened, but the values in my spreadsheet were recorded from the Zillow site the day I entered them.

I hear zillow can be pretty accurate in some cities but for the most part its pretty far off in most cities. I wouldnt use zillow at all where I'm from.  The only way to get an actual estimate of what your home is worth is through actual MLS comparisons of recent houses sold in your neighborhood.

They don't even notice that I have a house.  I'd say for me they're way off.


Same here, and they're never likely to notice since we don't intend to sell.


We recently dropped below 50%, which is pretty cool. That's my own wild-ass guess (own it outright) and includes the value of the acreage, though.
Title: Re: Home equity as a percentage of net worth?
Post by: Spork on May 30, 2015, 07:26:40 AM
Mine is 23% using Zillow.  No mortgage debt.

Be careful using Zillow.  I track my home value and net worth monthly and in mid 2014 my home value increased significantly for about 6 months then fell again.  If I now look at the historical trend on Zillow, it does not reflect the increase in 2014.  It is as if it never happened, but the values in my spreadsheet were recorded from the Zillow site the day I entered them.

I hear zillow can be pretty accurate in some cities but for the most part its pretty far off in most cities. I wouldnt use zillow at all where I'm from.  The only way to get an actual estimate of what your home is worth is through actual MLS comparisons of recent houses sold in your neighborhood.

They don't even notice that I have a house.  I'd say for me they're way off.


Same here, and they're never likely to notice since we don't intend to sell.


We recently dropped below 50%, which is pretty cool. That's my own wild-ass guess (own it outright) and includes the value of the acreage, though.

My valuation is a WAG too -- based on what we paid for the land and later the house.  Like you: I don't intend to sell or cash out the equity.  I track both "net worth" and "Financial net worth".  (The latter a term I made up that excludes non-financial assets like house/cars/etc.)  I do all my FIRE calculations with the financial NW sum.
Title: Re: Home equity as a percentage of net worth?
Post by: mickeyj on May 30, 2015, 07:43:15 AM
I've included my home even though it's not an investment property.

It's more than 50% of my net worth now because I've just found MMM this year.
Title: Re: Home equity as a percentage of net worth?
Post by: Insanity on May 30, 2015, 07:45:34 AM
The refi is complete.  Of the new appraised value, the equity is roughly 18-20% of our net worth.   
Title: Re: Home equity as a percentage of net worth?
Post by: TaxChick on May 30, 2015, 08:57:32 AM
My current equity in my home after reducing the potential sales price for selling costs is about 23% of my total net worth. Plan to have the house paid off within two years. At that point, it will represent approximately 29% of my total equity.
Title: Re: Home equity as a percentage of net worth?
Post by: Bardo on May 30, 2015, 03:23:51 PM
Mine is 23% using Zillow.  No mortgage debt.

Be careful using Zillow.  I track my home value and net worth monthly and in mid 2014 my home value increased significantly for about 6 months then fell again.  If I now look at the historical trend on Zillow, it does not reflect the increase in 2014.  It is as if it never happened, but the values in my spreadsheet were recorded from the Zillow site the day I entered them.

I hear zillow can be pretty accurate in some cities but for the most part its pretty far off in most cities. I wouldnt use zillow at all where I'm from.  The only way to get an actual estimate of what your home is worth is through actual MLS comparisons of recent houses sold in your neighborhood.

They don't even notice that I have a house.  I'd say for me they're way off.


Same here, and they're never likely to notice since we don't intend to sell.


We recently dropped below 50%, which is pretty cool. That's my own wild-ass guess (own it outright) and includes the value of the acreage, though.

My valuation is a WAG too -- based on what we paid for the land and later the house.  Like you: I don't intend to sell or cash out the equity.  I track both "net worth" and "Financial net worth".  (The latter a term I made up that excludes non-financial assets like house/cars/etc.)  I do all my FIRE calculations with the financial NW sum.

I want to be conservative in my calculations, so I compute home equity based on the amount I paid for the house, reduced by 6% for the eventual selling costs. 
Title: Re: Home equity as a percentage of net worth?
Post by: Exflyboy on May 30, 2015, 03:30:06 PM
20.5%, no mortgage.... At least its 20.5% until the big earthquake happens on the west coast..:)
Title: Re: Home equity as a percentage of net worth?
Post by: ender on May 30, 2015, 03:48:18 PM
This is interesting to me, I was expecting a lot lower numbers. I'm surprised how many of you are well into the double digits.

We have about 5% of our NW now in "house downpayment savings" plans, with the hope do about double that by year-end.

Title: Re: Home equity as a percentage of net worth?
Post by: Spork on May 30, 2015, 04:02:38 PM
This is interesting to me, I was expecting a lot lower numbers. I'm surprised how many of you are well into the double digits.

We have about 5% of our NW now in "house downpayment savings" plans, with the hope do about double that by year-end.

Won't that also put you into double digits?
Title: Re: Home equity as a percentage of net worth?
Post by: monarda on May 30, 2015, 04:27:39 PM
This is interesting to me, I was expecting a lot lower numbers. I'm surprised how many of you are well into the double digits.

We have about 5% of our NW now in "house downpayment savings" plans, with the hope do about double that by year-end.

What Spork said.

Also,  perhaps many of us "double digit" folk have owned our houses quite a while by now.  June 15 will be 20 years in my primary residence. and we've owned our rentals for 13 years each.
Title: Re: Home equity as a percentage of net worth?
Post by: EngineerMum on May 30, 2015, 06:35:35 PM
Some of the percentages are phenomenal to me - the idea that you could own a house for less than 20% of net worth

The question was about equity, not home value.  If you get a zero down mortgage your equity could be zero percent of a multi-million dollar net worth or a $1 net worth.

I'm my case, we bought a house for 20 percent down last year.  The home would sell today for about 30 percent of our net worth, but since our equity in it is less than the purchase price, we only have about 8 percent of our net worth tied up in it.  Would be six percent (20 percent of 30 percent) if we hadn't made any payments over the past year.

I get that, but again - different environment. Since in Aus there is no tax deduction for primary residence, plus our interest rates are still WAY higher than yours - around 6 - 7% for mortgages - there is far more incentive to pay it off. So most people would prioritise paying down the mortgage above investing, hence building up other investments before paying down the mortgage a bit would be unusual.
Title: Re: Home equity as a percentage of net worth?
Post by: arebelspy on May 30, 2015, 06:48:37 PM
This is interesting to me, I was expecting a lot lower numbers. I'm surprised how many of you are well into the double digits.

We have about 5% of our NW now in "house downpayment savings" plans, with the hope do about double that by year-end.

What Spork said.

Also,  perhaps many of us "double digit" folk have owned our houses quite a while by now.  June 15 will be 20 years in my primary residence. and we've owned our rentals for 13 years each.

