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Post by chang on Mar 6, 2022 16:09:17 GMT
I ask, because I'm wondering how much of my nest egg I should allow to spend for a primary home? I know, what matters is how much is left over ... but still it would be useful to know where others stand on this.
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Post by richardsok on Mar 6, 2022 16:54:58 GMT
15% +/-
But I am putting the Pennsylvania property up for sale this week. When it goes, my Florida house will be my primary, at least for a while, and then my primary will be only about 9 - 10% of assets.
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Post by uncleharley on Mar 6, 2022 17:10:02 GMT
That question made me think... My most valuable assets are my and my wifes pensions and social security. If I use a bond rate to calculate what it would take to replace those incomes, then my house represents about 10% of our net worth. However both pensions and SS are annuities with no survivorship left in the pensions. To the survivor our house would represent about 20%. We also have investment accounts that add another 4% or so to our net worth or call it 8% to a survivor. None of the above takes into consideration the value of cars, toys, & other personal property.
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Post by richardsok on Mar 6, 2022 17:16:15 GMT
That question made me think... My most valuable assets are my and my wifes pensions and social security. If I use a bond rate to calculate what it would take to replace those incomes, then my house represents about 10% of our net worth. However both pensions and SS are annuities with no survivorship left in the pensions. To the survivor our house would represent about 20%. We also have investment accounts that add another 2% or so to our net worth or call it 4% to a survivor. While you might well argue that pension & Soc Sec should be included in one's wealth total, I don't think the OP had it in mind. I think the question was house value vs wealth presently held. |
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Post by fishingrod on Mar 6, 2022 17:23:49 GMT
20% of total port. No mortgage.
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Post by Fearchar on Mar 6, 2022 18:43:23 GMT
Primary residence represents about 4% of my net worth.
4BR, 2.5 baths, 2800 SF on 3 partially wooded acres.
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Post by Mustang on Mar 6, 2022 19:53:07 GMT
It was around 15% (no mortgage) but we downsized last year. The new place is approximately 10% and I'm sitting on a lot of cash. Since I cannot see the future I'm using dollar-cost-averaging to slowly buy more of Wellington and Wellesley.
Edit: I did not include anything dealing with pensions or social security.
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Post by retiredat48 on Mar 6, 2022 22:29:36 GMT
Percentage not relevant. If one has a pension and SS income only (these are not wealth, as their values go to zero in the end), then one can have 100% in their home. Many retirees do.
I view the main parameter is to what extent one should have real estate in their portfolio, and what type. In this regard, I own three homes...one a rental property in Florida. EACH HAS BEEN A GREAT INVESTMENT THE LAST DECADE...(USING fd1000 RISK-ADJUSTED RETURNS).
I place the rental property as far more desirable than standard-issue bond funds. If I sold, where would the money go into?? FL properties zooming.
A key consideration is what is ones annual property taxes. My daughter owns a $500,000+ newer home in North Carolina, where total property taxes are $3200/year. They are sure glad they stepped up four years ago and bought "more house" (by a factor of two) than they needed...as an investment. Refinanced at 3.1% , 30 year rate.
And inflation is only starting to zoom!
R48
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Post by liftlock on Mar 7, 2022 1:28:26 GMT
I think the amount of cash flow required to afford a home might be a more important criteria than using a % of net worth. Historically, mortgages lenders want borrowers housing expenses to not exceed 28% of gross income.
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Post by mozart522 on Mar 7, 2022 1:35:09 GMT
20% with a small mortgage.
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Post by chang on Mar 7, 2022 4:43:58 GMT
Thanks for everyone's replies. To clarify the picture a little bit: I've saved up $X during my career, basically all sitting in investments (and at the moment a record high level of cash). No real estate, no cars at the moment; just the usual collection of household goods and toys. Now we are looking to buy a retirmement house to spend the rest of our lives in, and pass on to my stepson.
Houses where we are looking are pretty expensive, and I'm not seeing anything I like in my original target range. I might have to pay as much as 40% of my nest egg for the house we really want. That's what worries me.
Not considering a mortgage -- I don't want the complexity, or the debt.
Obviously, what matters is the amounts. If I had $100 million and bought a $40 million house, I wouldn't be worried. But I don't have that much.
Without putting exact numbers around it, let's just say that the remaining 60% -- if I did spend 40% for the house -- would be in the vicinity of $4m. Not including SS payments to come later. That's not a bad sum to live off of, but I had expected to spend less for the house and keep more in my brokerage account.
