At what net worth would you to be comfortable purchasing $3MM house? (given certain assumptions)

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills.
KlangFool
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Re: At what net worth would you to be comfortable purchasing $3MM house? (given certain assumptions)

Post by KlangFool »

visualguy wrote: Sat Dec 04, 2021 9:40 pm
KlangFool wrote: Sat Dec 04, 2021 9:22 pm
visualguy wrote: Sat Dec 04, 2021 8:09 pm
KlangFool wrote: Sat Dec 04, 2021 5:31 pm
Firemenot wrote: Sat Dec 04, 2021 4:47 pm

I’d rather own a 500k 2000 square foot house on a 2.5 million dollar piece of dirt.
I would rather not live in that area.

The gap between between median income and the median house price is too high for my liking.

To each its own.

KlangFool
Assets are more important than income. I don't get the obsession with income. You can have an unimpressive income, while having a high net worth. For examples, techies who made money at some point on IPOs or big RSU grants when they were at their peak, but now don't make nearly as much or are retired/semi-retired. There are people who inherit money, or get family help, etc. Income is just part of the picture. You need to look at the entire picture, including assets.

Moreover, you need to look at income+assets among current BUYERS in the area, not the entire population. Typically most of the population in these areas bought years ago when prices were lower.
visualguy,

This may matters to you. But, I don't.

I live in a neighborhood with an annual median household income of 150K with the median house price of 600K. It is about 4X. It is a good ratio for me.

As for why someone like living in an area with a 3 millions 2,200 square feet house with substantial lowered median income ratio, it is their choice. But, it is not for me.

KlangFool
Why would you care about that ratio? That's what I'm trying to understand. I never heard anyone use that as a metric for deciding whether an area is a good place to live or not.
Why would you want to live in an area with a great wealth disparity? Aka, the median income folks cannot afford to buy median house in the area? I don't.

<< Why would you care about that ratio?>>

Why won't you care about this ratio?

Is it because

A) you do not care

or

B) this problem does not exist where you live

(A) or (B)?

KlangFool
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Firemenot
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Re: At what net worth would you to be comfortable purchasing $3MM house? (given certain assumptions)

Post by Firemenot »

KlangFool wrote: Sat Dec 04, 2021 9:57 pm
visualguy wrote: Sat Dec 04, 2021 9:40 pm
KlangFool wrote: Sat Dec 04, 2021 9:22 pm
visualguy wrote: Sat Dec 04, 2021 8:09 pm
KlangFool wrote: Sat Dec 04, 2021 5:31 pm

I would rather not live in that area.

The gap between between median income and the median house price is too high for my liking.

To each its own.

KlangFool
Assets are more important than income. I don't get the obsession with income. You can have an unimpressive income, while having a high net worth. For examples, techies who made money at some point on IPOs or big RSU grants when they were at their peak, but now don't make nearly as much or are retired/semi-retired. There are people who inherit money, or get family help, etc. Income is just part of the picture. You need to look at the entire picture, including assets.

Moreover, you need to look at income+assets among current BUYERS in the area, not the entire population. Typically most of the population in these areas bought years ago when prices were lower.
visualguy,

This may matters to you. But, I don't.

I live in a neighborhood with an annual median household income of 150K with the median house price of 600K. It is about 4X. It is a good ratio for me.

As for why someone like living in an area with a 3 millions 2,200 square feet house with substantial lowered median income ratio, it is their choice. But, it is not for me.

KlangFool
Why would you care about that ratio? That's what I'm trying to understand. I never heard anyone use that as a metric for deciding whether an area is a good place to live or not.
Why would you want to live in an area with a great wealth disparity? Aka, the median income folks cannot afford to buy median house in the area? I don't.

<< Why would you care about that ratio?>>

Why won't you care about this ratio?

Is it because

A) you do not care

or

B) this problem does not exist where you live

(A) or (B)?