Sure, and that means they've paid down some of their principal, and have appreciated.  On the other hand, it also means that the rest of your portfolio has had a decade and 1/2 to grow.  :)
Title: Re: Home equity as a percentage of net worth?
Post by: Jack on May 30, 2015, 07:56:08 PM
This is interesting to me, I was expecting a lot lower numbers. I'm surprised how many of you are well into the double digits.

We have about 5% of our NW now in "house downpayment savings" plans, with the hope do about double that by year-end.

What Spork said.

Also,  perhaps many of us "double digit" folk have owned our houses quite a while by now.  June 15 will be 20 years in my primary residence. and we've owned our rentals for 13 years each.

Sure, and that means they've paid down some of their principal, and have appreciated.  On the other hand, it also means that the rest of your portfolio has had a decade and 1/2 to grow.  :)

In my case, it just means I got really lucky buying my house.
Title: Re: Home equity as a percentage of net worth?
Post by: ender on May 30, 2015, 07:57:28 PM
This is interesting to me, I was expecting a lot lower numbers. I'm surprised how many of you are well into the double digits.

We have about 5% of our NW now in "house downpayment savings" plans, with the hope do about double that by year-end.

Won't that also put you into double digits?


... depends on how the market does, I guess.

We're also doing other savings than just for a house, so it's likely our percentage will still be below 10% at the end of the year.

Doubling the actual amount, not the percentage of our net worth :)
Title: Re: Home equity as a percentage of net worth?
Post by: Snow White on May 30, 2015, 08:22:16 PM
13-14%. No mortgage.
Title: Re: Home equity as a percentage of net worth?
Post by: teen persuasion on May 30, 2015, 08:29:47 PM
28%, no mortgage.  I'm deliberately valuing the house low, but not at purchase price - we've been here 20 years.  With a nearly 10 % mortgage, and pre MMM, we prioritized paying down the mortgage early, and now we're making up for lost time on the stache.
Title: Re: Home equity as a percentage of net worth?
Post by: Spork on May 30, 2015, 09:17:55 PM
This is interesting to me, I was expecting a lot lower numbers. I'm surprised how many of you are well into the double digits.

We have about 5% of our NW now in "house downpayment savings" plans, with the hope do about double that by year-end.

Won't that also put you into double digits?


... depends on how the market does, I guess.

We're also doing other savings than just for a house, so it's likely our percentage will still be below 10% at the end of the year.

Doubling the actual amount, not the percentage of our net worth :)

Ah!   Totally misunderstood that.
Title: Re: Home equity as a percentage of net worth?
Post by: needmyfi on May 30, 2015, 09:18:40 PM
about 25%-no mortgage
Title: Re: Home equity as a percentage of net worth?
Post by: CCCA on May 31, 2015, 12:18:59 AM
This is interesting to me, I was expecting a lot lower numbers. I'm surprised how many of you are well into the double digits.

We have about 5% of our NW now in "house downpayment savings" plans, with the hope do about double that by year-end.

What Spork said.

Also,  perhaps many of us "double digit" folk have owned our houses quite a while by now.  June 15 will be 20 years in my primary residence. and we've owned our rentals for 13 years each.

Sure, and that means they've paid down some of their principal, and have appreciated.  On the other hand, it also means that the rest of your portfolio has had a decade and 1/2 to grow.  :)

In my case, it just means I got really lucky buying my house.


We also got very lucky buying our house.  In under 5 years, we've seen appreciation of more than 60%.
Title: Re: Home equity as a percentage of net worth?
Post by: CommonCents on May 31, 2015, 11:09:00 AM
This is interesting to me, I was expecting a lot lower numbers. I'm surprised how many of you are well into the double digits.

We have about 5% of our NW now in "house downpayment savings" plans, with the hope do about double that by year-end.

1. I live in a high cost of living area.  Where do you live?
2. DH recognizes that it's probably better to invest the money than pay it off at 4% interest, but he emotionally hates debt and having someone else (the bank) own his house.  He feels more comfortable owning it outright so we pay down extra.  He also thinks that the market is going to crash soon, so he's not keen about pouring our extra cash into the markets right now.
Title: Re: Home equity as a percentage of net worth?
Post by: sol on May 31, 2015, 01:00:53 PM
We also got very lucky buying our house.  In under 5 years, we've seen appreciation of more than 60%.

So, not nearly as good as your stock investments?
Title: Re: Home equity as a percentage of net worth?
Post by: arebelspy on May 31, 2015, 01:03:51 PM
We also got very lucky buying our house.  In under 5 years, we've seen appreciation of more than 60%.

So, not nearly as good as your stock investments?

Hah, good point.

They were probably significantly more leveraged on the former though.

[Edit: Typo.]

Title: Re: Home equity as a percentage of net worth?
Post by: ender on May 31, 2015, 01:45:33 PM
This is interesting to me, I was expecting a lot lower numbers. I'm surprised how many of you are well into the double digits.

We have about 5% of our NW now in "house downpayment savings" plans, with the hope do about double that by year-end.

1. I live in a high cost of living area.  Where do you live?
2. DH recognizes that it's probably better to invest the money than pay it off at 4% interest, but he emotionally hates debt and having someone else (the bank) own his house.  He feels more comfortable owning it outright so we pay down extra.  He also thinks that the market is going to crash soon, so he's not keen about pouring our extra cash into the markets right now.

Midwest. $200k here buys a very spacious 4BR 1500-2000 sqft house.

Title: Re: Home equity as a percentage of net worth?
Post by: brooklynguy on May 31, 2015, 02:08:02 PM
DH recognizes that it's probably better to invest the money than pay it off at 4% interest, but he emotionally hates debt and having someone else (the bank) own his house.

I never understood why some people feel that they don't "own" their house if it is encumbered by a mortgage.  I can understand why someone would derive psychological benefits from being debt-free (even though I don't personally feel that way), but you do own your property whether or not it is subject to a lender's security interest.  Even if you have no mortgage, if you fail to satisfy any obligations that you legally owe, your creditors can reduce their claims against you to a judgment, obtain a judgment lien and "take away" your property just the same (subject to any applicable debtor protection laws, like homestead protection exemptions).  Maybe it's just a matter of semantics, and when someone says they don't like "not owning their house" they really mean they don't like holding any debt a default in respect of which would have a reasonable likelihood of resulting in the forced disposition of their home?
Title: Re: Home equity as a percentage of net worth?
Post by: CCCA on May 31, 2015, 03:05:52 PM

We also got very lucky buying our house.  In under 5 years, we've seen appreciation of more than 60%.

So, not nearly as good as your stock investments?

Hah, good point.

They were probably significantly more leveraged on the latter though.

Yes. We put down about 25% so if you calculate it based upon our initial down payment we returned over 200% in under 5 years.
Title: Re: Home equity as a percentage of net worth?
Post by: CommonCents on June 01, 2015, 08:20:05 AM
DH recognizes that it's probably better to invest the money than pay it off at 4% interest, but he emotionally hates debt and having someone else (the bank) own his house.