I don't want to overspend for the house, but I also don't want to underspend either. This is, after all, my home.
We're going out today to look at more houses, and might have to make a snap decision. Unfortunately, demand exceeds supply here, and many places that I really liked were sold before we arrived to look.
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Post by chang on Mar 7, 2022 5:51:57 GMT
There’s a complicating factor as well - my wife really wants a small condo down south to escape the winters. If so, then I need to reserve adequate funds for a second purchase.
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Post by alvinthechipmunk on Mar 7, 2022 8:28:40 GMT
There’s a complicating factor as well - my wife really wants a small condo down south to escape the winters. If so, then I need to reserve adequate funds for a second purchase. But then... Why not just move South and make that residence your primary? I am originally from New England. I quite understand why people want to flee the winters. Florida seems a natural choice. But my goodness! Since I was spending lots of time down there in the 1970s, the whole place has been paved over. YUX. ...We were lucky to have a connection here, so we went West. My son's in California around L.A. Ya might think that would be a great location for that reason. But California can go pound sand, after my experiences there. Anyhow, this is the long way around to suggesting that you might look WEST, too? Warm summers, cooler winters, but no snow. Unless you WANT it, up in the mountains. |
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Post by richardsok on Mar 7, 2022 12:11:26 GMT
chang --
Your wife's viewpoint has some merit -- and Florida is NOT 'all paved over' less you settle in the sprawling areas around Tampa or Miami/Dade, for example; anywhere south of Palm Beach. But there are wonderful smaller cities to consider. No one ever has a bad word for Jupiter or the Vero Beach areas. There are many more. My wife loves Florida, running aroudn with her gal-pals. Me? No winters are the chief blessing. The rest? Meh.
Two problems with Florida IMO -- the summer heat and lack of terrain. It never seemed to bother my parents or even my wife, but I find the flatness dull at times; a veritable desert for a fly fisherman. If you are going to live here all year, then your own private pool is de rigeur. Essential. The heat is oppressive and it is simply bliss to quietly slip into your own pool early mornings when the whole world is still and the sun is just coming up.... or to repeat the process after dinner when darkness has fallen.
If here only part year, you could compromise in a private community with an association pool. Most people won't use a private pool much in the winter anyway, unless it is heated (which gets costly).
I fully understand your desire to be debt free, (and by inclination I agree with you) but just know R48 has put out persuasive arguments in the past on benefits of keeping and using intelligent debt. If you're paying a 3.5% mortgage on a property appreciating at 8% per year, how is that a loss? If your investments are gaining 8% annually but you with draw $x to pay cash on a nice house, how are you ahead?
I'm not advocating it, mind; just pointing out another viewpoint.
I like the idea of a small apartment to live in during winters and rent it out for some supplementary income -- but there you must compromise in keeping your clothing, favorite decorations and personal items in and out of storage. I want to do just that with our Florida property but, like you, have run into domestic opposition.
Make no mistake, though. I'm the boss in my house. My wife is just the decision-maker.
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Post by Fearchar on Mar 7, 2022 12:57:22 GMT
chang , As I recall, you were/are living oversees and concerned about living in the US. Have you decided on a general location?
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Post by Chahta on Mar 7, 2022 13:06:41 GMT
40% is not unreasonable. But taking it out of "savings" is the hard part. We are pushing the 40% amount but that is due to the crazy increase in values the last 2 years. Most home equity is built separately from investments.
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Post by win1177 on Mar 7, 2022 14:22:02 GMT
Chang,
We built our dream home on a large lake in S.C., and LOVE it. It’s handicap accessible, for our oldest son who is in a wheelchair due to CP. We have about 10% of our net assets in the home, no mortgage, but realize we have a pretty large portfolio, probably much more than we’ll ever “need”.
We also own a large farm, 472 acre tree farm, with no mortgage. It’s probably another 15-20% of assets. Rest is equity, some bond mutual funds (5%), cash (11%).
If you are looking for a place to live, look in the SE- Carolina’s, GA, etc. nice weather, relatively low cost of living (compared to CA, NY, Conn., etc.).
Win
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Post by mozart522 on Mar 7, 2022 14:54:30 GMT
Not to be doom and gloom, but we could well be in recession soon and housing may come down. I bought at the high in 2006, and then in 2008 the value of my home just about halved. Unless you have a really big need to buy now, I'd wait. But that is just me, and my wife and I tend to be practical to a fault.
