Dave Ramsey: House Prices ‘Aren’t Going To Go Anywhere but Up’ — His Homebuying Advice
Written by
Martin Dasko
Edited by
Cory Dudak
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Dave Ramsey, the popular personal finance expert, warned potential home buyers that they shouldn’t pause their plans to enter the market at this time. Ramsey recently mentioned that despite increasing interest rates, housing prices will continue to rise due to low inventory. As a result, Ramsey has boldly stated that you shouldn’t wait to enter the real estate market.
What’s Dave Ramsey’s advice for homebuying? We will examine his suggestions for those hesitant about entering the real estate market due to the current market conditions.
Work On Your Finances Before You Make An Offer
Ramsey wants you to hit two key financial milestones before making an offer on a home because numerous expenses associated with home ownership will add up quickly. Ramsey wants you to pay down your debt and build an emergency fund so that you’re in a position to get into the market. We will break both of these down.
Build An Emergency Fund
Ramsey wants you to set aside $1,000 for unexpected expenses that could pop up. This $1,000 fund should be a starter amount, as Ramsey wants you to increase this financial buffer once you pay off your debts. The goal is to eventually save up anywhere from three to six months’ worth of living expenses (including your possible mortgage payment) in your emergency fund.
Pay Down Your Debt
Once you’ve started an emergency fund, it’s time to tackle your debt aggressively. Ramsey is known for his “Snowball Method,” where you make all your minimum payments on your debt and then focus on paying off your smallest balance first. The goal here is to build momentum by paying off a debt balance so that you stay focused on the journey towards becoming debt-free.
What If You Can’t Afford High-Interest Rates?
The St. Louis Fed recently shared that the medium home price in the third quarter of 2023 was $431,000. Many potential homebuyers have been cautiously waiting for rates to drop. To make matters worse, the average 30-year fixed mortgage reached 7.76% recently. Many potential homebuyers have been cautiously waiting for rates to drop. However, Ramsey still believes that housing prices will go up in the future instead of coming down.
Ramsey urges listeners not to wait for conditions to improve in the real estate market. While pausing and waiting for the market to improve is tempting, you may be waiting a long time. Ramsy also reminded potential home buyers that they could always get into the market now and refinance that mortgage for a much better rate in the future.
There’s just one caveat. As mentioned earlier, Ramsey wants you to focus on getting out of debt and building an emergency fund before entering real estate.
Other Ways To Get Into Real Estate
If you’re worried about the various hidden costs associated with home ownership and the headaches involved with being a landlord, you have other options for investing in real estate.
Real Estate Investment Trusts (REITs)
These investments are publicly traded companies that will handle the work for you as they collect rent. They pass along the rent collected from tenants to shareholders through dividend payments.
Real Estate Crowdfunding Platforms
These platforms allow you to invest your money with others in a pool to purchase properties or shares of a property. You can invest in various real estate, from commercial buildings to farmland. You don’t have to worry about investing thousands of dollars and can be a passive investor.
Closing Thoughts
With the median house price at $431,000 and interest rates reaching the highest levels since 2000, it’s no secret why many prospective homebuyers are concerned. Ramsey believes that the housing market is stalled and that it’s time to create a budget so that you have a plan to enter the market now instead of waiting for housing prices to drop.
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