I never understood why some people feel that they don't "own" their house if it is encumbered by a mortgage.  I can understand why someone would derive psychological benefits from being debt-free (even though I don't personally feel that way), but you do own your property whether or not it is subject to a lender's security interest.  Even if you have no mortgage, if you fail to satisfy any obligations that you legally owe, your creditors can reduce their claims against you to a judgment, obtain a judgment lien and "take away" your property just the same (subject to any applicable debtor protection laws, like homestead protection exemptions).  Maybe it's just a matter of semantics, and when someone says they don't like "not owning their house" they really mean they don't like holding any debt a default in respect of which would have a reasonable likelihood of resulting in the forced disposition of their home?

Yes, he means that he does not feel as comfortable having a lien on the house which could result in him being disposed of it, however unlikely it may be.  I just shortened the 10 minute explanation.  Obviously you can get a lien in other ways (e.g. failing to pay taxes), and he's acknowledged that, but he doesn't have another lien, just this one.  Previously he lived 10 years in his condo that was bought with cash, so to live in a house with a mortgage is a change.

He understands it's illogical to pay off the mortgage first in that the stock market is likely to go up more, but apparently seeing the amount of the mortgage check going to interest 1) distresses him and 2) he points out that "past returns are not guarantees of future returns" or in other words, the stock market can go down while the mortgage has a fixed savings of ~3%.
Title: Re: Home equity as a percentage of net worth?
Post by: Jesstache on June 01, 2015, 10:12:53 AM
Ours is 44% total, but that includes two rental houses plus we rent out a portion of our main house that equates to about half of our mortgage payment.  If you count just our main home it's 27%.  We also live in a relatively HCOL area and we have a really nice house... So its total value is about $550k (and climbing like crazy, we paid $370 in 2012) with about $140k being owed on it.  We have quite a bit of other savings (which most here could figure out based on the numbers I provided) so the high value doesn't bother me at all.  We also plan on downsizing to one of our rentals that's about half the size of our current house when our kids are grown.  At that point, we will either sell the house we're living in now or rent it out and use the rental income to live off of in FIRE.  Decisions, decisions :)
Title: Re: Home equity as a percentage of net worth?
Post by: Jack on June 01, 2015, 10:30:16 AM
We also got very lucky buying our house.  In under 5 years, we've seen appreciation of more than 60%.

So, not nearly as good as your stock investments?

Hah, good point.

They were probably significantly more leveraged on the latter though.

That's an understatement!

I was essentially 100% financed. I got an 80% LTV FHA loan, the city gave me a ~20% down-payment grant*, and the FHA required me to bring a minimum of $1500 cash to closing, which I borrowed from my parents and paid back with the $8K Federal first-time buyer tax credit a few months later.

In essence, I made somewhere between $75K-$175K out of thin air.

2009 was a good time to buy a house!

(*It's structured as a 0% APR second mortgage with $0 monthly payment, which gets forgiven as long as the house remains my primary residence for another 4.5 years.)
Title: Re: Home equity as a percentage of net worth?
Post by: nobodyspecial on June 01, 2015, 02:57:56 PM
Quote
the city gave me a ~20% down-payment grant*, ...(*It's structured as a 0% APR second mortgage with $0 monthly payment,

Thank deity the government learned from the housing bubble and isn't doing anything to encourage people to buy houses they can't afford.....

..... of course 6 figure handouts to mustachains is different ;-)
Title: Re: Home equity as a percentage of net worth?
Post by: Cookie78 on June 01, 2015, 03:34:34 PM
34% for my primary house (half of which is rented out).
62% if you count both rental properties.

*Based on very rough estimates of what I could sell them for now.
Title: Re: Home equity as a percentage of net worth?
Post by: Villanelle on June 01, 2015, 03:39:25 PM
I think the higher numbers are probably also from places with high COL.

As I said earlier, we are well into double digits (roughly 1/3), and that's for a 1900sqft townhouse that is surely nothing fancy (no granite!  no stainless! Oh, the humanity!).  In SoCal, that's still a half a million dollar property.  So of course it makes up more of our net worth than someone who owns in a cheap housing market. 

There are places where a nicer home, fully paid off, is only $100,000.  Ours, only 2/5 paid, still accounts for double that.  So of course the average person in Nebraska has less of his net worth tied up in his home than they average person in Manhattan. 
Title: Re: Home equity as a percentage of net worth?
Post by: brooklynguy on June 01, 2015, 04:12:04 PM
I think the higher numbers are probably also from places with high COL.

As I said earlier, we are well into double digits (roughly 1/3), and that's for a 1900sqft townhouse that is surely nothing fancy (no granite!  no stainless! Oh, the humanity!).  In SoCal, that's still a half a million dollar property.  So of course it makes up more of our net worth than someone who owns in a cheap housing market. 

There are places where a nicer home, fully paid off, is only $100,000.  Ours, only 2/5 paid, still accounts for double that.  So of course the average person in Nebraska has less of his net worth tied up in his home than they average person in Manhattan.

I'm personally in the same boat as you, but I disagree with both of the bolded statements.  High COL areas also tend to have more high income opportunities (which, strictly from financial perspective, is the primary reason why it would make sense to live in a HCOL area), so it doesn't necessarily follow that housing will represent a higher percentage of net worth for a homeowner in a HCOL area.

And the average person in Manhattan rents and therefore has zero percent of his/her net worth tied up in his/her home.  You probably meant to say "the average homeowner in Manhattan."  I'm not trying to be pedantic, but just pointing this out because it is consistent with the fact that in HCOL areas the rent/buy calculation often skews in favor of renting.
Title: Re: Home equity as a percentage of net worth?
Post by: Ferrisbueller on June 01, 2015, 04:17:40 PM
Bout 50% of nw

Bought for 500k in 2011, now worth 900k+ ish
Title: Re: Home equity as a percentage of net worth?
Post by: partgypsy on June 01, 2015, 04:25:32 PM
home equity, around 44%. We do not include house equity in retirement plans. Sounds like most of you have a whole lot more in your retirement accounts than I do!
Title: Re: Home equity as a percentage of net worth?
Post by: SMCx3 on June 01, 2015, 05:47:13 PM
14% of NW
Title: Re: Home equity as a percentage of net worth?
Post by: Villanelle on June 02, 2015, 05:34:40 AM
I think the higher numbers are probably also from places with high COL.

As I said earlier, we are well into double digits (roughly 1/3), and that's for a 1900sqft townhouse that is surely nothing fancy (no granite!  no stainless! Oh, the humanity!).  In SoCal, that's still a half a million dollar property.  So of course it makes up more of our net worth than someone who owns in a cheap housing market. 

