How many would be FIRED if they just had a smaller house

[rob in cal]

   This idea probably applies mostly to people in very expensive real estate areas.  Say someone is about 250 or 300k away from being FIRED, and has a house much bigger than they need (kids moved away, turns out they never needed two guest bedrooms, etc.).  In this scenario if they sold their house and got a much smaller one in the same area they'd be FIRED or be closing in on it much sooner. Also in this scenario they wouldn't have to leave the area. I believe that issue is what stops a lot of people from being FIRED right now, not wanting to leave their HCOL area where they have friends and family, possibly a whole lifetime of connections and relationships.  Anyone in this situation of wanting to stay in their area but possibly able to move to a smaller house? In our case if we moved to a smaller house it would probably be only a 75k gain or thereabouts, its the low to mid 6 figure gains that are intriguing.

[FireHiker]

This will definitely be us in a few years. We have $523k of equity in our $1.1M house (we paid $772k for this house in 2012, with 20% down). Although our eventual plan is to leave the area entirely, we don't plan to leave until our youngest finishes high school in 13 years. We should hit FIRE (aside from our mortgage, 3.25% on a 30 year fixed so we never pay extra on it) in 7-10 years. One of our scenarios is to move to a much smaller place in the same area when the youngest goes to middle school (fall 2023), and potentially retire in place until she graduates if we can get a 3 bedroom condo/townhome/small house that we can buy outright after selling our existing behemoth of a house. Of course, since we both have 6 figure salaries, we'll see if we're really willing to leave that kind of money on the table if we still have to live here for her to finish school, but who knows. We definitely know we cannot retire in this house though. The property taxes alone are obscene, even if we didn't have a mortgage.

[Huffduf41]

Wife and I owe $375k on a property worth $900k.  Could retire tomorrow if we sold but both love the home and area.  On track to FIRE early 40s so both agree the juice is worth the squeeze.

[sokoloff]

Might apply to us as well. We're in a $1.8MM house (bought for $1.2MM in '07) and are probably "only" $1MM away from FI. With kids 6 and 8, a house, yard, and location that we adore, and the fact that I mostly enjoy my job, I plan to work until the kids are entering college. By that time, we'll be well more than FI, even after spotting "the house" a million buck head start.

Loving my job 3 days out of 5 and being OK with it the other 2 is a huge part of this calculus, of course.

[Monkey Uncle]

We probably would be, and we're not even in a HCOL area and don't owe a lot on the house.  Eliminating the last 10 years of mortgage payments would still make a huge difference.  But we can't find a cheaper place that we're willing to move to.  Also, if the health care uncertainty plays out in the worst possible way, we might still not be FIRED due to the potential for our annual spend to increase by a huge amount.

[TartanTallulah]

I would be comfortably FIRED by now if I'd made decisions that had included settling for living in a smaller house some 15 years ago instead of blowing a lot of savings on an extension that came nowhere near recouping its value when I sold. Cautionary tale there, young 'uns! But I'm now downsized to a point at which any gains from selling up and buying a smaller house would be marginal, mortgage-free, and would only consider moving if it became feasible to afford to live in a nearby town where houses are more expensive but which is better for amenities.

[Michread]

Not exactly a smaller home but without the pool area ( 30k, 1997), added sun room and a few upgrades (60k, 2007); new pool liner (5k, 2016).

All the above monies were from inheritance except the new liner.

I wouldn't change any of it.  I haven't really worked for money in 20+ yrs and we'll both be FIRE in 2018 at age 55.

[boarder42]

we upgraded our house and added 2 years to our FIRE timeline.  its been worth it so far... like waking up on vacation every day being lake front now.

[Bird In Hand]

Interesting post. I'm not sure that our house/mortgage value meets the criteria that the OP outlined.  But had we made some different decisions when we moved to our town, it might have made a large impact in our ability to be FI earlier.

We moved from a HCOL area to a slightly lower COL area right at the beginning of the real estate bubble popping in 2007.   Unfortunately we bought our new house at the inflated price, but our previous house did not sell for a year, and the price continued to plummet until it finally sold for almost $100,000 less than what we might have received if we had accepted the first offer.