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Post by shridog on Mar 7, 2022 15:35:52 GMT
Our home value is 17% of our net worth. Live in NE Ohio in semi rural area. Corn fields in front and rear with 1.5 acre lots. Bought in 2007. No idea of price appreciation since very few homes for sale in our area. At 79 years old, now to old to move south or west, but do take trips in winter to break up the weather issue.
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Post by richardsok on Mar 7, 2022 16:00:51 GMT
Chang, We built our dream home on a large lake in S.C., and LOVE it. It’s handicap accessible, for our oldest son who is in a wheelchair due to CP. We have about 10% of our net assets in the home, no mortgage, but realize we have a pretty large portfolio, probably much more than we’ll ever “need”. We also own a large farm, 472 acre tree farm, with no mortgage. It’s probably another 15-20% of assets. Rest is equity, some bond mutual funds (5%), cash (11%). If you are looking for a place to live, look in the SE- Carolina’s, GA, etc. nice weather, relatively low cost of living (compared to CA, NY, Conn., etc.). Win Agree. The north Georgia / western Carolinas areas are wonderful especially for outdoor lovers. You will never see a prettier small city than Greenville SC or small town Waynesville NC. If we're talking $600k and up, you'll really want to look into the Highlands as well as Google communities like The Coves at Glassy and Mountainaire. (Winters are short but cold, though.) Might want to rent for a few months before buying. Small-town life is a change. In many places you don't have the variety of restaurants or grocery stores you're used to. |
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Post by richardsok on Mar 7, 2022 17:22:39 GMT
Delighted to hear it, chang. All the best.
My only regret -- you'll never taste the fiery joy of White Lightening moonshine corn likker, simmered & refined by rowdy good ol' boys under the stars in an illegal North Georgia mountain still. Well, we cain't have ev-rythang.
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Post by win1177 on Mar 7, 2022 17:36:43 GMT
Delighted to hear it, chang. All the best. My only regret -- you'll never taste the fiery joy of White Lightening moonshine corn likker, simmered & refined by rowdy good ol' boys under the stars in an illegal North Georgia mountain still. Well, we cain't have ev-rythang. You’re referring to ALL my relatives, so be careful! LOL! I was only the second to go to college, many of them never even graduated from HS in the GA mtns. Win |
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Post by bugman on Mar 7, 2022 17:36:46 GMT
Delighted to hear it, chang. All the best. My only regret -- you'll never taste the fiery joy of White Lightening moonshine corn likker, simmered & refined by rowdy good ol' boys under the stars in an illegal North Georgia mountain still. Well, we cain't have ev-rythang. I've had the North Carolina version and don't sip that around a camp fire... |
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Post by Chahta on Mar 7, 2022 19:43:33 GMT
Good for you Chang. The point of a portfolio is to use it to make your life happy and content. At first I was thinking “the south of Thailand”. LOL
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Post by steadyeddy on Mar 8, 2022 0:08:17 GMT
chang , first Congrats on your new home!! Wonderful!! My house is 15% of my NW. No mortgage. All the best to you as you seek your new home(s) around the world 😜
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Post by archer on Mar 10, 2022 4:54:17 GMT
Delighted to hear it, chang. All the best. My only regret -- you'll never taste the fiery joy of White Lightening moonshine corn likker, simmered & refined by rowdy good ol' boys under the stars in an illegal North Georgia mountain still. Well, we cain't have ev-rythang. Aaawww shucks, yer makin me homesick! Maybe you can send Chang a jar. |
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Post by chang on Mar 10, 2022 6:52:44 GMT
Delighted to hear it, chang. All the best. My only regret -- you'll never taste the fiery joy of White Lightening moonshine corn likker, simmered & refined by rowdy good ol' boys under the stars in an illegal North Georgia mountain still. Well, we cain't have ev-rythang. Aaawww shucks, yer makin me homesick! Maybe you can send Chang a jar. You most certainly can. It's cold up in the mountains! |
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Post by johntaylor on Mar 20, 2022 15:22:40 GMT
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Post by retiredat48 on Mar 20, 2022 16:19:36 GMT
jt...forwarded to my kids in North Carolina...
R48
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Post by FD1000 on Mar 20, 2022 18:31:30 GMT
Several months ago we had about 3 weeks (2+1) vacation in NC, AR, MO, FL.
By far, NC was the best. Nashville is the best city if you don't care about museums.
I used to like FL more but the weather is too warm, tornadoes hit the state every several years, it's too expensive, and traffic is bad in many cities. We have been in Tampa, Sarasota, Miami, Orlando, Jacksonville.
I'm still in GA and the weather is better than NC and IMO, second to Southern CA without all the minuses.
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