There are places where a nicer home, fully paid off, is only $100,000.  Ours, only 2/5 paid, still accounts for double that.  So of course the average person in Nebraska has less of his net worth tied up in his home than they average person in Manhattan.


I'm personally in the same boat as you, but I disagree with both of the bolded statements.  High COL areas also tend to have more high income opportunities (which, strictly from financial perspective, is the primary reason why it would make sense to live in a HCOL area), so it doesn't necessarily follow that housing will represent a higher percentage of net worth for a homeowner in a HCOL area.

And the average person in Manhattan rents and therefore has zero percent of his/her net worth tied up in his/her home.  You probably meant to say "the average homeowner in Manhattan."  I'm not trying to be pedantic, but just pointing this out because it is consistent with the fact that in HCOL areas the rent/buy calculation often skews in favor of renting.

I don't think income and housing prices are always directly tied though.  We own (now a rental, but originally our home) in San Diego, which was just rated the least affordable housing city in the country.  (The rest of the top 5 was LA, San Jose, NY and San Francisico.) That isn't based on prices; it is affordability, so it is based on home prices compared to salaries. $440,000 median home price (and frankly, that is likely to be only houses that involve quite a commute), and $60,000 median income.  So the salary is not proportionately increased to match the housing prices.  Which leads back to my point that it makes sense when you live in a places where housing costs are high (and salaries not comparably high), more of your net worth will be in you home. 

And yes, I was referring to homeowners, since that's the topic of the thread.  While you are correct that high real estate prices lead to many rentors, for those who do buy, their home will likely be a relatively large % of net worth, especially in cities like San Diego where you don't have proportionately higher salaries, meaning more (both as a dollar amount and a %) of the salary goes to a home (and likely to other necessities) and less goes into an investment account.
Title: Re: Home equity as a percentage of net worth?
Post by: Jack on June 02, 2015, 07:37:11 AM
Quote
the city gave me a ~20% down-payment grant*, ...(*It's structured as a 0% APR second mortgage with $0 monthly payment,

Thank deity the government learned from the housing bubble and isn't doing anything to encourage people to buy houses they can't afford.....

..... of course 6 figure handouts to mustachains is different ;-)

Well, you still have to be able to qualify for the (primary) mortgage -- you just don't need to show a track-record of saving. Of course, you don't really have to do that for a 3.5%-down FHA loan, either.

On the whole, I think it's a good program (and not just because I benefited from it): it offsets some of the extra cost of living in the city (rather than in the suburbs) and it increases neighborhood stability both by increasing the proportion of owner-occupied properties and by incentivizing people to stay in the same house longer.
Title: Re: Home equity as a percentage of net worth?
Post by: Fuman on June 02, 2015, 05:54:11 PM
I'd say...roughly...50% of net worth.  I purchased the biggest dump in my neighborhood in 1999 and polished that turd into a lovely diamond.  No mortgage since '08.

HCOL, it's now worth 3X what I paid for it.  WOOT - WOOT!

I absolutely count it toward my net worth.  I've been doing contract work and traveling for years and have not lived there full-time since 2009.  I never intended to be a landlord but I rent it to a friend. 

All-in-all, it's worked out QUITE NOICE!
Title: Re: Home equity as a percentage of net worth?
Post by: Squirrel away on June 03, 2015, 01:41:12 AM
27%.
Title: Re: Home equity as a percentage of net worth?
Post by: smithy on June 03, 2015, 06:46:09 AM
Home equity: 29%
Rental equity: 38%
Funds: 33%

I include home equity in NW calculations, but not in any SWR/FI calculations.
Title: Re: Home equity as a percentage of net worth?
Post by: monarda on June 03, 2015, 09:32:22 AM
Home equity: 29%
Rental equity: 38%
Funds: 33%

I include home equity in NW calculations, but not in any SWR/FI calculations.

Ooh, I like this simple way of expressing it.

Mine:
Home equity   15%
Rental equity   63%
Funds, both liquid and IRA   22%
Title: Re: Home equity as a percentage of net worth?
Post by: BlueHouse on June 04, 2015, 01:12:26 PM
Quote
the city gave me a ~20% down-payment grant*, ...(*It's structured as a 0% APR second mortgage with $0 monthly payment,

Thank deity the government learned from the housing bubble and isn't doing anything to encourage people to buy houses they can't afford.....

..... of course 6 figure handouts to mustachains is different ;-)

Well, you still have to be able to qualify for the (primary) mortgage -- you just don't need to show a track-record of saving. Of course, you don't really have to do that for a 3.5%-down FHA loan, either.

On the whole, I think it's a good program (and not just because I benefited from it): it offsets some of the extra cost of living in the city (rather than in the suburbs) and it increases neighborhood stability both by increasing the proportion of owner-occupied properties and by incentivizing people to stay in the same house longer.
I agree with the bolded section.  I live in a community in WDC that includes homes with a similar subsidy, public housing rentals, and $1M townhomes.  The homes are designed to look exactly alike from the outside so no one knows who is who.  It's an experiment and it's not perfect by any means, but I do believe that having different economic classes of people living side-by-side creates more understanding of one another.   And I'm pretty sure that's a good thing. 
Title: Re: Home equity as a percentage of net worth?
Post by: Tortoise Banker on June 04, 2015, 04:59:41 PM
45%.  I live in a HCOL area and my wife wants a house (we're in a condo).  I've been prepaying our mortgage a bit to help save for a higher downpayment in the future as Houses start around 600k.
Title: Re: Home equity as a percentage of net worth?
Post by: Money Badger on June 04, 2015, 08:46:37 PM
Our only home's equity is 33% of total net worth...   We're on track to actually increase that % a tad with some mortgage prepayments...   Or it hopefully shrinks on a net % basis of total net worth as we're max'ing my 401K now.    The game is on!
Title: Re: Home equity as a percentage of net worth?
Post by: Dicey on June 09, 2015, 04:32:37 PM
45%.  I live in a HCOL area and my wife wants a house (we're in a condo).  I've been prepaying our mortgage a bit to help save for a higher downpayment in the future as Houses start around 600k.
I'm confused. How does prepaying your mortgage help you save for a higher down payment? Might you be Canadian?
Title: Re: Home equity as a percentage of net worth?
Post by: CommonCents on June 10, 2015, 10:22:02 AM
45%.  I live in a HCOL area and my wife wants a house (we're in a condo).  I've been prepaying our mortgage a bit to help save for a higher downpayment in the future as Houses start around 600k.
I'm confused. How does prepaying your mortgage help you save for a higher down payment? Might you be Canadian?

My guess is they intend to sell the condo and use the equity in it to finance the house purchase.
Title: Re: Home equity as a percentage of net worth?
Post by: Terrestrial on June 10, 2015, 02:17:41 PM
45%.  I live in a HCOL area and my wife wants a house (we're in a condo).  I've been prepaying our mortgage a bit to help save for a higher downpayment in the future as Houses start around 600k.
I'm confused. How does prepaying your mortgage help you save for a higher down payment? Might you be Canadian?