 We still cleared $225,000 tax-free, so it's hard to complain too much. But the market value of our current house has yet to reach the amount we paid almost a decade ago.  In hindsight, we should have unloaded our last house much quicker rather than holding out for a bigger offer. And we should have recognized that the housing market was starting to implode, and either made a much lower offer on our house, or rented for a while until we found a great deal.

 If we knew then what we know now (and had we bought a more Mustachian house), we would easily have had at least $350,000 more a decade ago. You can do the math, but it would've made a big difference with respect to FI.

[Morning Glory]

Venting here: I could have downshifted to 20 hours/week by now, or had a much higher savings rate,  if I had stayed in town

To backtrack: house #1 cost $45k in 2002, very LCOL area with poor job prospects, but the payment was cheaper than living in a dorm

2008 (right before the crash): moved to higher COL area for work, sold house #1 for $62k and bought house #2 (very similar to house #1, about 800 square feet, 2 bed, 1 bath, galley kitchen) for $117k. This was walking distance from work, on bike trails, and had very low utility costs.

2013: got sick of the galley kitchen and wanted to live in a nicer place. Husband wanted to fulfill his dream of living in the country. I had not discovered MMM yet but had amassed about $75k in a savings account due to natural frugality. I had no knowledge of investing, was putting just enough in my 403b to get the match,  and just assumed that everyone works until they are 65, so I used the money on a down payment for my big spendypants house.

So house #3 cost $340k in 2013. it is a very nice house with 2500 square feet, 3 beds, 2 baths, large kitchen with an island, a giant barn, and 18 acres of land. The mortgage is at 3.75% and we still owe about $228k. Payments are $1532/ month with tax and insurance included. The mortgage is not the problem.

Problem 1: We did not sell house #2 before buying house #3. We had decided to redo the bathroom after moving out but before putting it on the market (because there was only one bathroom). Contractor flaked out and I had to find another one, which pushed the timetable back and we lost out on the summer real estate season. Winter came and I looked at renting the house, but the city made ridiculous demands to get the house up to their rental codes, so I took the first lowball offer I got (about 90k after closing costs, realtor fees, etc). Lesson learned.

Problem 2: Vampires. My big spendypants house has them everywhere. Electric bill is 3x what it was in town, and that is after doing all the easy fixes like LED bulbs and hanging clothes outside.  The per kWh charge is higher because the company has more lines to maintain., but I still think the house is using power even when nothing is turned on. We have LP gas for heat, which is more expensive than the natural gas in town. We got a home energy audit a couple years ago and the guy told us to add more insulation to the attic, so we are using a bit less propane but the electricity is the same. We have a high water table so the sump pump runs almost constantly. We paid a contractor to put in a French drain and the basement isn't any dryer than before. The creek in back has shifted in the past 2 years and part of my property is now under water.

Problem 3: Time. We didn't notice this until we had a kid. It takes 3 hours to mow the lawn, plus there are plenty of repairs and DIY projects to be done around here, and a bigger house takes longer to clean. Problem is only one of us can work on things at a time because someone has to watch the kid.

Problem 4: My husband and his crap. He has used the country living and extra space as an excuse to buy all sorts of crap. Some was necessary, most was not. Also when he buys a new thing he doesn't get rid of the old one. Much easier to have less crap in a smaller space.

Problem 5: no sidewalks. Again, I didn't notice this until I had a kid. We live on a busy county highway with gravel shoulders.  I can bike to work by riding on the yellow line, but would not feel safe pulling a bike trailer. Also I have to drive about 2 miles to a nearby park to take my kid for a walk in his stroller. 2 miles is not much, but it is also not mustachian.

So there, I am done complaining. I could sell the house and downsize but hubby doesn't want to live in town. I could get a smaller, cheaper house in the country but the other issues would be the same, and it would probably be further from work. Also the county will be doing road work all summer so it wouldn't be a good time to sell, plus there are lots of little repairs, painting, etc.  that we don't have time to do. And there is another baby on the way so the next couple of years will be a crappy time to move. Due to my side gig I am managing a 50% savings rate for now in spite of the house, but I would like to work less and have more time with the kiddos.