KlangFool
C — Nice weather and good schools?
diamondmine
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Re: At what net worth would you to be comfortable purchasing $3MM house? (given certain assumptions)

Post by diamondmine »

OP – Lots of people are answering different questions, but I will try to stick to yours. I would suggest using a two-step process, and you would need to tweak with your own numbers where I have made assumptions below.

(1) First, and most importantly, determine your annual costs = $60K + healthcare + housing + taxes
- Healthcare: Your costs will depend on your current and anticipated needs and any subsidies (based on state of residence and taxable income). You should try to estimate for your situation, but I will assume ~$24K. Google to find a calculator and adjust as needed.
- Housing: I’ll trust your tax/insurance assumptions of $46K and $74K and take a wild guess on maintenance costs of, say, $20K for your 2200 sq ft dream house. Again, you should estimate based on your particulars.
- Taxes: It is hard to guess on your tax situation, which will depend on your investments, basis in them, state tax rate, etc. Again, you should try to estimate for your details. See viewtopic.php?f=2&t=287733.

Let’s tentatively say annual costs = $60K + $24K (healthcare) + $66/94K (housing for $3MM/5MM house) + taxes. That gives a total of about $150K (for a $3MM house) or $180K (for a $5MM house) + taxes

(2) Decide on a withdrawal rate that keeps you comfortable. See https://earlyretirementnow.com/safe-wit ... te-series/ for support on a rate ~3%. If you are flexible in your spending, you can go a bit higher. If you have trouble sleeping at night, you might need to go a bit lower.

To stick to a 3% withdrawal rate, you would need about $5MM/$6MM to support those annual budgets (without taxes). Adding in the house purchase cost brings your totals to around $8MM (for a $3MM house) or $11MM (for a $5MM house). Reducing to a 2.5% withdrawal rate adds about $1MM.

I suggest you fine tune your expense numbers and give some honest consideration to your flexibility to adjust expenses if needed. My personal difficulty with owning an expensive house is that I would be reluctant to sell and move as others suggest when things get tough and, accordingly, the costs associated with the house are mostly inflexible. That is, your property tax and insurance must be paid each year, and maintenance is almost as inflexible (though you might be able to do some yourself if needed). If you are selling equities each year to pay those costs, that has an unavoidable effect on your taxes (again, somewhat inflexible), and that can also affect any health care subsidies, if you think you can qualify for those. Accordingly, I would consider all those to be unavoidable costs when determining an acceptable withdrawal rate.

Thanks for posing an interesting and useful question. You got lots of good feedback from others, and I will be curious to hear how you apply to your situation.
Last edited by diamondmine on Sat Dec 04, 2021 10:37 pm, edited 1 time in total.
Californiastate
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Re: At what net worth would you to be comfortable purchasing $3MM house? (given certain assumptions)

Post by Californiastate »

D) You can afford it

I never was a fan of guilt.
EnjoyIt
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Re: At what net worth would you to be comfortable purchasing $3MM house? (given certain assumptions)

Post by EnjoyIt »

pizzy wrote: Sat Dec 04, 2021 12:56 pm
2tall4economy wrote: Sat Dec 04, 2021 12:46 pm
pizzy wrote: Sat Dec 04, 2021 12:44 pm
2tall4economy wrote: Sat Dec 04, 2021 12:37 pm or guns
:shock:
https://www.businessinsider.com/range-r ... uv-2014-11

I don't judge, I just observe. I don't own any jewelry either. One's art is another's firearm I guess.
I just meant I didn't realize people count guns in their net worth.
There are people who own guns like people own art. Multiple old collectors items passed on from grandparents or parents.
A time to EVALUATE your jitters: | viewtopic.php?p=1139732#p1139732
CFM300
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Re: At what net worth would you to be comfortable purchasing $3MM house? (given certain assumptions)

