Quote:
Originally Posted by noppenbd
I do think it is relevant. Having a large portion of your net worth represented by the equity in your house is not diversified IMO. Look at boomers who planned to use the equity in their house to retire on. Say you only had $250K in retirement savings with $750K in home equity, planning to downsize or borrow against that equity to finance a large portion of your retirement. If you lost 20% of that equity in the housing bubble you are going to be cash strapped in retirement.
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I don't have any control over the value of my home (other than keeping up with proper maintenance and repairs). In my answer above, I assumed 5% price appreciation. What if this neighborhood sees a huge spike in growth and my home actually appreciates 10%/year? That won't have any impact at all on our retirement savings but it would greatly change the percentage of net worth represented by the home. So what? It doesn't mean a thing.
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Steve
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