Your house is what percentage of your net worth?

[leighb]

A lot of folks view their primary residence as an expense and not an investment. For many their primary residence is also their primary investment. Nationally, folks in the top quintile have 30% of their net worth in their homes. Whereas, folks in the middle three quintiles have 62%-67% tied up in their homes. I'm curious where MMM users will fall.

I myself have seen my own net worth inflated by this current housing market cycle (bubble?). When I look at my mint account, I'm shocked by my home value, which has gone up by 100%. It has the psychological effect of making me feel a lot more financially secure than I ought to be. Are others finding similar effects?

[WerKater]

I have no house. So, 0%.
I am shocked at the insane prices you have to pay for one in my area.

[monstermonster]

^same as WerKater. Can't really find a house to buy at any reasonable price level here, so I'll keep renting.

[geekette]

Right at 20%, so...how do I vote?  LOL

[undercover]

These numbers can mean very different things.

Someone can have 100% of their net worth tied up in a home and owe nothing or they might still owe for another 0-30 years.

So it's really not telling the entire picture...

Your primary home is an investment if you look at it in terms of money saved by not renting. No, a primary home is never going to out-perform a home purchased specifically for renting or the stock market in general - but we all need a place to live.

[monstermonster]

These numbers can mean very different things.

Someone can have 100% of the net worth tied up in a home and owe nothing or they might still owe for another 0-30 years.

So it's really not telling the entire picture...

You realize that net worth includes subtracting your debt, right?

Also there's plenty of cases where you save money by renting.

[leighb]

Right at 20%, so...how do I vote?  LOL

Pretty statistically unlikely...

These numbers can mean very different things.

Someone can have 100% of the net worth tied up in a home and owe nothing or they might still owe for another 0-30 years.

So it's really not telling the entire picture...

Your primary home is an investment if you look at it in terms of money saved by not renting. No, a primary home is never going to out-perform a home purchased specifically for renting or the stock market in general - but we all need a place to live.

True, it's just looking at one piece of the pie. It's hard to look at the whole pie in a 5 question survey.

[undercover]

These numbers can mean very different things.

Someone can have 100% of the net worth tied up in a home and owe nothing or they might still owe for another 0-30 years.

So it's really not telling the entire picture...

You realize that net worth includes subtracting your debt, right?

Also there's plenty of cases where you save money by renting.

Yes, of course, it depends on your timeline mainly.

The net worth question - yes, did I insinuate otherwise?

[andy85]

10% and I'd like to keep it at that permanently

[justajane]

These numbers can mean very different things.

Someone can have 100% of the net worth tied up in a home and owe nothing or they might still owe for another 0-30 years.

So it's really not telling the entire picture...

You realize that net worth includes subtracting your debt, right?

Also there's plenty of cases where you save money by renting.

I "owe" 120K on my house, but it's worth 225K. Unless you're underwater, wouldn't almost all homes add to net worth in some capacity?

To answer the question. Our home is about 30% of our net worth.

[woodnut]

23%.  Paid off, no mortgage.

[Frugal D]

About 65% in a HCOL area.

[LivlongnProsper]

We are at about 10% with the mortgage being our only debt.

[HPstache]

Home equity is 24.8% of our family NW

[Rubic]

About 8% now, but I'm selling the condo, so 0% soon.

I've been a renter for most of my adult life and will
probably continue that trend into FIRE.

[KittyFooFoo]

Are people reporting what percentage of their net worth is home equity?  Or is it total home value?

[MilesTeg]

I "owe" 120K on my house, but it's worth 225K. Unless you're underwater, wouldn't almost all homes add to net worth in some capacity?

A mortgaged house will not add to your net worth until your equity exceeds your remaining mortgage debt.

If you have a house valued @ $225k with a $120K mortgage, you have $105k of equity with still $120k of debt associated with it, so the house reduces your net worth by $15k (equity - associated mortgage debt).

[MilesTeg]

Are people reporting what percentage of their net worth is home equity?  Or is it total home value?

Should be the former. It doesn't matter how much your home is worth -- the non-equity portion of your home (i.e. how much you still own on the mortgage) never, ever adds to your net worth.

[wenchsenior]

We own two houses in a LCOL area. One is paid off, one is about 30% paid off. Our combined equity is about 17% of our net worth.