My guess is they intend to sell the condo and use the equity in it to finance the house purchase.

If one intends to move up in a short/mid-term time frame this makes good sense...you will at least earn the rate of return your mortgage is at on the additional down payment money, prob not great but 4% is better than <1% sitting in a savings acct, if the time frame is too short to put the money into the market.
Title: Re: Home equity as a percentage of net worth?
Post by: Erica/NWEdible on June 10, 2015, 07:30:51 PM
33%. Not calculated as part of SRW.
Title: Re: Home equity as a percentage of net worth?
Post by: Rural on June 10, 2015, 07:37:46 PM
33%. Not calculated as part of SRW.


Yes, but yours is sort of an investment, since it feeds you and employs you (through the blog). Different situation.
Title: Re: Home equity as a percentage of net worth?
Post by: Erica/NWEdible on June 10, 2015, 08:32:29 PM
33%. Not calculated as part of SRW.


Yes, but yours is sort of an investment, since it feeds you and employs you (through the blog). Different situation.
True. There are some offsets. But from a purely financial perspective, we are over-invested in this one particular asset that we happen to live in. But there's the issue - we deliberately DON'T consider home value an "asset" in the traditional sense of something we hold for appreciation and capital generation. If I looked at our home that way, and calculated the opportunity cost of everything we've put into our house and garden vs. piling cash into the market, I might weep. But you know what? You can't eat stock certificates, you can't welcome your friends and family under a well balanced portfolio, you can't grow roots in the S&P 500. Bottom line is, we choose to prioritize and cultivate our home life. My passion for living this way has, shockingly, turned into an income-earning job. But we'd live this way regardless I think. It's just a very satisfying life for us, and it happens to both make and save enough money to more than justify the over-investment in one rather lovely big ol' chunk o' real estate.

Edit to make the words work.
Title: Re: Home equity as a percentage of net worth?
Post by: canadian bacon on June 12, 2015, 11:22:31 AM
15% and the house is paid for.

Why do I feel that some people do not understand how to calculate net worth? 
Title: Re: Home equity as a percentage of net worth?
Post by: Bolshevik Artizan on June 12, 2015, 11:40:05 AM
52.6%.... and trying to get that down to below 45%
Title: Re: Home equity as a percentage of net worth?
Post by: Shinplaster on June 12, 2015, 11:49:38 AM
About 30% - no mortgage.  We live in Ontario, so no tax benefits for mortgage interest.  Only debt we've ever had, and glad to pay it off years ago.   I am undervaluing it by about 20%, since if we stay in it for at least 5 more years, there will be some renovations/repairs required.  We didn't buy it as an investment, just as a place to live, but it's increased in value about 60% over the past 15 years.  Bonus!
Title: Re: Home equity as a percentage of net worth?
Post by: Jack on June 12, 2015, 12:25:45 PM
We live in Ontario, so no tax benefits for mortgage interest.

FYI, most Americans don't get tax benefits for mortgage interest either. A lot of them may think they do because they've heard of a thing called the "mortgage interest deduction," but didn't pay enough attention to their tax preparer to realize that because they're taking the standard deduction they don't qualify for it.

The mortgage interest deduction doesn't actually make sense to use unless you're way above the median both in income and home price.

(Cue a bunch of people here talking about how great the mortgage interest deduction is and how they genuinely do get it, not realizing that their East Coast or West Coast HCOL lifestyle is not representative of the median American.)
Title: Re: Home equity as a percentage of net worth?
Post by: Fastfwd on June 12, 2015, 12:54:44 PM
37% no mortgage
Title: Re: Home equity as a percentage of net worth?
Post by: GuitarStv on June 12, 2015, 01:03:39 PM
80-90%

It is part of my net worth, but it's excluded when calculating a safe withdraw rate.

Sweet, someone with more cash in their shack than me!

Now there's 2 people with more house than I : I'm at 63%

same here - approx 63%. For now. I would rather that it wasn't that way, but that is what it is in a HCOLA.

Hong Couver?
Title: Re: Home equity as a percentage of net worth?
Post by: happy on June 12, 2015, 03:47:33 PM
80-90%

It is part of my net worth, but it's excluded when calculating a safe withdraw rate.

Sweet, someone with more cash in their shack than me!

Now there's 2 people with more house than I : I'm at 63%

same here - approx 63%. For now. I would rather that it wasn't that way, but that is what it is in a HCOLA.

Since my investment stash is growing, it would be nice to think that the proportion would drop with time, but housing prices are still going up, so thats not happening.
Title: Re: Home equity as a percentage of net worth?
Post by: Spork on June 12, 2015, 04:02:07 PM
We live in Ontario, so no tax benefits for mortgage interest.

FYI, most Americans don't get tax benefits for mortgage interest either. A lot of them may think they do because they've heard of a thing called the "mortgage interest deduction," but didn't pay enough attention to their tax preparer to realize that because they're taking the standard deduction they don't qualify for it.

The mortgage interest deduction doesn't actually make sense to use unless you're way above the median both in income and home price.

(Cue a bunch of people here talking about how great the mortgage interest deduction is and how they genuinely do get it, not realizing that their East Coast or West Coast HCOL lifestyle is not representative of the median American.)

FWIW... that's been around a long time... like back when mortgage rates were over 10% (and standard deductions were much lower).   When you add property tax + 10% interest... it was enough to make a difference even on an $80k house back when I was first starting out.

I'm not saying I'm in favor of them... just providing a little history.
Title: Re: Home equity as a percentage of net worth?
Post by: Maya on June 12, 2015, 04:02:58 PM
35-40%. We just sold our rental property so shifting things around. Used to be 75% before.
Title: Re: Home equity as a percentage of net worth?
Post by: Self-employed-swami on June 12, 2015, 04:10:14 PM
Ours is somewhere between 50 and 55%, depending on how you value our house.  We put a very large downpayment on it (64%), to keep our cash-flow needs down, because we were single income when we bought it.  It's worked well for us.
Title: Re: Home equity as a percentage of net worth?
Post by: Fuman on June 12, 2015, 04:29:51 PM
15% and the house is paid for.

Why do I feel that some people do not understand how to calculate net worth?

If I was to sell right now, I'd list the house for around $650K.  I've been told be several folks that at that price, a bidding war (Seattle) would absolutely take place - launching my former shack into the financial stratosphere.

The markets that I'm familiar with (Seattle, Bay Area and Denver/Boulder) have attained ludicrous levels.  I'm seriously thinking of selling.
Title: Re: Home equity as a percentage of net worth?
Post by: slugline on June 12, 2015, 06:11:09 PM
When I bought a house a couple of years ago, it was 22%.

