Anonymous
08/29/2024 12:07
Subject: What %age of your total assets is your home value?
Anonymous wrote:Anonymous wrote:A bit of a tangent, but how are all the PPs determining their "home value?" In this housing environment, I have absolutely no idea what our house is worth. Or more accurately, I see what comps are going for and I can't believe the numbers I'm seeing, and have a hard time using those numbers in our calculations. But apparently, if they are accurate I am under-calculating our net worth by $400k-$500k
Use multiple sites - zillow, redfin, etc. look at comps and assume an average value. Deduct 10% off that value towards cost of selling.
Also, don't include the value of your home in your net worth. I know the textbook definition of net worth includes all assets but you'll always need a roof over your head and the days of 'downsizing' in retirement are long gone. You should include real estate value in your assets if only it's an investment property or an extravagant primary house ($5M house and you could easily afford to live in one that costs $1M so the extra $4M could be unlocked and be available for other purposes if necessary). If you do that, the associated mortgage should be counted as a liability.
Be warned that a few pedantic types will swing by to lecture you on why it should be included in net worth, it's the right thing to do do, text book definition, blah, blah, blah.. ignore them.
This is the stupidest argument in all of personal finance. “You always need a roof over your head.” Yeah, no sh!t, Sherlock. And if I didn’t have a paid-off house, I would have to pay rent, which would cost a lot more than just property taxes and maintenance.
This would mean that I would need a lot more investments to generate the cash flow needed to cover my rent. This is why including home equity in net worth is not pedantic—it’s the only way to accurately depict one’s financial situation.
Anonymous
08/29/2024 11:25
Subject: Re:What %age of your total assets is your home value?
Anonymous wrote:Wow, that’s a huge pension. Are you a retired CEO?Anonymous wrote:Home equity is about one fifth of my net worth. Retired, no mortgage, mid 6-figure pension and investment income.
I see I expressed myself unclearly. My pension is not mid 6-figures (I wish!); my annual income is comprised of a combination of pension and investment income, with the pension being about a quarter of the total.
Anonymous
08/29/2024 09:49
Subject: What %age of your total assets is your home value?
10%. UPB on mortgage is $600k. Net worth excluding equity is $7M
Anonymous
08/29/2024 09:32
Subject: What %age of your total assets is your home value?
Right now, my equity in the house is 18% of its total value (100k down payment plus roughly 100k equity, out of 1.1M value)
My total net worth outside the house, including my wife’s assets, is about 400k. So the house’s share of my total net worth is 200/600=33%. Pretty nuts but I guess that’s what happens when you’re young and buy an expensive house, with relatively small other assets
My total net worth outside the house, including my wife’s assets, is about 400k. So the house’s share of my total net worth is 200/600=33%. Pretty nuts but I guess that’s what happens when you’re young and buy an expensive house, with relatively small other assets
Anonymous
08/29/2024 09:18
Subject: What %age of your total assets is your home value?
Anonymous wrote:Anonymous wrote:A bit of a tangent, but how are all the PPs determining their "home value?" In this housing environment, I have absolutely no idea what our house is worth. Or more accurately, I see what comps are going for and I can't believe the numbers I'm seeing, and have a hard time using those numbers in our calculations. But apparently, if they are accurate I am under-calculating our net worth by $400k-$500k
Use multiple sites - zillow, redfin, etc. look at comps and assume an average value. Deduct 10% off that value towards cost of selling.
Also, don't include the value of your home in your net worth. I know the textbook definition of net worth includes all assets but you'll always need a roof over your head and the days of 'downsizing' in retirement are long gone. You should include real estate value in your assets if only it's an investment property or an extravagant primary house ($5M house and you could easily afford to live in one that costs $1M so the extra $4M could be unlocked and be available for other purposes if necessary). If you do that, the associated mortgage should be counted as a liability.
Be warned that a few pedantic types will swing by to lecture you on why it should be included in net worth, it's the right thing to do do, text book definition, blah, blah, blah.. ignore them.