[Dora the Homebody]

If we had stayed in our cute little house in town (which we purchased for $71,000) we would be well on our way to FIRE.

But we sold it and bought our farm, and I wouldn't change that for anything!  I hope to live here until I die.  I am truly living my dream out here so I'm absolutely willing to pay for it.

Renting is not for me.  We rented for a few years and the apartment was for sale, which meant we had people coming to look at it (so we had to not be there and everything had to be super clean) which was stressful.  New owners of the building could potentially evict us to move in themselves, which added to the stress. Plus neighbours upstairs.  Plus no garden.   Bleh.

[JayhawkRacer]

Renting is not for me.  We rented for a few years and the apartment was for sale, which meant we had people coming to look at it (so we had to not be there and everything had to be super clean) which was stressful.  New owners of the building could potentially evict us to move in themselves, which added to the stress. Plus neighbours upstairs.  Plus no garden.   Bleh.

That sounds like the worst apartment rental ever. I only rent (location hopping) and it's always been amazing. Hopefully you had a good deal.

[honeybbq]

This will definitely be us in a few years. We have $523k of equity in our $1.1M house (we paid $772k for this house in 2012, with 20% down). Although our eventual plan is to leave the area entirely, we don't plan to leave until our youngest finishes high school in 13 years. We should hit FIRE (aside from our mortgage, 3.25% on a 30 year fixed so we never pay extra on it) in 7-10 years. One of our scenarios is to move to a much smaller place in the same area when the youngest goes to middle school (fall 2023), and potentially retire in place until she graduates if we can get a 3 bedroom condo/townhome/small house that we can buy outright after selling our existing behemoth of a house. Of course, since we both have 6 figure salaries, we'll see if we're really willing to leave that kind of money on the table if we still have to live here for her to finish school, but who knows. We definitely know we cannot retire in this house though. The property taxes alone are obscene, even if we didn't have a mortgage.

Our situation is similar. We have about 50% equity in a 1.5MM$ house. Property taxes are 12k+ a year. So in ~10 years when we retire, what will they be? Way too much...

I definitely want to downsize. And truly the only reason we live so close to downtown is for my work. Once I hang up my boots, there's no reason to stay so close. Move a bit farther away and downsize, and laugh all the way to the bank. That's my plan.

I'm sure we could FIRE now and move to remote locations in WA or OR and be just fine paying cash for a $150-250k house. But I'd rather raise my daughter in an urban environment and continue working for now.... Someday though.

[Chris22]

Doesn't apply here.  Location is what makes our house (moderately) expensive, not size.  And I've lived in a worse location and it is a huge detriment to quality of life; living close to work, shops, entertainment, etc etc is a huge benefit.  Our other house was a lot nicer, and I have no desire to move back into it (and I still own it so I could if I wanted to).

[EnjoyIt]

Completely our case.  If we had a smaller lower priced home we would have spent less money on the house.  We would have spent less money on the remodel, we would be spending less money on property tax, maintenance and utilities.  All that cash would have been invested and we would have more than enough for FI today. Sometimes I feel we are making a huge mistake, other times I'm okay with it. I do like living in this house and living in this neighborhood.  If I hated my job, we would sell immediately and retire.  But my job is fun and I plan to semi-retire working 8 days a month at the end of 2018. So I can hold off for another year and a half.

[MMMarbleheader]

I have done the math many different ways and I am not sure what is better. I live in a house that's $490k with a $375 mortgage. But if I moved to a lcol area I would take a pay cut that would delay fire more than my current mortgage. Or I could keep my job and move further outside the metro but then car commute eats up that savings.

My plan is to save enough to fire with 4% rule based on all non mortgage spending but including taxes and insurance. Then either move into a multi family, work another year or two to save the mortgage balance, or if my wife still likes her job use that to pay the mortgage.