Post by CFM300 »

scguy613 wrote: Fri Dec 03, 2021 1:45 am I wonder what Jed Clampett’s house in Beverly Hills would go for now.
It was the most expensive home for sale in the US in 2018, listed at $245 million.

https://www.latimes.com/business/reales ... story.html
EnjoyIt
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Re: At what net worth would you to be comfortable purchasing $3MM house? (given certain assumptions)

Post by EnjoyIt »

Firemenot wrote: Sat Dec 04, 2021 9:59 pm
KlangFool wrote: Sat Dec 04, 2021 9:57 pm
visualguy wrote: Sat Dec 04, 2021 9:40 pm
KlangFool wrote: Sat Dec 04, 2021 9:22 pm
visualguy wrote: Sat Dec 04, 2021 8:09 pm

Assets are more important than income. I don't get the obsession with income. You can have an unimpressive income, while having a high net worth. For examples, techies who made money at some point on IPOs or big RSU grants when they were at their peak, but now don't make nearly as much or are retired/semi-retired. There are people who inherit money, or get family help, etc. Income is just part of the picture. You need to look at the entire picture, including assets.

Moreover, you need to look at income+assets among current BUYERS in the area, not the entire population. Typically most of the population in these areas bought years ago when prices were lower.
visualguy,

This may matters to you. But, I don't.

I live in a neighborhood with an annual median household income of 150K with the median house price of 600K. It is about 4X. It is a good ratio for me.

As for why someone like living in an area with a 3 millions 2,200 square feet house with substantial lowered median income ratio, it is their choice. But, it is not for me.

KlangFool
Why would you care about that ratio? That's what I'm trying to understand. I never heard anyone use that as a metric for deciding whether an area is a good place to live or not.
Why would you want to live in an area with a great wealth disparity? Aka, the median income folks cannot afford to buy median house in the area? I don't.

<< Why would you care about that ratio?>>

Why won't you care about this ratio?

Is it because

A) you do not care

or

B) this problem does not exist where you live

(A) or (B)?

KlangFool
C — Nice weather and good schools?
Nice weather and good schools, but many pay for private school so maybe school isn’t that good.
A time to EVALUATE your jitters: | viewtopic.php?p=1139732#p1139732
Bryan995
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Re: At what net worth would you to be comfortable purchasing $3MM house? (given certain assumptions)

Post by Bryan995 »

Throughout most of SoCal you can find 5000sqft of pure luxury for 3-5MM. 8-15MM and you can land a full on estate (8000sqft+).

With a >900k W2 income and positive outlook on career growth / job stability I would feel more than comfortable locking in a historically low fixed rate mortgage on a 5MM home.

Without an income, I’d want 14M+ LNW to buy at 5M with 1M down.

But at that price point it would be a real home. Not some crappy 2000sqft condo in downtown SF or a 1960s ranch in palo
Alto. Without an income driving the need to physically be in VVHCOL, I would not stay put and compromise. Alternatively I would continue working to double my budget :)

https://ogroup.com/listing/5150-garrett-ct/
EnjoyIt
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Re: At what net worth would you to be comfortable purchasing $3MM house? (given certain assumptions)

Post by EnjoyIt »

Bryan995 wrote: Sun Dec 05, 2021 12:24 am Throughout most of SoCal you can find 5000sqft of pure luxury for 3-5MM. 8-15MM and you can land a full on estate (8000sqft+).

With a >900k W2 income and positive outlook on career growth / job stability I would feel more than comfortable locking in a historically low fixed rate mortgage on a 5MM home.

Without an income, I’d want 14M+ LNW to buy at 5M with 1M down.