Now it's 30%. It's not because I'm aggressively paying the mortgage. It turns out I had jumped in just as a sellers' market was starting to roar.
Title: Re: Home equity as a percentage of net worth?
Post by: Faraday on June 12, 2015, 06:35:57 PM
31% and remaining steady, since I'm paying off the mortgage at about the same rate as I'm saving/investing. What's interesting is, if you look at the portfolio in something like "Personal Capital", the home mortgage and equity portions provide the appearance of much higher stability and gains/losses than simply equities and investments alone.
Title: Re: Home equity as a percentage of net worth?
Post by: OurTown on June 07, 2018, 11:41:17 AM
I'm going to bump this one b/c someone resurrected the car vs net worth thread, and there is an active conversation going on in this subject in the 1-2 million thread.

Here is where we are:  TNW = $617,000
Home fmv = $255,000
Mortgage balance = {$133,000}
Home Equity = $122,000

That puts us at 19.8%.  I would assume this varies quite a bit by region, and that the Californians will have a higher percentage.
Title: Re: Home equity as a percentage of net worth?
Post by: mak1277 on June 07, 2018, 11:54:11 AM
I'll play.  Our (paid for) home is 10.9% of our total NW.
Title: Re: Home equity as a percentage of net worth?
Post by: hadabeardonce on June 07, 2018, 11:56:38 AM
I would assume this varies quite a bit by region, and that the Californians will have a higher percentage.
Californian... 50%+ of my net worth is home equity. Bought a condo in 2004 for 228,000. SF Bay Area real estate is crazy.

Code: [Select]
$662,000 Net Worth
$483,000 Condo FMV
$146,000 Mortgage Balance
$340,000 Condo Equity

We've only been mustachianimizing our investments since mid 2016.
Title: Re: Home equity as a percentage of net worth?
Post by: frugalnacho on June 07, 2018, 12:02:14 PM
About 67%.  We have 2 houses.  They have both appreciated since we purchased them.

We sold one house, and paid the other mortgage off.  We still hold a mortgage ($46k at 0%with no payments due) that needs to be paid, but nothing is due until we sell the house.

Current home equity $114k, current NW $449k, so 25%.

My NW was only $257k when I made the original post 3 years ago, an increase of $192k.  That's crazy.
Title: Re: Home equity as a percentage of net worth?
Post by: Brother Esau on June 07, 2018, 12:17:27 PM
13%
Title: Re: Home equity as a percentage of net worth?
Post by: TheWifeHalf on June 07, 2018, 12:41:36 PM
8%
I did not include the home value in our net worth
Zillow's info is so antiquated, it's unreliable.  For one, the land we have, they say we have half!

I saw a house for sale near here, and the map was ALL wrong. I called the agent and told him, because I didn't want him to wonder why no one called on that house.
Title: Re: Home equity as a percentage of net worth?
Post by: CoffeeAndDonuts on June 07, 2018, 07:52:56 PM
6.2% in home equity (after transaction costs) of about $1.3m nw.

Couldn't resist a 20% down mortgage fixed at 3.625% for 30yrs on our latest purchase.

The mortgage hurts our swr math but keeping the proceeds from our last home which was at about 60% paid off sure does help our access to post tax liquidity.

Home value as a percentage of assets is about 25%.

A little spendier than I expected but it's a home we're really happy with and enables other mustachian behaviors especially with biking and transit.
Title: Re: Home equity as a percentage of net worth?
Post by: PhilB on June 08, 2018, 03:44:35 AM
Very hard to be exact as our NW includes some pensions kicking in in 11 years time which are hard to value without getting a transfer value quote. Roughly speaking we are 25% home equity, 25% these pensions, 50% DC pensions and other investments (this latter category broke the £1M barrier for the  first time today! :0)
Title: Re: Home equity as a percentage of net worth?
Post by: Villanelle on June 08, 2018, 04:04:39 AM
We no longer live in it, since we moved overseas, but it's about 40%.  That's in crazy SoCal, for a >2000sqft home with no yard and some very dated finishes (though that's not quite how it's described when I list it for rent!).

Sadly, while we aren't sure, retiring in SoCal would/will probably be our first choice, so that equity might not matter much. 

That also doesn't account for DH's eventual pension, which is a huge part of our FIRE plans.
Title: Re: Home equity as a percentage of net worth?
Post by: BlueHouse on June 08, 2018, 06:48:17 AM
About 30% right now.
Title: Re: Home equity as a percentage of net worth?
Post by: BayAreaFrugal on June 08, 2018, 07:57:24 AM
I'm at about 60%. The SF Bay Area is insane, our house is appreciating faster than investment growth and additional savings combined. We do have plans to sell our house at some point and move somewhere cheaper, so I include it in our NW.
Title: Re: Home equity as a percentage of net worth?
Post by: OurTown on June 08, 2018, 08:07:08 AM
I wonder if there is an "optimal" percentage, or maybe a sliding scale based on HCOL vs LCOL?  Obviously you don't want too much of total net worth tied up in your home, so there is a "less is more" rule of thumb.  IIRC this was addressed in the "Millionaire Next Door."  There is also a sort of carrying cost (based on fmv, not equity) insofar as a more expensive home will require a higher payment during the mortgage years, and will still require higher property taxes and insurance after payoff. 
Title: Re: Home equity as a percentage of net worth?
Post by: BTDretire on June 08, 2018, 08:48:06 AM
I don't count home equity as part of my net worth calculation.
 I'm at about 7%. Relatively low value home, high net worth.
Title: Re: Home equity as a percentage of net worth?
Post by: Much Fishing to Do on June 08, 2018, 08:48:35 AM
Obviously you don't want too much of total net worth tied up in your home

I think this is true for good savers, including the majority of folks who visit this site.

But for most of the population the equity being naturally built over time due to paying off principal and the home asset inflating represents most of what someone is "saving" (look at the difference between median net worth vs. median net worth minus primary residence).  Of course, this used to be a better form of forced saving back when the normal pattern was to get a 30 year fixed mortgage and pay it off over time, not pulling out equity or oft home moves, etc.  I had an uncle tell me when I was looking to buy a home he made the 'mistake' of not buying the largest home he could get a mortgage for, and given his net worth was probably pretty equal to his paid off home, and probably would have been no matter what size home he bought (i.e. he would have spent whatever wasn't forced into the mortgage payment), for him this was true.
Title: Re: Home equity as a percentage of net worth?
Post by: dude on June 08, 2018, 08:49:53 AM
If we're talking home equity, not value, it's 18% (not including value of my pension). Our home value has increased 34% since we bought it 10 years ago.
Title: Re: Home equity as a percentage of net worth?
Post by: FIRE@50 on June 08, 2018, 08:54:03 AM
8%
I did not include the home value in our net worth
Zillow's info is so antiquated, it's unreliable.  For one, the land we have, they say we have half!

I saw a house for sale near here, and the map was ALL wrong. I called the agent and told him, because I didn't want him to wonder why no one called on that house.

