Can’t Afford Your Housing Market? Here’s What Dave Ramsey Says To Do
Written by
Nicole Spector
Edited by
Amber Barkley
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If you’re looking to buy a home in 2024, you’ll need to first know whether you can afford your housing market. If, for example, you live or want to live in San Francisco or New York, you may find yourself instantly priced out. This can be discouraging and disruptive, but it doesn’t have to be the end of the quest.
If you can’t afford your housing market, there are a number of things you can do to get to a place where you can — or to come up with a whole new plan that is more friendly to your finances.
Money guru Dave Ramsey has much to say on what to do if you can’t afford your housing market. Here’s a look at some top tips, sourced from his blog, Ramsey Solutions.
Reset Your Expectations About the Type of Home You Want
Been dreaming of living in Hawaii your whole life only to find that, now that you’re ready to buy a home, there’s simply no way you can financially full off this feat? It’s time to unplug and reset your expectations. This means revisiting the list you’ve made regarding what you “need” in a home. Perhaps you’ve gotten overambitious in that department.
“A remodeled four-bedroom craftsman home on an acre lot might be out of your price range, so think about what you can change,” Rachel Cruze wrote on Ramsey Solutions. “A three-bedroom home, a half-acre lot or a ranch-style house that needs a little work could be a perfect fit for your budget.”
Broaden Your Search
Do you really need to live in that exact zip code? Is being able to access that particular public school so important? Do you have any wiggle home on location at all — even if it just makes the difference of a few miles? If you’re open to it, broaden your home search.
“Broadening your search might change your mind about where you actually want to be,” Cruze wrote, adding that home prices are typically more affordable outside of cities, where all the action is.
Up Your Income or Relocate Altogether
If, even after resetting your expectations and widening your search, you still can’t find the right home you can afford in your market, it’s time to make a couple moves. First, you may want to seek a higher paying job or even add a side hustle to the mix. Additionally, you should consider relocating to a different place altogether. Perhaps you can blend a new job in with a new location.
“I know, getting a new job or moving to a new city can be scary, especially if you’re comfortable right where you are,” Cruze said. “But if buying a house is really important to you, you’ll have to face your fears and get uncomfortable.”
On the Ramsey blog, Cruze also provided a helpful piece of math advice for those about to embark on a new job search.
“Figure out the minimum salary you’ll need to buy a house,” Cruze said. “Your monthly house payment — including principal, interest, insurance and HOA fees — should be no more than 25% of your take-home pay. So if your house payment is $2,000, your take-home pay should be about $8,000 a month or $96,000 a year.”
Remember: This Needn’t Be Your Forever Home
You may be feeling hesitant to overhaul your expectations and focus more on what you need than on what you really want. But that’s OK. Why? Because the home you’re buying in 2024 needn’t be the home you stay in for the rest of your life. Especially not if it’s your first home.
“It doesn’t need to have everything on your wish list, because you’re probably going to move one day, anyway,” Cruze wrote. “Letting go of the idea of a luxury kitchen or gleaming hardwood floors might be tough, but it’s worth it to avoid getting in over your head financially. (It’s okay to have nice stuff, just don’t let your nice stuff have you.) Remember, you can always upgrade your home’s features down the road.”
Save Longer
Now, if you just can’t get that four-story house out of your head, even though the two-bedroom condo is what you can actually afford in your desired market, you should decide whether saving longer is an appropriate move to make — and a reality you can handle.
“If you risk buying a house when you’re not truly able to do so, you’re asking for trouble,” Cruze wrote. “But you can start saving.”
And the waiting that happens while you’re saving up for your dream house could also behoove you.
“If you want to buy a home in a pricey market, waiting may be your smartest move,” Cruze said. “In the meantime, keep saving. Your area may seem more affordable three years from now, when you have a hefty down payment saved!”
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