[wildbeast]

Even small homes are very expensive where we live so downsizing is pretty limited.

We have about $700k equity in our house and although most people would think it's small, we find it too big at 1450 sq ft.  However, the extra space might be nice in old age to have live in care providers.  So keeping it long term might be good. 

Another option I've been thinking of is a condo in a 55+ community nearby.  Really nice place and we could get something nice at about $450k.  Lots of amenities - pools, fantastic hiking, golf course, and still in the area we love.  I'd feel like I was on vacation every day and the place is super quiet and safe which would be nice as we get older but stay in a large city.  No building maintenance to take care of.  Lots of pluses.  However, DH is not a big fan as he prefers having his own house.  We'll see if that changes as he gets older.

I used to think it would be terrible to live in a 55+ community - so boring and stodgy!  And now that I'm getting closer to that age, I'm like... hmm... so peaceful and relaxing!  :)  It would be a really nice balance of urban vitality and peaceful seclusion.  And yes, it would give us some extra cash to play with in retirement.

[BlueHouse]

me.  I could move back to my condo, which is about 35 minutes away and rent my current place out for $4500-$5000/month.  That would decrease my costs AND bring in passive income.  Enough to stop working. 

But I really like living here.  Yes, part of why I moved here was to be closer to a high-pay job, but I also gained a lot of very dear friends here.  And we're the kind of friends that just drop in on each other, look out for each other, go out on weekends, grab a bite to eat, watch a show together, etc.  I'd miss that if it dwindled down to pre-arranged meetups only.   

[redbird]

I always lived in HCOL areas while working. There's a reason I live in LCOL post-FIRE - housing-related costs are just that much cheaper.

Husband always kinda wanted to go to Longmont CO to retire because of the things MMM says about the community. But when it came close to time to FIRE for us, we did research and real estate was simply more than we wanted to pay for there.

[GuitarStv]

Our house is a bit larger than we need to comfortably live in.  We could give up a bathroom and about 800 sqft of living space without even noticing it.  That said, you can't find a much smaller home in the neighbourhood that we live.  Size isn't really the issue though.

We could easily sell our home, pocket a few hundred grand, and move to a bigger house in one of the many less expensive areas in our province.

[marty998]

Downsizing an expensive house is a problem if you (like me) already live in a small one.

Not keen to move cities yet - won't find a job very easily like the one I have.

[GillyMack]

Yes, it's definitely a factor. Our house is too large, especially now that the kids are hypothetically grown. It's paid off so the mortgage isn't the problem.  It's that with a big house, every maintenance project costs more.  More materials. Higher estimates for any skilled labor.  Insurance and taxes are more. And like someone upthread said, it's the TIME. More time to clean or do routine maintenance.  We've done the calcs and given ourselves a deadline to get it ready for sale. But it's a hundred year old beauty with lovely woodwork. It's been a labor of love to restore it. And I'll be very sad to go. But it will be very freeing and much better for FI to do so.

[SwordGuy]

We had a paid-off house and were very close to FIRE.   We move to a better house for us, but it still has a mortgage.  We also bought a house to restore and flip that will take a fair bit of change to fix up.   So we've delayed our FIRE a year to use our salaries to cover the expensive repairs on the flip.

Instead of May 2017 we're aiming for May 2018.

[Alim Nassor]

Man, all this talk about million dollar homes and I thought I was doing good to downsize from 200k to 70k..  But it made a big difference to us, and out FIRE requirements are fairly low.

[Greystache]

We have a $600K house that is paid off. We live in a SoCal suburb. With the kids gone, we no longer need 2000 sq. ft. and four bedrooms.  So why haven't we downsized? 
1. Our property taxes are only $3800 a year. Yes we could lower that if we downsized and moved to a less expensive area, but the most we could save is maybe a grand or two per year. 
2. Our utilities and maintenance cost are very low.  I do all of the maintenance on the house and enjoy doing it.  That may change when I get older.  Due to the mild climate we spend very little on heating and cooling. 
3. We don't need the cash right now. Yes, if we cashed out we could have FIRed earlier, but we view our home equity as part of our "safety margin". It is sort of our reserve fund in case everything goes wrong.