[WerKater]

I "owe" 120K on my house, but it's worth 225K. Unless you're underwater, wouldn't almost all homes add to net worth in some capacity?

A mortgaged house will not add to your net worth until your equity exceeds your remaining mortgage debt.

If you have a house valued @ $225k with a $120K mortgage, you have $105k of equity with still $120k of debt associated with it, so the house reduces your net worth by $15k (equity - associated mortgage debt).

Why are you counting the debt twice? If you have a house that's worth 225k and you owe 120k on it, your equity in the house is 105k and that is a part of your total net worth. Period.

[LeRainDrop]

Oops, I think I messed up.  Are we supposed to take our EQUITY in the home and divide that by total net worth?  Or take the fair market value of the home and divide that by total net worth?

[MilesTeg]

I "owe" 120K on my house, but it's worth 225K. Unless you're underwater, wouldn't almost all homes add to net worth in some capacity?

A mortgaged house will not add to your net worth until your equity exceeds your remaining mortgage debt.

If you have a house valued @ $225k with a $120K mortgage, you have $105k of equity with still $120k of debt associated with it, so the house reduces your net worth by $15k (equity - associated mortgage debt).

Why are you counting the debt twice? If you have a house that's worth 225k and you owe 120k on it, your equity in the house is 105k and that is a part of your total net worth. Period.

You're right, I have no idea what I was thinking.

[leighb]

Oops, I think I messed up.  Are we supposed to take our EQUITY in the home and divide that by total net worth?  Or take the fair market value of the home and divide that by total net worth?

Take just the equity, divide that by your total net worth.

[sol]

How do you expect people to count rental properties? 

Some (many?) of us own more than one home.  Are you only asking about the home we live in?

[Cap_Scarlet]

net worth c. $5.0 million
House c. $500k debt free
10%

[redbird]

0. I don't own a house right now.

(So for those who think it's impossible to FIRE without owning a house - it's not. It can just help you for cash flow reasons if you have a paid off house.)

[leighb]

How do you expect people to count rental properties? 

Some (many?) of us own more than one home.  Are you only asking about the home we live in?

Only include your primary residence not other real estate investments.

[marty998]

I have loans against my home which are used for investment. So it brings the equity % of net assets down to 14%.

Otherwise it would be much much higher.

[LeRainDrop]

Oops, I think I messed up.  Are we supposed to take our EQUITY in the home and divide that by total net worth?  Or take the fair market value of the home and divide that by total net worth?

Take just the equity, divide that by your total net worth.

Thanks.  Any chance you're willing to change the poll setting to "allow users to change their vote"?  I did calculate mine incorrectly the first time, and that changes my response.

[SwordGuy]

Based on the appraised value when I bought the home, 17%.   Based on the appraisal I received this week as part of a refinancing process, 2%.   (That large drop in value is good news as I can appeal the property tax amount and cut my FI expenses. :))

57% if you include income properties.   Part of that is part of 2 farms I inherited.  I have no idea what the land would be worth if I sold it (and because of family issues I won't be finding out).   So I just pretend it's a stock portfolio and the farm income is a 4% SWR.    In other words, I don't know what my "real" net worth is, but this is "good enough" for my purposes.

[KittyFooFoo]

 I suppose the poll should have a separate category for 0. That is probably inflating the first category at the moment.

[okits]

I will abstain from voting because we are renters (0%, and not likely to change anytime soon).

You could also have an "underwater on house" category (is anybody?)

[markbike528CBX]

0%, as I don't count house equity in NW, as a house is a cash flow drag (taxes, insurance ) and you can't eat it..

16% per OPs formula, and the zillow bull#%%^^ estimate.

9% per OPs formula, and my estimate

[Squirrel away]

Oops, I clicked the wrong option, I thought it was around 30%, but it is around 40%. My house went up in value recently so I was thinking of it as the old value.

ETA - No, actually I did click the right option. Sorry, I didn't get much sleep last night, lol!

[Monkey Uncle]

13%.  That's based on my best guess of current market value, as I haven't had an appraisal in over 10 years.

Based on poll results so far, it looks like this bunch is way under the average/median US percentages.  To be expected, I guess.

[Money Badger]

A year away from downsizing and the house is close to paid for... so equity deployed to housing is at the highest of our lives at 42%.  So it's good and bad news.

