Just bought a house for less than 10% of my net worth

[seattleite]

I really feel like I need to share this with people who will understand. I just bought a house. Cash. For less than 10% of my net worth. It feels weird. I'm not bragging or anything I'm just a little weirded out by it. Our offer was accepted yesterday and this morning I woke up realizing how little this impacts our finances.

Most Americans have most of their net worth tied up in their house. I had considered spending up to 25% when we first started looking but we lucked out with: 1. Increases in net worth and 2. Choosing a lower COL location.

Anyways. That is all. Weird.

[Linea_Norway]

Well done to find such a cheap-for-you house that you want to live in.
We are still living in 2/3 of our net worth and that does not fell good. Planning to sell and switch to 1/3 of NW, or cheaper if that is a good option. In LCOL areas you often see surprisingly nice houses for a really low price, what I think is below the actual building costs.

[Much Fishing to Do]

Wonderful.  When we bought our house at 33 it was definitely more than 10% of our net worth, but now at 47 its worth about 6% of our TNW.  Once I was approaching FI and so started considering RE, the first thing we did was go look at some of the expensive homes in the area (in a medium COL area) to see if the upgrade would be worth working longer.  We frankly didn't see how it would improve our lives much, our favorite part of our current place is we back to a state forest (which I don't have to pay taxes on or maintain ;-) .... and we have great neighbors, which is the luck of the draw.  So we spent a much much much lower amount to do a couple of "financially unwise"''' remodels to make our home exactly how we wanted it (which you don't feel bad about when you plan to never move and you know its just not that much of your TNW).

[Rdy2Fire]

Congrats.. I think about selling my house in a HCOL area all the time. It's free and clear with some rental income that pays the ridiculous taxes but still consider it all the time when i see 'inexpensive' houses in LCOL areas (or lower)..

Just curious, is it in KY? I've looked in Kentucky as I love Louisville.

[chasesfish]

That's so cool!

Similar experience when looking at houses, realized at less than 20% of our net worth and paying cash, its just a financial decision.

Our market feels overpriced here so we've gone into a few open houses just to get an idea of floorplan, construction quality, ect.  Being vague on the realtor's questions has been interesting.   When they push and I tell them I'd be a buyer at X price (and 70% of what its listing), the last one thought it was about our ability to afford.  Reminder of what an FI bubble I'm in

[soccerluvof4]

Congratulations. We actually went the other way from about 11% recently to 24% but got alot more of what we wanted in what we hope to be our forever home in the same area/school district and long term should do better holding or increasing in value.

[SwordGuy]

Congrats!    Buying an inexpensive home to live in is a great way to make it easier to build wealth.   

You've made a very good move!

We own 8 homes we bought for less than 10% (each) of our net worth at the time of purchase.    4 of them are providing income.   2 are flips and one will go to charity.  The other one we live in.    A low cost of living area and the willingness to buy a house that needs a fair bit of work helped that along quite nicely!   So did learning how to find and purchase properties at a discount.

We're about to splurge on a new home for ourselves -- at 12.4% of our net worth.  It's mighty fine, too!

[reeshau]

Great achievement!  I hope to be within the range of 10-15%, paid in cash, as we look to move to Houston in the next year or so.  The area is new to us (although my wife grew up there--many moons ago, in a dynamic city) so we will rent first to get to know the lay of the land.

[HawkeyeNFO]

Well, some places, like Kentucky, that is quite possible.  Unfortunately for me the median house in my ZIP code is around $1M.

[GrumpyPenguin]

Well, some places, like Kentucky, that is quite possible.  Unfortunately for me the median house in my ZIP code is around $1M.

Same. And Condos or townhomes that may appear cheaper have very high HOAs that counter their lower sticker prices. It's a bit discouraging.  I wonder how people who are a lost less fortunate than me are able to live around here? I guess they aren't, must be commuting long distances.

[AdrianC]

I really feel like I need to share this with people who will understand. I just bought a house. Cash. For less than 10% of my net worth.

I understand. We live just over the river. We moved here from So. CA 12 years ago and did similar to you. No regerts.

Congrats!

[seattleite]

Well, some places, like Kentucky, that is quite possible.  Unfortunately for me the median house in my ZIP code is around $1M.

Exactly the reason I escaped crazylandia. The house I was renting in California sold for $3.5m after we moved out. Our choice was work for another 10-20 years or move to a LCOL place. We chose the latter.

[Shane]

Congratulations @seattleite ! We recently made a similar move from a HCOL area, where our home represented 66% of our NW, to a great LCOL town, where we were able to easily pay cash (<15% of our NW) for a bigger home in a much more convenient, walkable, bikable neighborhood. It feels great to no longer have all that money tied up in one single piece of real estate.

[cloud72]

Smart choice.
We all should minimizing car and housing expense in relation to total net worth. Most people have most of their net worth tied to the house. The house is their saving account. A house we live in is NOT an investment. It's a shelter, an expense.

When I bought my first house, it was 300% of my net worth. Now it's only only 60% after 10 years of investing. 

We must control the urge to upgrade to bigger house when our net worth increases.  I only feel comfortable when  liquid invested capital is at least x2 times of house value. That equates to house value to net worth ratio of: 30%. 

and for car: aim for less than 5% of net worth. My current car worth 4.3% of net worth.