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Originally Posted by disneysteve
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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I disagree. I understand it doesn't change your retirement planning or your ability to fund your retirement. But from a gross portfolio perspective it is not desirable.
I hold that any one asset that grows to be a large fraction of your net worth is not diversified. If you had a large run up in one of your asset classes of your retirement accounts you would want to rebalance, right? It is not really practical to do that with your house, but I think it is important to know that you are overweighted in real estate. So in that case maybe you wouldn't want to go buy a rental property, but rather increase other investments. Or if you owned REITs in your investments you might reduce your exposure to compensate.