But at that price point it would be a real home. Not some crappy 2000sqft condo in downtown SF or a 1960s ranch in palo
Alto. Without an income driving the need to physically be in VVHCOL, I would not stay put and compromise. Alternatively I would continue working to double my budget :)

https://ogroup.com/listing/5150-garrett-ct/
I’m with you. If I’m retired and dropping $3 million on a home it better be an awesome home. 2200sqft with a tiny yard just doesn’t make any sense to me. If I’m working in that area, then maybe so, but not retired.
A time to EVALUATE your jitters: | viewtopic.php?p=1139732#p1139732
KlangFool
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Re: At what net worth would you to be comfortable purchasing $3MM house? (given certain assumptions)

Post by KlangFool »

Californiastate wrote: Sat Dec 04, 2021 10:37 pm D) You can afford it

I never was a fan of guilt.
Good luck to you. You enjoy spending money to buy a small 3m 2,200 square feet house in a lousy congested area. It does not make sense to many of us. We could find better alternatives with 3m.

KlangFool
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mushripu
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Re: At what net worth would you to be comfortable purchasing $3MM house? (given certain assumptions)

Post by mushripu »

Out of curiosity, how do I find actual transactions data for state of california for number of houses sold priced > 1.5 mil.
This is to guage how much buying population is out there earning enough to buy at these levels.
I cannot imagine anyone outside a small section of population employed in tech buying at these levels.
pizzy
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Re: At what net worth would you to be comfortable purchasing $3MM house? (given certain assumptions)

Post by pizzy »

mushripu wrote: Sun Dec 05, 2021 6:30 am Out of curiosity, how do I find actual transactions data for state of california for number of houses sold priced > 1.5 mil.
This is to guage how much buying population is out there earning enough to buy at these levels.
I cannot imagine anyone outside a small section of population employed in tech buying at these levels.
An MLS service would be easy. Any friends/family that are realtors licensed in CA?
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Ron Ronnerson
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Re: At what net worth would you to be comfortable purchasing $3MM house? (given certain assumptions)

Post by Ron Ronnerson »

mushripu wrote: Sun Dec 05, 2021 6:30 am Out of curiosity, how do I find actual transactions data for state of california for number of houses sold priced > 1.5 mil.
This is to guage how much buying population is out there earning enough to buy at these levels.
I cannot imagine anyone outside a small section of population employed in tech buying at these levels.
I wouldn’t be so sure it’s just tech money involved in these transactions that are greater than $1.5m. I’m a public school teacher and live in a $1.2m house (median home price in my area is $1.8m). My wife is a stay-at-home parent. I bought my home for $500k a decade ago and paid down $150k in principal over that time through payments. So if I bought a $1.5m house, $850k (minus transaction costs) would be covered by current equity.

A good friend of mine at work, a teacher who is married to another teacher, bought his home 20 years ago. It’s worth $1.3m and paid off. He bought several investment properties about 10 years ago too and they’ve doubled or tripled in value. If he bought a $1.5 home, he could likely pay for it in cash after selling his current home.

Another teacher I work with just sold her home in which she lived for 20 years and bought a new one for $1.8m. She complains about the property taxes more than the mortgage.

None of us works in tech or is married to anyone in tech. We’re all in our 40s and just happened to buy a home 10-20 years ago so have some decent equity. We live in the East Bay - one of the least expensive areas in the region. People who bought on the peninsula or Silicon Valley years ago have seen much greater appreciation.

By the way, I bought my home for $15k down. I’m not recommending anyone else do that but just sharing that to show that it used to be a little easier to get your foot in the door once upon a time. There was no PMI to pay either in my case.

Anyhow, it’s definitely challenging for newcomers and young folks in this area these days, though. The whole region seems to be changing - and sort of quickly - as house prices have suddenly soared. It’s now getting out of reach of “regular” people who don’t already have equity. I’m not sure how things will work themselves out but it doesn’t seem sustainable like this forever.
Californiastate
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Re: At what net worth would you to be comfortable purchasing $3MM house? (given certain assumptions)

Post by Californiastate »

KlangFool wrote: Sun Dec 05, 2021 6:19 am
Californiastate wrote: Sat Dec 04, 2021 10:37 pm D) You can afford it

I never was a fan of guilt.
Good luck to you. You enjoy spending money to buy a small 3m 2,200 square feet house in a lousy congested area. It does not make sense to many of us. We could find better alternatives with 3m.