A year from now, God willing the home equity to NW ratio will be less than 30% (in a smaller place paid for with the incremental equity working harder and lower cost of living to accelerate FIRE in 2021 or sooner).   So let it be written...

[leighb]

Oops, I think I messed up.  Are we supposed to take our EQUITY in the home and divide that by total net worth?  Or take the fair market value of the home and divide that by total net worth?

Take just the equity, divide that by your total net worth.

Thanks.  Any chance you're willing to change the poll setting to "allow users to change their vote"?  I did calculate mine incorrectly the first time, and that changes my response.

I can't seem to figure out how to do that. I can add new choices and reset the entire poll.

[2buttons]

Home equity is 44% of our NW in a HCOL area.

[teen persuasion]

30%, based on my best guess of home value.  Mortgage paid off.  Home values aren't very inflated here, so retirement accounts are growing faster, thus % is shrinking each year.  It was probably 50% when we paid the mortgage off.

[Lis]

Just purchased my home a few months ago. It was appraised at $80k, I have about $60k in the mortgage, so I'm +$20k right now. My net worth is ~$68k including the home, so I'm sitting pretty at 29%. Not too shabby.

A one bedroom rental goes from $1350-1500+ in my area (plus the luxury condos that are rented out for $1800+). My mortgage+maintenance is just over $1000. I couldn't wait to buy.

[I'm a red panda]

I don't count my house as part of my net worth. Same as I don't count any of my other stuff.

But if I added it's equity to my net worth, then I guess it's about 30%.

[boarder42]

I don't count my house as part of my net worth. Same as I don't count any of my other stuff.

But if I added it's equity to my net worth, then I guess it's about 30%.

your house is part of your networth.  it isnt part of your amount needed to FIRE if you plan to live in it during FIRE but it's part of your networth.

[GuitarStv]

When we purchased our home five years ago, we put down most of our money into a down payment.  At that point it was at least 90% of net worth.  We will pay it off completely next month.  Even though we've been socking away a fair amount of savings over that period, the value of houses in our area has risen so much that our house is still up at about the 55% range of our net worth.

[Fishindude]

If my primary residence was sitting on a simple 1/2 - 1 acre country lot it might be worth $200,000.
It sits on 140 acres, so value is closer to $1 mil mark.

[I'm a red panda]

I don't count my house as part of my net worth. Same as I don't count any of my other stuff.

But if I added it's equity to my net worth, then I guess it's about 30%.

your house is part of your networth.  it isnt part of your amount needed to FIRE if you plan to live in it during FIRE but it's part of your networth.

If I consider my house as part of my net worth, I'd have to consider everything inside it too, all of the things in the house have value too.  That  just gets silly.  I don't consider possessions to be part of my net worth.  My house is not an investment, it is a place to live.

[TexasRunner]

I consider it part of my net worth simply because it permits a significantly lower COL and fluctuates in 'trade-able' value, just not as liquid as stock.

I also voted based on my FIREd goals because I'm just starting out. 

[ketchup]

About 30%.

[robartsd]

I'm pretty early in the savings for retirement game (close to one year of expenses saved) and recently purchased a house with about 5% down (yes, I wasn't willing to wait a few more years until I had 20% down - face punch). Could have stretched our resources to get to 10% down if we really tried, but that would be stressful and leave us with no emergency fund (and only equity above 20% is easy to access springy debt). I answered 45% based on the "Zestimate" (currently lower than "Redfin Estimate"), but using the appraisal (about 4% over sale price) used for our mortgage it would only by about 25%. I expect the dollar amount of our retirement investments to grow about twice as fast as the principle on our mortgage decreases over the next couple of years.

[2Birds1Stone]

0%

[CCCA]

We are right around 50%.  In the SF Bay Area, we have significant equity because prices have risen like 40-50% in the last 6 years (since we bought) and of course, houses are expensive here.     

We don't usually count home equity in our net worth, since it's not liquid and it's so large that it would distort our understanding of our investible and income generating assets.  We just track our conventional assets (bank, brokerage, and retirement accounts).

I assume that we'll continue to have approximately this percentage (i.e. our return in the stock market will more or less match the sum of housing price appreciation and paying off our mortgage*).

*our current annual principal payments amount to about 4-5% of our current home equity value.