As the owner, you can update info on Zillow.
Title: Re: Home equity as a percentage of net worth?
Post by: Bird In Hand on June 08, 2018, 09:41:34 AM
About 19% if Zillow is accurate.  We only owe ~$70k and it will be paid off in 2-3 years.  I expect our investments to go up a lot more than that over the next 2-3 years, so that 19% is probably an upper limit.
Title: Re: Home equity as a percentage of net worth?
Post by: Dicey on June 08, 2018, 09:56:13 AM
8%
I did not include the home value in our net worth
Zillow's info is so antiquated, it's unreliable.  For one, the land we have, they say we have half!

I saw a house for sale near here, and the map was ALL wrong. I called the agent and told him, because I didn't want him to wonder why no one called on that house.
Zillow has made it a lot easier to edit your own listing. I've done it on a couple of properties. I have also alerted them to known rental scams, which they adressed promptly. I do not find their listings to be more antiquated than any other site, and their History and Neighborhood functions are invaluable when house hunting. I live in a hot market so their numbers are generally on the low side. I comfortably use their Zestimates, knowing that it is a minimum value in the present market. It's not a vital number for us by any means.

We searched exhaustively for this house, so we use Zestimates to see how this home has appreciated against the also-rans. We also use the History function when house hunting for our next rental or flip project. It's super helpful.
Title: Re: Home equity as a percentage of net worth?
Post by: dogboyslim on June 08, 2018, 10:13:33 AM
I'm at 15%
Title: Re: Home equity as a percentage of net worth?
Post by: PNW Lady on June 08, 2018, 10:13:48 AM
Our home equity is around 30% of our total NW. Until somewhat recently I was thinking we would eventually sell our house in a HCOL area and relocate to a LCOL area as part of our FIRE plan, but the reality is 1) we love our home, 2) we love our neighbors/neighborhood and local community, 3) we love our city and its proximity to some of our favorite spots (even though it has become a bit crowded for my taste), and 4) all of our family lives here.  I am slowly coming to terms with the fact that we will most likely be in our current home for the long haul, which means we will need to save more.

Title: Re: Home equity as a percentage of net worth?
Post by: 2Birds1Stone on June 08, 2018, 10:39:54 AM
0%
Title: Re: Home equity as a percentage of net worth?
Post by: Bracken_Joy on June 08, 2018, 10:52:52 AM
24% if I use the assessed value when we bought a couple years ago. 30% if you use the zillow estimate of the houses value right now. (Accurate or even possibly an underestimate of value, based on comps and the work we've put into the place).

We're still pretty early in this process, both in the big savings working years, and in the mortgage.
Title: Re: Home equity as a percentage of net worth?
Post by: des999 on June 08, 2018, 11:07:35 AM
about 25% based on a conservative value for our house.  I could see us downsizing in 10 years and using some of that money for the stache.
Title: Re: Home equity as a percentage of net worth?
Post by: TheWifeHalf on June 08, 2018, 09:36:40 PM
8%
I did not include the home value in our net worth
Zillow's info is so antiquated, it's unreliable.  For one, the land we have, they say we have half!

I saw a house for sale near here, and the map was ALL wrong. I called the agent and told him, because I didn't want him to wonder why no one called on that house.

As the owner, you can update info on Zillow.
thanks for the response. I probably won't bother, it would screw up about 5 neighbors. On the other side of the house that used to be there, there was ?, I don't know if easement is the right word, that allowed that land to be used for a road, when needed. This was back in the early 1900s. The house that used to be next to us, was bought by the neighbor on its other side, and he had the easement taken away, about 25 years ago. He knew how to do it, he was a lawyer. So since the road would run next to us, we actually have 2 lots, one in front of the other. Zillow only has the front one as this address.

This is not a county that tries to run every little thing, they kind of leave people alone.  We went to the county seat to see who to contact about the tile out front, between the sidewalk and the road. No one? We could do what ever we wanted, but in the end, the problem was in the back yard instead of the front.
Title: Re: Home equity as a percentage of net worth?
Post by: davisgang90 on June 09, 2018, 10:44:18 AM
We've been home owners for a week.  Bought with a VA loan, zero down.  Because it was my second time using my VA loan benefit, I was charged a VA funding fee that I rolled into the loan balance (I'll get it refunded as soon as I get a disability rating from the VA) so I'm technically a little upside down on the loan.

In related news, I retire in 6 days.
Title: Re: Home equity as a percentage of net worth?
Post by: BlueMR2 on June 09, 2018, 10:49:04 AM
9.5% currently.  Still adding to the 'stache, but home values keep rising too.  It'll be interesting to see how it changes.
Title: Re: Home equity as a percentage of net worth?
Post by: Capsu78 on June 09, 2018, 11:56:10 AM
22%
Title: Re: Home equity as a percentage of net worth?
Post by: albireo13 on June 09, 2018, 12:45:23 PM
currently 5.4% for us
Title: Re: Home equity as a percentage of net worth?
Post by: Bateaux on June 09, 2018, 08:17:00 PM
Real estate (currently no mortgage)is currently about 12 percent of NW.  We're buying another home and won't be selling current home for a while.  With the down payment on the new home we'll be about 15 percent. 
Title: Re: Home equity as a percentage of net worth?
Post by: We be free if we try on June 09, 2018, 08:32:16 PM
66%. SF FTW!
Title: Re: Home equity as a percentage of net worth?
Post by: Dicey on June 09, 2018, 08:59:40 PM
66%. SF FTW!
Yeah!
Title: Re: Home equity as a percentage of net worth?
Post by: lhamo on June 09, 2018, 09:29:11 PM
29%, according to Zillow valuation (which dropped precipitously the last few weeks due to some questionable comps).

We paid cash last year in a HCOLA.  Will downsize to something smaller (and probably cheaper) in about 10 years when the kids are launched.  This is not a house you can grow old in (stairs! and too much yard)
Title: Re: Home equity as a percentage of net worth?
Post by: SwordGuy on June 09, 2018, 09:36:49 PM
About 5.5% with 13 years, 1 month to go on a 15 year mortgage.
Title: Re: Home equity as a percentage of net worth?
Post by: MrUpwardlyMobile on June 10, 2018, 08:12:29 AM
Mine is 23% using Zillow.  No mortgage debt.

Be careful using Zillow.  I track my home value and net worth monthly and in mid 2014 my home value increased significantly for about 6 months then fell again.  If I now look at the historical trend on Zillow, it does not reflect the increase in 2014.  It is as if it never happened, but the values in my spreadsheet were recorded from the Zillow site the day I entered them.