KlangFool
California VHCOL area real estate prices don't make sense to most people who don't benefit from the capital gains. That $3M "small" home could have easily cost $2M 18 months ago. Is this the top? People have been forecasting the top every since the Fairchildren first populated the area.
KlangFool
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Re: At what net worth would you to be comfortable purchasing $3MM house? (given certain assumptions)

Post by KlangFool »

Californiastate wrote: Sun Dec 05, 2021 10:42 am
KlangFool wrote: Sun Dec 05, 2021 6:19 am
Californiastate wrote: Sat Dec 04, 2021 10:37 pm D) You can afford it

I never was a fan of guilt.
Good luck to you. You enjoy spending money to buy a small 3m 2,200 square feet house in a lousy congested area. It does not make sense to many of us. We could find better alternatives with 3m.

KlangFool
California VHCOL area real estate prices don't make sense to most people who don't benefit from the capital gains. That $3M "small" home could have easily cost $2M 18 months ago. Is this the top? People have been forecasting the top every since the Fairchildren first populated the area.
Californiastate,

It won't matter to many of us. We have to be paid a lot of money every year in order to spend 3m on a 2,200 square feet house to live in this area. It would have to be at least about 1m a year.

I had about 1.5m when I was laid off July 2020. I would only take a job that allow me to work from home (Northern VA). So, I do not think 1m a year would be enough to get me to move and paid 3m to buy 2,200 square feet home at that area too.

My annual expense is about 60K per year including mortgage payment on a 2,000 square feet house.

<<That $3M "small" home could have easily cost $2M 18 months ago. Is this the top?>>

I was in Asia during the Asian Currency Crisis. The house price double or triple in 2 to 3 years. We all know how the story ended.

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2tall4economy
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Re: At what net worth would you to be comfortable purchasing $3MM house? (given certain assumptions)

Post by 2tall4economy »

pizzy wrote: Sat Dec 04, 2021 12:56 pm
2tall4economy wrote: Sat Dec 04, 2021 12:46 pm
pizzy wrote: Sat Dec 04, 2021 12:44 pm
2tall4economy wrote: Sat Dec 04, 2021 12:37 pm or guns
:shock:
https://www.businessinsider.com/range-r ... uv-2014-11

I don't judge, I just observe. I don't own any jewelry either. One's art is another's firearm I guess.
I just meant I didn't realize people count guns in their net worth.
Ah, yes I can see that. :)

My dad owned $80k of guns and my mom $40k of jewelry growing up and I had some minimally depreciating sports cars, so I have always had those three things as my go to for “expensive stuff that generally holds it’s value but isn’t an investment”
You can do anything you want in life. The rub is that there are consequences.
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Re: At what net worth would you to be comfortable purchasing $3MM house? (given certain assumptions)

Post by stoptothink »

2tall4economy wrote: Sun Dec 05, 2021 10:57 am
pizzy wrote: Sat Dec 04, 2021 12:56 pm
2tall4economy wrote: Sat Dec 04, 2021 12:46 pm
pizzy wrote: Sat Dec 04, 2021 12:44 pm
2tall4economy wrote: Sat Dec 04, 2021 12:37 pm or guns
:shock:
https://www.businessinsider.com/range-r ... uv-2014-11

I don't judge, I just observe. I don't own any jewelry either. One's art is another's firearm I guess.
I just meant I didn't realize people count guns in their net worth.
Ah, yes I can see that. :)

My dad owned $80k of guns and my mom $40k of jewelry growing up and I had some minimally depreciating sports cars, so I have always had those three things as my go to for “expensive stuff that generally holds it’s value but isn’t an investment”
My mom's cousin is a super successful lawyer who found a niche in gun trusts. He has told me stories about some of his clients with mindblowing gun collections.
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zaboomafoozarg
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Re: At what net worth would you to be comfortable purchasing $3MM house? (given certain assumptions)

Post by zaboomafoozarg »

Financial Samurai recommends an income of $1M/year and a net worth of $10M in order to buy a $3M house.

