After 46 years in the real estate industry, Dave Ramsey believes in his real estate analysis. On an episode of “The Ramsey Show,” he triumphed over a prediction he made about the U.S. housing market in July 2022: that there is “zero chance” of a housing crash.
Ramsey’s bet appears to have been correct, as home prices have remained relatively stable despite rising interest rates.
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“You were wrong!” he said of his critics, adding, “I really know what I’m talking about.”
That’s why Ramsey was not convinced by the bleak outlook for housing.
shortage of supply
When the Federal Reserve began raising interest rates in 2022, many feared higher borrowing costs would reduce home sales and prices.
But Ramsey is skeptical of these concerns, insisting that he instead expected house prices to remain stable or rise slowly. His thesis was based on simple demand and supply dynamics.
“When goods are in short supply, prices go up,” he said. “That’s the basics of economics.”
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This theory seems to be borne out by a report from the National Association of Realtors. Home prices have risen 5.7% over the past year as of February, with the median value of a home in the U.S. at $384,500.
Rising prices and rising mortgage rates are worsening housing affordability. According to data analyzed by Redfin, only 15.5% of homes available for sale in 2023 will be considered “affordable” for households earning a typical income in 2023.
Unfortunately, Ramsey says there is no end in sight to this housing crisis.
housing forecast
The factors that led to the current crisis will continue, at least for the foreseeable future. A Realtor.com analysis reveals that the difference between the number of households formed and the number of single-family homes built will be 7.2 million units by 2023.
“Prices are going to go up,” Ramsey predicted. “This is what’s happening in real estate. I promise you, look into this. [episode] Five years from now, you’ll be thinking, “Wow, those old farts were right again.” ”
When it comes to interest rates, Ramsey doesn’t make any firm predictions, but advises buyers to focus on price instead and refinance when borrowing rates drop.
“Marry the house and date the charges,” he said.
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