[Much Fishing to Do]

We bought our house 15 years ago in a medium cost of living area, paid it off after about 7 years, love the area and neighborhood so did a $100k remodel to make it perfect for us.  Its probably worth around $300k today, and anything we'd downsize to would probably be $200k here and maybe $150k in a LCOL area.  Net worth is $2M, so the house already isn't as large a piece of our worth and so not a relatively huge difference if we did downsize.

[Monkey Uncle]

3. We don't need the cash right now. Yes, if we cashed out we could have FIRed earlier, but we view our home equity as part of our "safety margin". It is sort of our reserve fund in case everything goes wrong.

Yeah, after a couple of years of looking in vain for a decent downsizing option, I'm starting to come around to the point of view that the equity in our too-large house may serve as a substitute for long-term care insurance.

[Zikoris]

My home is pretty close to the minimum square footage allowed in my city to still be considered habitable, so not so much. I think the minimum is 320 square feet and I'm at 400.

[BuildingFrugalHabits]

...Net worth is $2M, so the house already isn't as large a piece of our worth and so not a relatively huge difference if we did downsize.

Shouldn't your answer be: "N/A. I'm FIRED already"  ;-)
Seems like 2M in a medium COL would be the golden ticket!

[BuildingFrugalHabits]

If we downsized to an condo with reasonable HOA and the ACA remains intacted, I believe we would be FIRED.  Our monthly budget would drop by about $1,500 if we purchased a condo with cash with equity from the home sale.  Waiting to see what happens with healthcare though. 

[SwordGuy]

Man, all this talk about million dollar homes and I thought I was doing good to downsize from 200k to 70k..  But it made a big difference to us, and out FIRE requirements are fairly low.

For sure!

We bought our old house in 2001 for $120,000 ($114,000 mortgage).  Paid it off in about 10 years.

Our new house, which we bought 18 months ago, is rated in the low $300,000 range.   But, in our defense, we waited for several years until it sold for $227,400.   We identified about half a dozen houses several years earlier that would be perfect for our FIRE lifestyle (and aging in place) and this one is the one that didn't sell at too high a price.  It also came with a mother-in-law suite that we can use to teach craft classes in. :)  (And without having to clean the whole house, either!)

We were planning on selling the old house and using that to pay off the mortgage.  But since then, we've learned the financial value of a 2.75% interest rate and investing the money instead.

[Dora the Homebody]

Renting is not for me.  We rented for a few years and the apartment was for sale, which meant we had people coming to look at it (so we had to not be there and everything had to be super clean) which was stressful.  New owners of the building could potentially evict us to move in themselves, which added to the stress. Plus neighbours upstairs.  Plus no garden.   Bleh.

That sounds like the worst apartment rental ever. I only rent (location hopping) and it's always been amazing. Hopefully you had a good deal.

We were paying market rent, but the landlords just decided to put the building up for sale.  The feeling that the rug could be ripped out from under us at virtually any time was quite unnerving.   I need the illusion of control that owning my own property provides :)

[lemonde]

Not us. 100k house paid off in a few years. We're staying put unless we move to a farm.

[nara]

We have $270k equity in our $390k house. I do think about all the scenarios we could have potentially chosen that would allow us to FIRE earlier like buying a multi family and living in one unit. However, we are not willing to just settle when it comes to where we live. And we decided that after years of nightmare rental situations (neighbor who fired guns right next door within city limits when he got drunk, complaints about our barking dogs which required us to take them to expensive doggy daycare daily so we wouldn't be evicted, 3' floods in our basement, landlords who charged us excessively and and unnecessarily  for "damages" like replacing entire wood floors, maintenance people intruding on us constantly for all kinds of inspections, etc.) We decided that we just don't want to live around anyone ever again! One bad neighbor can actually ruin your life--I hear it all the time. We are very happy living on our secluded 5 acres. It is worth working 10 more years if we have to just so we don't have to live on top of people!