- House should cost no more than 30% of your net worth
- House should cost no more than 3x your gross income
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HomerJ
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Re: At what net worth would you to be comfortable purchasing $3MM house? (given certain assumptions)

Post by HomerJ »

stostech wrote: Thu Dec 02, 2021 4:09 pm I have an informal survey that I'm hoping will help me figure out appropriate saving targets..

Given the following assumptions:
- 45 years old
- 22 years of high earnings
- Moderate desire to quit current job, with a likelihood of never returning to anything lucrative
- No pension or employer provided healthcare (after quitting)
- Requirement to live in VHCOL area to be close to family
- Desire to purchase a nice house on a large lot. Assume ~3-4 bedroom, 2.5 bath, 2200 sq ft.
- Excluding potential housing and healthcare costs for 2 people, other expenses/travel/hobbies aren't expected to exceed $60k/year total
- Net worth is accessible and invested sensibly for long term growth (60-70% in low cost equity index funds)
What is the lowest total net worth that you would be comfortable purchasing a $3MM house?
What about a $5MM house?

(In this area:
random $3MM house on zillow estimates $3,100/month in property tax and $750/month in insurance
random $5MM house on zillow estimates $5,000/month in proerty tax and $1200/month in insurance)
Age 45 - 3% withdrawal rate
  • 60k expenses x 33 = $2.2 million.
  • Property taxes/insurance for $3 million house = $46,200 x 33 = $1.5 million
  • Health care = $12,000 a year (you won't spend this much when you're young, might spend more when you are 60-65, about right again once you get Medicare) x 33 = $400,000
  • House (pay cash for it) - $3 million
Total = $7.1 million minimum. Makes you pretty house-heavy with 40% of your net worth wrapped up in your primary residence.

And that assumes $60,000 a year is all you need for everything else for the next 40-50 years. You might want to add another $20k to that as a buffer in case you take up some expensive hobbies.

I'd shoot for $8-9 million

Note I'm assuming you never work again with this scenario (Based on assumption #2). If you think you can bring in SOME money with a lower-paying job for another 10-15 years, then you can adjust the numbers.
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joeblow
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Re: At what net worth would you to be comfortable purchasing $3MM house? (given certain assumptions)

Post by joeblow »

KlangFool wrote: Thu Dec 02, 2021 6:18 pm
I could retire and buy many beach houses and invite the family to those beaches.

KlangFool
KlangFool wrote: Thu Dec 02, 2021 5:45 pm
You were asking for our opinion. I give you mine. 3 millions is enough to retire on a nice beach some where.

KlangFool
Which country and which beaches? Serious question.

And for OP, I would say $8-10 million.
JackoC
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Re: At what net worth would you to be comfortable purchasing $3MM house? (given certain assumptions)

Post by JackoC »

arf30 wrote: Thu Dec 02, 2021 6:53 pm Overall carrying costs varies widely by state - a 3M house in NJ would be ~55k/year property taxes alone, and I'm guessing "only" around 15k in CO. This would have to factor in to the income/net worth equation.
It seems it's CA, questions about very expensive houses here very disproportionately are. However, it underlines how the specific location would factor in. For tax for example, I assume OP's estimates of taxes are correct. And a $3mil house in NJ could have $55k/yr prop taxes but it's lower where we are, roughly 1% of market value, with not a lot of places above $3mil though lots in the 2's with prop taxes in the 20's. I think NJ average is around 1.5%.

