Dave Ramsey again predicts what’s in store for the housing market after saying he got it right 2 years ago
After 46 years in the real estate industry, Dave Ramsey is confident in his real estate analysis. On an episode of “The Ramsey Show,” he took a victory lap on a prediction he made about the U.S. housing market in July 2022: There was “zero chance” of a housing crash.
Relatively stable house prices, despite higher interest rates, appear to have vindicated Ramsey’s bet.
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“You were wrong!” he said of his criticism, adding: “I really know what I’m talking about.”
Here’s why Ramsey wasn’t convinced by the bleak housing outlook.
Supply crisis
When the Federal Reserve began raising interest rates in 2022, many feared that rising borrowing costs would reduce home sales and prices.
However, Ramsey says he was skeptical of these concerns and instead expected house prices to remain stable or increase slightly. His thesis was based on a simple supply-demand dynamic.
“When there is a shortage of an item… prices go up,” he said. “It’s basic economics.”
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This theory seems to be confirmed by a report from the National Association of Realtors. Home prices have climbed 5.7% over the past year as of February, with the median value of U.S. homes worth $384,500.
The combination of rising prices and rising mortgage rates has caused housing affordability to deteriorate. In 2023, only 15.5% of homes available for sale could be considered “affordable” by a household earning a typical income, according to data analyzed by Redfin.
Unfortunately, Ramsey said, he sees no end in sight to this housing crisis.
Housing forecast
The factors that led to the current crisis are likely to persist, at least for the foreseeable future. Realtor.com’s analysis found that the gap between the number of households formed and the number of single-family homes built was 7.2 million in 2023.
“Prices will go up,” Ramsey predicted. “That’s what’s happening with real estate. I promise you, you can look up this (episode) in five years and you’ll say ‘my God, that old fart was right again.’
When it comes to interest rates, Ramsey doesn’t make a firm forecast but advises buyers to instead focus on price and refinance when borrowing rates drop.
“Marry the house, date the price,” he said.
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This article provides information only and should not be considered advice. It is provided without warranty of any kind.
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