I am the PP you responded to, and while I do think home equity is part of net worth, it's not useful to consider it for most purposes. For example, I don't consider it when figuring out our proximity to retirement. On my "New Worth" spreadsheet, I have graduating calculations that exclude various categories of assets:
New Worth
Net Worth (without college savings)
Net Worth (without college savings and home equity)
Net Worth (without college savings and home equity and inaccessible capital investments)
Investments
Tax Advantaged Investments
Also, net worth is a completely useless calculation, in that it isn't used for anything in the practical financial world. So really, include, or don't, whatever you want.
Anonymous
08/29/2024 09:11
Subject: Re:What %age of your total assets is your home value?
Anonymous wrote:Anonymous wrote:Wow, that’s a huge pension. Are you a retired CEO?Anonymous wrote:Home equity is about one fifth of my net worth. Retired, no mortgage, mid 6-figure pension and investment income.
Wait, so you get a pension in the range of $300-600k?
In my experience, when someone says they have a mid six-figure pension, they mean ~$150k.
Anonymous
08/29/2024 09:05
Subject: What %age of your total assets is your home value?
Home equity is 15% of total assets.
Anonymous
08/29/2024 08:27
Subject: Re:What %age of your total assets is your home value?
Net worth about $13M
Home is worth $1.3M. Our home equity is about $900K (low mortgage rate).
We are sitting on some cash, so we could easily either upgrade or buy a second home, but not feeling any urgency to do so right now. DH retiring next year and we still have a kid in high school. Will figure it out after HS graduation. If the housing market crashes, we might jump on something.
Home is worth $1.3M. Our home equity is about $900K (low mortgage rate).
We are sitting on some cash, so we could easily either upgrade or buy a second home, but not feeling any urgency to do so right now. DH retiring next year and we still have a kid in high school. Will figure it out after HS graduation. If the housing market crashes, we might jump on something.
Anonymous
08/28/2024 21:00
Subject: Re:What %age of your total assets is your home value?
Anonymous wrote:one's home equity is not part of ones net worth
Yes it is
Anonymous
08/28/2024 20:55
Subject: Re:What %age of your total assets is your home value?
one's home equity is not part of ones net worth
Anonymous
08/28/2024 14:37
Subject: Re:What %age of your total assets is your home value?
Anonymous wrote:Wow, that’s a huge pension. Are you a retired CEO?Anonymous wrote:Home equity is about one fifth of my net worth. Retired, no mortgage, mid 6-figure pension and investment income.
Wait, so you get a pension in the range of $300-600k?
Anonymous
08/28/2024 12:42
Subject: Re:What %age of your total assets is your home value?
4% (for the main home)
Anonymous
08/28/2024 12:35
Subject: What %age of your total assets is your home value?
40%
No mortgage
No mortgage
Anonymous
08/28/2024 12:30
Subject: What %age of your total assets is your home value?
Anonymous wrote:A bit of a tangent, but how are all the PPs determining their "home value?" In this housing environment, I have absolutely no idea what our house is worth. Or more accurately, I see what comps are going for and I can't believe the numbers I'm seeing, and have a hard time using those numbers in our calculations. But apparently, if they are accurate I am under-calculating our net worth by $400k-$500k
Use multiple sites - zillow, redfin, etc. look at comps and assume an average value. Deduct 10% off that value towards cost of selling.
Also, don't include the value of your home in your net worth. I know the textbook definition of net worth includes all assets but you'll always need a roof over your head and the days of 'downsizing' in retirement are long gone. You should include real estate value in your assets if only it's an investment property or an extravagant primary house ($5M house and you could easily afford to live in one that costs $1M so the extra $4M could be unlocked and be available for other purposes if necessary). If you do that, the associated mortgage should be counted as a liability.
Be warned that a few pedantic types will swing by to lecture you on why it should be included in net worth, it's the right thing to do do, text book definition, blah, blah, blah.. ignore them.
Anonymous
08/28/2024 11:57
Subject: Re:What %age of your total assets is your home value?
Wow, that’s a huge pension. Are you a retired CEO?Anonymous wrote:Home equity is about one fifth of my net worth. Retired, no mortgage, mid 6-figure pension and investment income.