Zillow’s Zestimates are notoriously nonsense.  Our apartment currently shows as being a half million more than it’s worth.
Title: Re: Home equity as a percentage of net worth?
Post by: partgypsy on August 07, 2018, 01:04:19 PM
Before the divorce it was 47-52% (depending on appraisal or zillow). After divorce will be is 63-68% depending on what number use. I took money out of retirement fund to pay out ex for house. I have 2 kids and I need stability right now. I feel like it is the right decision. But also feels like I am behind, retirement-wise. Some things are worth more than money however. 
Title: Re: Home equity as a percentage of net worth?
Post by: Fishindude on August 07, 2018, 01:10:38 PM
Our home is part of a 160 acre farm.  If we cut the house, outbuildings and a couple acres away from the farm it would probably represent around 4% - 5% of our net worth.
Title: Re: Home equity as a percentage of net worth?
Post by: onlykelsey on August 07, 2018, 01:16:11 PM
I have a walk-up condo in Manhattan. 

My condo is worth about 630K  (zillow, but very close to the average of the last two units that sold SUBJECT to a large assessment)
I owe about 348K (so have about 282K in equity)
I book a 40K "liability" that I assume I'll have at sale for the transfer and prepping the place.
My overall net worth is about 740K.

So the equity is about 282/740 (~38%) by the calculation people are using here, right?
Title: Re: Home equity as a percentage of net worth?
Post by: Slee_stack on August 07, 2018, 01:22:57 PM
18%


Title: Re: Home equity as a percentage of net worth?
Post by: SugarMountain on August 10, 2018, 09:58:14 AM
About 18% of our net worth. (House is almost paid off.)

But I don't count this towards our stache at all when looking at things like the 4% rule of thumb and firecalc or other simulators. (There are loads of threads around where folks debate whether it should count.  There is no pure answer, I don't think.  My take is that I'm not counting it, but the house is there as a backstop should we run out of money in our late years it could be sold or reverse mortgaged to get another few years worth of money.)
Title: Re: Home equity as a percentage of net worth?
Post by: aceyou on August 10, 2018, 01:45:15 PM
23% of net worth.

Net Worth: $651,000
Home Equity: $150,000

*Disclaimer, I assumed that there would be a 6% commission if I sold my home to come up this this 150k number. 
*Zillow says my home is worth 310k,  I have 139k left on the mortgage...this is my only remaining debt. 
Title: Re: Home equity as a percentage of net worth?
Post by: dacalo on August 10, 2018, 02:15:39 PM
Around 60% (thanks Silicon Valley!)

We don't include in our NW as it is not liquid and doesn't produce income for us. Not planning to sell for a while too.
Title: Re: Home equity as a percentage of net worth?
Post by: mak1277 on August 10, 2018, 02:32:25 PM
fully paid off home is 10.9% of NW
Title: Re: Home equity as a percentage of net worth?
Post by: SwordGuy on August 10, 2018, 08:41:58 PM
About 5.5% with 13 years, 1 month to go on a 15 year mortgage.


11.5% based on value of the house.   5.3% based on equity in the house.   13 years to go on the 15 year mortgage.

Our mortage payment adds about $850 a month in equity.   Our stock/bond portfolio, at average historical rates of return, should add considerably more.

So, even though we are paying our mortgage down on schedule, it should - in average or better stock market years - become a smaller portion of our net worth.   :)



Title: Re: Home equity as a percentage of net worth?
Post by: ender on August 11, 2018, 06:07:52 AM
We're around 10%. A bit higher if you include our "house payoff" account funds, which we kind of have designated to payoff the mortgage once the account equals or is above the mortgage amount.
Title: Re: Home equity as a percentage of net worth?
Post by: monarda on August 11, 2018, 07:21:58 AM
Home equity: 29%
Rental equity: 38%
Funds: 33%

I include home equity in NW calculations, but not in any SWR/FI calculations.

Ooh, I like this simple way of expressing it.

Mine:
Home equity   15%
Rental equity   63%
Funds, both liquid and IRA   22%

Since this thread has been revived, revisiting after a couple of years:

Home equity   14%
Rental equity   57%
Funds, both liquid and IRA  29%

but after remodel is done, this will shift to about

Home equity   22%
Rental equity   51%
Funds, both liquid and IRA  27%

since home equity will jump up about 80-100K (just guessing)

Will adjust these numbers when the project is done and it actually happens.
Title: Re: Home equity as a percentage of net worth?
Post by: Must_ache on August 11, 2018, 08:39:39 AM
Home value = 280.  Mortgage = 102.  Home Equity = 178.  New Worth = 889.  178/889 = 20.0%
Title: Re: Home equity as a percentage of net worth?
Post by: nick663 on August 11, 2018, 03:40:44 PM
~25% today.  Will shrink in the immediate future as we invest more but it will be 25% again if we pay it off after reaching our FI number.

Be careful using Zillow.  I track my home value and net worth monthly and in mid 2014 my home value increased significantly for about 6 months then fell again.  If I now look at the historical trend on Zillow, it does not reflect the increase in 2014.  It is as if it never happened, but the values in my spreadsheet were recorded from the Zillow site the day I entered them.
Redfin does the same.  Annoys me enough that I've contacted them.  Their response was something about updating the graph to reflect the most up to date information.
Title: Re: Home equity as a percentage of net worth?
Post by: Rife on August 12, 2018, 10:46:50 AM
Real estate has been crazy in the Seattle area. We used a zero down VA loan six years ago but our house doubled in value. Currently around 40% of total net worth.
Title: Re: Home equity as a percentage of net worth?
Post by: sol on August 12, 2018, 11:06:38 AM
About 8 percent.

Revisiting this thread three and a half years later, our home equity has risen to 11%.

In terms of absolute dollars, the equity in our house has roughly tripled since 2015, due to rapidly appreciating home prices and a 15 year amortization schedule.  But our net worth has approximately doubled in that time, so the percent of equity as a proportion of net worth isn't up by very much.
Title: Re: Home equity as a percentage of net worth?
Post by: LoanShark on August 13, 2018, 02:19:56 PM
45%, no mortgage...so that % declines by the day!
Title: Re: Home equity as a percentage of net worth?
Post by: ohio4life on August 14, 2018, 03:08:28 PM
Now:
19% with pension's cash value included
26% with pension's cash value not included

Earlier this year:
29% with pension's cash value included
40% with pension's cash value not included

I did a cash out refinance in the spring with the intent of putting most of that back into the house in repairs and upgrades. I've been slow to get off the ball on that. Have approximately 13% of my net worth in cash for the last 5 months.

Do I need a face punch?
Title: Re: Home equity as a percentage of net worth?
Post by: palerider1858 on August 14, 2018, 03:42:06 PM
Home equity is 44% of our net worth. Thanks to the Seattle house market our home's value has almost tripled since we purchased it in 2011.
Title: Re: Home equity as a percentage of net worth?
Post by: Maya on November 10, 2018, 11:03:13 AM
35-40%. We just sold our rental property so shifting things around. Used to be 75% before.

And now 3 years later, following cross country move it's 30% or so.