Many know Dave Ramsey from his radio show and his website where he offers some of the best financial advice around.
Recently, he took a bit of a ‘victory lap’ regarding his real estate market predictions.
Relatively steady home prices, despite higher interest rates, seem to have vindicated Ramsey’s bet. “You were wrong!” he said of his critics, adding, “I freaking know what I’m talking about.”
No Housing “Bubble” – Appreciation to Continue
When the Federal Reserve started raising interest rates in 2022, many were concerned that higher borrowing costs would reduce home sales and prices.
However, Ramsey claims he was skeptical of these concerns and was instead expecting home prices to remain steady or rise modestly. His thesis was based on simple supply-demand dynamics.
“When there is a shortage of an item … prices go up,” he said. “That’s basic economics.”
This theory seems to be vindicated by a report from the National Association of Realtors. Home prices climbed 5.7% over the past year as of February, with the median American home being worth $384,500.
Dave’s Latest Prediction
“Prices will go up,” Ramsey predicts. “This is what’s happening with real estate. I promise you, you can look up this [episode] five years from now and you’re going to go ‘god, that old fart was right again.’”
As for interest rates, Ramsey doesn’t make a firm prediction but advises buyers to focus on prices instead and refinance when borrowing rates go down.
“Marry the house, date the rate,” he said.
Who Is Dave Ramsey
Ramsey also makes efforts to educate people on the ways of using monetary resources judiciously, through his ‘Financial Peace University,’ speaking in churches and community centers.
Ramsey advises everyone to follow his prime mantra, “Avoid debt at all costs.”
Dave’s 7 “Baby Steps”
One of Dave Ramsey’s financial literacy campaigns features seven “baby steps” that individuals and households should pursue in order to gain financial freedom. Each step should proceed when the previous one has been completed or is near completion. These include:
- Establish an emergency savings fund of at least $1,000
- Pay off all non-housing debts ASAP starting with those with the smallest outstanding balances (known as the debt snowball method)
- Increase your emergency fund to 3-6 months’ income
- Invest 15% or more of your gross monthly income into a retirement account like a 401(k) or IRA
- Start college funds (if you have children) in qualified accounts like 592 plans and ESAs
- Pay off your mortgage as early as possible
- Build wealth
In Conclusion
If buyers are waiting to purchase thinking that home prices are going to move lower, that is most likely a bad idea. Instead, Marry the House but Date the Rate – purchase today and gain appreciation and refinance later if rates go down. Reach out to me for more, as it would be my pleasure to put a home-purchase plan in place!
The blog postings on this site represent the positions, strategies or opinions of the author and do not necessarily represent the positions, strategies or opinions of Guild Mortgage Company or its affiliates. Each loan is subject to underwriter final approval. All information, loan programs, interest rates, terms and conditions are subject to change without notice. Always consult an accountant or tax advisor for full eligibility requirements on tax deductions.