[Tuskalusa]

Same here. We have about 80% equity in a $1.6m house. (Bought awhile ago...our house out-earns us these days.) We are in a high COL area. We could potentially FIRE if we moved out of the area, but it would have to be far. Houses half the size of ours are going for $1m. We love the area, the community, and the schools. Once our 10-year-old heads off to college, we will head to a smaller place in a different location and FIRE away!

[FrugalSaver]

me.  I could move back to my condo, which is about 35 minutes away and rent my current place out for $4500-$5000/month.  That would decrease my costs AND bring in passive income.  Enough to stop working. 

But I really like living here.  Yes, part of why I moved here was to be closer to a high-pay job, but I also gained a lot of very dear friends here.  And we're the kind of friends that just drop in on each other, look out for each other, go out on weekends, grab a bite to eat, watch a show together, etc.  I'd miss that if it dwindled down to pre-arranged meetups only.

What situations would compel someone to rent a place for $5,000 / month?

[Fastfwd]

Not FIRE yet but I am somewhat FI if I sell the house. I would still have kids to raise so frugality can only take me so far but it would be doable; I just don't want to live super frugally in retirement for the next 4-5 decades.

[Linea_Norway]

Just before finding MMM we lived in an 1976 cheap house that needed a lot of upgrades. It also had some other issues, so that I wanted to move to a newer house and get rid of the issues and of upgrading. Our requirements for the new house were: a really nice view, no noise from traffic and in the vicinity of a train station. There are very few houses in our area that filled those requirements. We found and bought a 5 year old house, which turned out to be very big and very expensive. But we could afford it by selling our own house and selling all our stock. We used 620K USD of our savings to buy this bigger house, in addition to selling the cheap house, for a total of 980K USD. After FIRE we could move to a much cheaper house, in a less central area.

If we could sell the house without loss, we could probably FIRE in a few years, presuming our savings keep up with last year. But in 2 years time (2019) we could start working 50% of the time, because by then we should have built up enough stash to FIRE from 2021. And my DH figures that as long as we don't sell the house, the money put into it is not going anywhere, it's still there. I on the other hand, have seen what happened to the house in my mother's street during the housing crisis there. Those houses went down in value with over 40% compared to their highest price just a few years earlier. We could not afford to FIRE if that would happen, as we need the 4% + inflation growth of our stash per year. As long as the money is sitting in the house, it is probably not growing as much as stock would do. Hopefully the house price will compensate for inflation.
I have suggested to take up a mortgage on a part of the house and invest it in stock, but DH is not mentally ready for this. So what I do now is just buying a small portion of stock every month from what I have left on my bank account. Just to build up as much new stash as I can.

[BlueHouse]

me.  I could move back to my condo, which is about 35 minutes away and rent my current place out for $4500-$5000/month.  That would decrease my costs AND bring in passive income.  Enough to stop working. 

But I really like living here.  Yes, part of why I moved here was to be closer to a high-pay job, but I also gained a lot of very dear friends here.  And we're the kind of friends that just drop in on each other, look out for each other, go out on weekends, grab a bite to eat, watch a show together, etc.  I'd miss that if it dwindled down to pre-arranged meetups only.

What situations would compel someone to rent a place for $5,000 / month?

Washington DC.  Walking distance to house and senate office buildings. There are a lot of people who move here temporarily who seem to have unlimited funds to spend on housing. 

[fiStressRelief]

This is our biggest issue now.  We've cut most of the waste in the budget with the exception of  this too big for us house.  It's nice with space for a home office, but also excessive with things like a dedicated media room.

It's not really about freeing up equity, but reducing annual budget and future maintenance.  We could downsize and move a couple miles and stay in the same school district.

Between property taxes, hoa, utilities, and home insurance, I figure we can save 5-7k annually which then reduces our barebones FI number.  Will probably happen in next couple years.

[MrsPete]

Expand that thought:  How many people would be financially independent right now IF they lived in a smaller house AND downsized to only one car per family. 