On expected price appreciation though, people justifying extremely expensive houses as large %'s of NW assuming rapid appreciation will continue are taking an obvious big and concentrated risk. Our house has appreciated at 7+% pa nominal both since 1940 (oldest known sale price, house is much older) and since we bought it in the 1990's (therefore somewhat higher after inflation rate in the latter period). But I would not assume or plan on that to stretch and buy it now (though I hope the next buyer one of these years makes optimistic assumptions to justify paying us too much :happy ).

This thread has converged more than some (no equivalent I saw of people saying you need to be worth $30mil to buy a Porsche 9114S, ca. $150k car :shock: ) with lots of responses around $10mil, and some responses aren't paying attention to what OP asked as if often the case so don't really count IMO (eg. *they* would not buy a $3mil house period, but OP is asking *if* you did...). Quit a high paying job, not plan on making much after that, buy a $3mil house. I wouldn't do that at NW $10mil including the house, I'd want to have a good deal more. But I've been quite conservative about financial risk since voluntarily leaving the fast lane, something I actually did so it's not hypothetical: I've never regretted it. But $10mil is not obviously too little if you really want to do it. But OP didn't say NW that I saw, maybe $100mil and happy nobody said you need $200mil. :happy
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stostech
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Re: At what net worth would you to be comfortable purchasing $3MM house? (given certain assumptions)

Post by stostech »

KlangFool wrote: Sun Dec 05, 2021 6:19 am
Californiastate wrote: Sat Dec 04, 2021 10:37 pm D) You can afford it

I never was a fan of guilt.
Good luck to you. You enjoy spending money to buy a small 3m 2,200 square feet house in a lousy congested area. It does not make sense to many of us. We could find better alternatives with 3m.

KlangFool
I'm a little surprised that you can call it a lousy congested area when the area hasn't even been defined. There are plenty of much larger houses for the same cost. I stated 2,200 square feet because I don't want a larger house. As has been stated in this thread it's the location that's the dominating expense in my case.

One man's paradise is another man's lousy. I'm sure the same thing can be said for where you live.
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Re: At what net worth would you to be comfortable purchasing $3MM house? (given certain assumptions)

Post by KlangFool »

stostech wrote: Sun Dec 05, 2021 1:17 pm
KlangFool wrote: Sun Dec 05, 2021 6:19 am
Californiastate wrote: Sat Dec 04, 2021 10:37 pm D) You can afford it

I never was a fan of guilt.
Good luck to you. You enjoy spending money to buy a small 3m 2,200 square feet house in a lousy congested area. It does not make sense to many of us. We could find better alternatives with 3m.

KlangFool
I'm a little surprised that you can call it a lousy congested area when the area hasn't even been defined. There are plenty of much larger houses for the same cost. I stated 2,200 square feet because I don't want a larger house. As has been stated in this thread it's the location that's the dominating expense in my case.

One man's paradise is another man's lousy. I'm sure the same thing can be said for where you live.
stostech,

<< I'm a little surprised that you can call it a lousy congested area when the area hasn't even been defined. There are plenty of much larger houses for the same cost. >>

You could define the place but it would not make a difference for many of us. At 3 million, we would be retired. And, if we are not working, we would not choose to live in that area.

<< One man's paradise is another man's lousy. I'm sure the same thing can be said for where you live.>>

That is true.

KlangFool
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Re: At what net worth would you to be comfortable purchasing $3MM house? (given certain assumptions)

Post by KlangFool »

joeblow wrote: Sun Dec 05, 2021 12:39 pm
KlangFool wrote: Thu Dec 02, 2021 6:18 pm
I could retire and buy many beach houses and invite the family to those beaches.

KlangFool
KlangFool wrote: Thu Dec 02, 2021 5:45 pm
You were asking for our opinion. I give you mine. 3 millions is enough to retire on a nice beach some where.

KlangFool
Which country and which beaches? Serious question.

And for OP, I would say $8-10 million.
joeblow,

Keep a home base in Singapore and travel/live in Malaysia, Thailand, and so on as you like.

