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I just got a new property assessment that shows a fairly large increase in the value of my house. I keep that number in Quicken, and after updating the number I see that my house is now 23% of my total net worth.

Background info: I'm retired, have no debts, have more income than I need from pensions and government benefits, children are adults. We bought a lot and custom built the home in 2003. We are 5 km from the Winnipeg city limit in a semi-rural setting. It's much larger than we need, it's on a .815 acre lot, but I'm very happy here and glad we made the move. It's where we plan to stay until I can't keep up with the maintenance. I don't consider my house to be an investment, although it is an asset, and part of ones net worth calculation.

Questions: Is that a reasonable percentage of ones net worth? What would people consider to be reasonable? Anyone care to comment on what their number is and in what range the recommended number should be?

Thanks in advance.
 

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My house is probably 60% of my net worth. I'd like it to be 23%, but that's not the case yet. I am focusing on paying off my mortgage so my money is going towards my house versus other avenues. This means that my house is increasing as a part of my net worth. However, when it is paid off I can put all that money I was putting into my mortgage into the market, and that percentage will start to drop (hopefully fast).

Edit: I'm in my Mid-30's.
 

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Right now my house value represents 41% of our networth (47 years old). Below is my forecasted percentage based on retiring at 55, 60, & 65:

Age 55: House value forecasted to be 22% of our networth
Age 60: House value forecasted to be 16% of our networth
Age 65: House value forecasted to be 11% of our networth

Obviously a lot can change between now and then :)
 

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Our condo townhouse is ~ 10.5% of net worth.
 

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I guess I look at my numbers differently. I don't count my house in my net worth. My house is an asset and has value, but unless I'm willing to move, I don't want to consider it in my net worth. It won't pay my bills or buy my groceries when I'm retired, since I have to live somewhere. Even if I downsize, if I buy in the same city and market, the price difference would not be that significant. In an emergency, I know I can sell and rent somewhere with the profits.

I've seen too many people with a big, expensive house (and not much else) consider themselves to have a high net worth and want to retire, and can't. I just focus on net worth of investments to calculate when I can retire. Just a different way of looking at it.
 

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In April 2011 it was 52 %. Today, I'm still 52 %. I guess I'm paying off the mortgage at the same rate as I'm increasing my investments.
 

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I agree with FourPillars. There is no correct answer. Depends on too many personal variables, as well as what real estate market you are in.
 

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I agree with the posters above, there is no right answer.

However, I think you know that, and you're interested in a rule of thumb. Garth Turner has referenced a 'rule of 90' repeatedly: 90- Your Age = max. level for home equity as a proportion of a balanced financial profile.


I think that primarily this is intended to discourage over investment in real estate by young buyers and upgraders, suggesting that a 30 year old couple shouldn't pile all of their worldly assets into their down payment.

It seems to me that the rule (or any rule of thumb) will start breaking down when people are in retirement, where it would be entirely natural for you to stay in your home, it to grow in value (perhaps slowly), and for you to spend down your financial assets. Unless you take out a reverse mortgage or downsize, there isn't much to do with the equity in your house.

Oh, and to the OP, before you beat yourself up about concentrated wealth in your house, I'd be sure to include the net present value of any pensions (including CPP and OAS) in your net worth calculation.
 

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Our house is about 50% of our net worth. Age 39. We still owe 6-figures on the mortgage.

At time of retirement, I hope our house is worth about 25% of net our worth. Net worth is expected to include $1 M portfolio, paid off home, and not including pensions.
 

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On a strict valuation process, about 18%

but have to live somewhere so I look at my real estate as part of the inheritance and really don't care if it goes up or down 10%

That said nice to have a chunk on standby!
 

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I don't think there is a right answer since everyone has their own way of doing things and their own comfort levels. Some people can just throw money into the stock market (like myself) and other people turn into nervous wrecks, so they invest in something they can touch (property). No right answer.

The only metric I would be looking to measure is that your worth is growing every year at an acceptable rate to sustain your goals in the future. Or if you're in retirement, things aren't depleted faster than they should be.
 
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