[Linea_Norway]

Expand that thought:  How many people would be financially independent right now IF they lived in a smaller house AND downsized to only one car per family.

If we would downsize seriously, and sell our mountain cabin, we would be there in a year or so.

[Dicey]

That might describe us, but the reason we own the big-ish house with the hella high property taxes is because MIL and her pal Al Z. Heimer live with us. We're here until she isn't,  which could be a long, long while.

[Cassie]

We downsized our home before retiring. WE are in the same local area. 

[FireHiker]

me.  I could move back to my condo, which is about 35 minutes away and rent my current place out for $4500-$5000/month.  That would decrease my costs AND bring in passive income.  Enough to stop working. 

But I really like living here.  Yes, part of why I moved here was to be closer to a high-pay job, but I also gained a lot of very dear friends here.  And we're the kind of friends that just drop in on each other, look out for each other, go out on weekends, grab a bite to eat, watch a show together, etc.  I'd miss that if it dwindled down to pre-arranged meetups only.

What situations would compel someone to rent a place for $5,000 / month?

Our neighbors across the street rent for $5,000/month; they moved here from Boston and were waiting for their house there to sell. He is high up in the pharmaceutical industry and she doesn't work. Around the corner from us, Brandon Flowers (who was playing football for the Chargers the past two years) rented a house for when he was in town during the football season. We could rent our house out for $5,000 which is absolutely insane to me. Our mortgage is $4000 currently (oh the pain...).

[stoaX]

Doesn't apply here.  Location is what makes our house (moderately) expensive, not size.  And I've lived in a worse location and it is a huge detriment to quality of life; living close to work, shops, entertainment, etc etc is a huge benefit.  Our other house was a lot nicer, and I have no desire to move back into it (and I still own it so I could if I wanted to).

Location is what determines the price of my house as well. The biggest houses in my neighborhood go for about $55k more than the smallest houses.  So the key for me is not the size of the house, but rather moving from my HCOL area to a LCOL area.

[nottoolatetostart]

We bought a moderately small house (1600 sq ft) in a great, walkable neighborhood with awesome schools. Houses go from the low 200s to over a million (people buy lots, demolish, and then rebuild to over 5-6k sq ft). We paid about 290k for ours. We have no plans to pay off home during retirement and the cost is just factored into retirement. We are inches away from being FI, practically there.

FWIW, we could have purchased in a neighboring area but we'd be in a different school district likely and deal with terrible traffic. Being downtown already insulates us from much traffic because we can walk/bike. Could have saved about $100k for same size house but not worth it.

[Maenad]

3. We don't need the cash right now. Yes, if we cashed out we could have FIRed earlier, but we view our home equity as part of our "safety margin". It is sort of our reserve fund in case everything goes wrong.

This is our situation as well. Our more expensive house was a calculated decision, willingly trading off a few more years of work for the benefits of mature trees, plenty of gardenable space, etc. We'll likely leave when it's time to go into a CCC, and the sale price will likely finance our stay there. No guarantees, but that's the current plan.

[honeybbq]

me.  I could move back to my condo, which is about 35 minutes away and rent my current place out for $4500-$5000/month.  That would decrease my costs AND bring in passive income.  Enough to stop working. 

But I really like living here.  Yes, part of why I moved here was to be closer to a high-pay job, but I also gained a lot of very dear friends here.  And we're the kind of friends that just drop in on each other, look out for each other, go out on weekends, grab a bite to eat, watch a show together, etc.  I'd miss that if it dwindled down to pre-arranged meetups only.

What situations would compel someone to rent a place for $5,000 / month?

My house would rent for $5800/month according to Zillow. You have 3+ kids and are moving to a new area, want to check out the place.... Seattle also has lots of people from Canada coming down and renting while they work. Large families need to live somewhere....

[spokey doke]

Just the opposite...we own our home, but it is in a very LCOL area, so we are kind of stuck here...or need a big financial cushion to consider the possibility of moving elsewhere.  Candidate places to RE are at least 3x the cost.