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Re: At what net worth would you to be comfortable purchasing $3MM house? (given certain assumptions)

Post by Leesbro63 »

I’ve been thinking about this post. It’s really 2 questions:

1. What income should you have to buy a $3M house?

2. What is a safe withdrawal rate to assume to convert an investment portfolio into some or all of the income required in question number 1?
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Cheez-It Guy
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Re: At what net worth would you to be comfortable purchasing $3MM house? (given certain assumptions)

Post by Cheez-It Guy »

Houses that size are not worth those amounts in any version of reality that I inhabit. California is nuts.
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Re: At what net worth would you to be comfortable purchasing $3MM house? (given certain assumptions)

Post by shess »

Cheez-It Guy wrote: Sun Dec 05, 2021 2:38 pm Houses that size are not worth those amounts in any version of reality that I inhabit. California is nuts.
Nobody lives in California anymore, it's too expensive!
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Re: At what net worth would you to be comfortable purchasing $3MM house? (given certain assumptions)

Post by Cheez-It Guy »

So I've heard. Also, no one ever goes there anymore because it's too crowded.
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Re: At what net worth would you to be comfortable purchasing $3MM house? (given certain assumptions)

Post by LadyGeek »

The discussion is getting derailed on the choice of living location. The points have been made, let's move on. Please stay on-topic, which is:
stostech wrote: Thu Dec 02, 2021 4:09 pm I have an informal survey that I'm hoping will help me figure out appropriate saving targets..

Given the following assumptions:
- 45 years old
- 22 years of high earnings
- Moderate desire to quit current job, with a likelihood of never returning to anything lucrative
- No pension or employer provided healthcare (after quitting)
- Requirement to live in VHCOL area to be close to family
- Desire to purchase a nice house on a large lot. Assume ~3-4 bedroom, 2.5 bath, 2200 sq ft.
- Excluding potential housing and healthcare costs for 2 people, other expenses/travel/hobbies aren't expected to exceed $60k/year total
- Net worth is accessible and invested sensibly for long term growth (60-70% in low cost equity index funds)
What is the lowest total net worth that you would be comfortable purchasing a $3MM house?
What about a $5MM house?

(In this area:
random $3MM house on zillow estimates $3,100/month in property tax and $750/month in insurance
random $5MM house on zillow estimates $5,000/month in proerty tax and $1200/month in insurance)
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Re: At what net worth would you to be comfortable purchasing $3MM house? (given certain assumptions)

Post by ncbill »

stostech wrote: Sun Dec 05, 2021 1:17 pm
KlangFool wrote: Sun Dec 05, 2021 6:19 am
Californiastate wrote: Sat Dec 04, 2021 10:37 pm D) You can afford it

I never was a fan of guilt.
Good luck to you. You enjoy spending money to buy a small 3m 2,200 square feet house in a lousy congested area. It does not make sense to many of us. We could find better alternatives with 3m.

KlangFool
I'm a little surprised that you can call it a lousy congested area when the area hasn't even been defined. There are plenty of much larger houses for the same cost. I stated 2,200 square feet because I don't want a larger house. As has been stated in this thread it's the location that's the dominating expense in my case.

One man's paradise is another man's lousy. I'm sure the same thing can be said for where you live.
A $3 million, 2200 sqft house anywhere in CONUS is going to be in a heavily urbanized, VHCOL area...severe traffic congestion is a given.

If you really are in a position to retire and have the assets to contemplate buying a $3 million home why not move to a lower COL area and take the family members (those you want to be around) with you?

E.g. you could buy multiple homes on the beach down in Mexico and hire maids, cooks and gardeners (& caregivers for your older relatives) with that kind of money.
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Re: At what net worth would you to be comfortable purchasing $3MM house? (given certain assumptions)

Post by LadyGeek »

This thread has run its course and is locked (derailed). See: Locked Topics
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