Wisdom from Dave Ramsey

Dave Ramsey is a financial guru and real estate agent who has a lot to say about current market conditions. I have gleaned some of his real estate related pearls of wisdom from his blogs and vlogs to share with you.

“Now is the best time to buy a house in the next 5 years. … If interest rates drop…. refinance, BUT DON’T NOT BUY THE HOUSE.”

“Prices are not going to come down. If you are waiting for them to come down, you are never going to buy a house! The housing market has only gone down two times in the last 100 years – way back during the 1930’s and again in 2008. And the market snapped back fairly quickly after 2008.”

“We are not going to see a housing crash. Remember the only factors that could cause home prices to go down are related to supply and demand. There are ways buyer’s demand could sink. For example, the Federal Reserve could continue to increase federal interest rates. While the Fed doesn’t directly set mortgage rates, federal interest rate hikes usually cause mortgage lenders to raise their mortgage rates, too. Some buyers may back out of the market to avoid those high interest rates. But, again, the pandemic had so many buyers putting off their plans to buy a home, so buyer demand is still greater than housing supply – which is why prices will continue to go up but at a slower pace.”

Here are some of his predictions for 2023:

“Some news headlines make it seem like the housing market downturn will be worse in the coming years. But experts at the National Association of REALTORS and Freddie Mac predict the number of sales will either experience no increase or slow to 5.4 million and home prices will soften to a normal growth rate of 2-4% in 2023. The news often hypes things up to get your attention. Ignore the headlines and look at the data. But the truth is, slower growth isn’t a sign of crashing.”

When will it be a buyers’ market?

“In a buyers’ market, there are more homes than buyers, and since home supply is still low, it doesn’t look like there will be a buyers’ market anytime soon. The good news is the market isn’t as hot as it was 6 months ago. If you’re looking to buy, you’ll have a few more options and maybe less competition. It might still take longer to save for a down payment or find your dream home, but the frenzy is slowing down.”

Ramsey’s recommendations for safely getting into a home are more conservative than the mortgage industry’s opinions:

“Your monthly payment will be 25% or less of your monthly take home pay.”

“You have a down payment. A 20% down payment is ideal because you will avoid paying private mortgage insurance (“PMI”). But 5- 10% is okay too, if you are a first-time home buyer, just be prepared to pay PMI”

Should I just rent?

“I am not going to tell you to go rent something right now. That would put you in the hole with the rental amount, plus the fact that housing prices are going to continue to rise, even if not at the pace they’ve risen recently. In other words, if you rent, you’re going to lose money two different ways – with the real amount and home prices continuing to increase. Buying high and selling high isn’t a big deal. But buying high and later buying after renting – bad idea.”

Go buy the house!