Whether you love him or hate him, Dave Ramsey has a large and devoted audience, many of whom look to him for financial advice on everything from debt to investments. 

Here are his thoughts on the housing market, and what to expect with prices over the next five years. 

Go ahead and make that smaller down payment

With the current market conditions, consumers are asking if it even makes sense to buy a home right now.

In a recent video titled, “Wait Until Prices Go Down to Buy a House? Dave and his co-host answered a question from someone in the audience considering two options, one of which was to make a smaller down payment (less than 20%) to get into a house sooner.

The alternative was waiting for prices to go down. Dave quickly quashed that alternative, quoting data on current supply and demand in the housing market. 

Prices are not gonna come down… If you’re waiting on prices to come down, you’re not gonna buy a house ever… So, yes, I would buy, but don’t buy more than a fourth of your income on a 15-year fixed regardless of what you put down. And just understand you are signing up for PMI.

Dave Ramsey

The Data on Supply & Demand

The numbers behind this market’s supply and demand in no way support the idea that housing prices will go down. Listing prices for some houses might dip, thanks to location or other factors, but housing prices overall are trending upward. 

Here are some of the reasons why:

  • 5 million more millennials looking for homes than in 2007 (demand)
  • Half the number of new builds (supply) 
  • Competition with investors purchasing properties to rent, with rents going up 12-15%

What we can expect with housing prices

As Ramsey points out in the video referenced above, housing prices may not go up as quickly as they have in recent years. But they’re not going down. 

The slowing of the appreciation rate is similar to what agents are noticing as a decline in buyer offers. It may not be a white-hot market, but it’s still hot. The demand is still there. 

KCM president David Childers said as much in a recent episode of The Walk Thru: “The Truth About Mortgage Demand Decline”

I think a couple of things are happening: inflation is affecting every one of us… But what we’re seeing right now is exactly what we said would happen: rising interest rates are starting to moderate the market.

David Childers

The two main byproducts of that moderation are buyer uncertainty and hesitancy and a slowing of the appreciation of homes. 

That said, buyers are still making bids over the asking price. And as rents go up, renters are joining the bidding wars, making it a great time for rental investors to snap up available properties. 

Adjust your desires

In the YouTube video referenced earlier, Dave Ramsey told the audience to “adjust your desires” or, in other words, to not let their nice-to-haves list bully them into waiting for their dream home.

He follows the same vein in another video, titled, “Why RIGHT NOW is the Best Time to Buy a House! (Don’t Wait!),” but he tones it down a bit. 

I’m not saying you shouldn’t have nice things. I’m saying your nice things shouldn’t have you. And you need to kind of adjust your mind because normal is such a high standard of living, now, compared to a few years ago.

Dave Ramsey

Comments on both videos are mixed. Quite a few took issue with his implication that overly high standards are behind buyer hesitancy. Some criticized him for being out of touch with anyone not extremely wealthy. 

No one disputed the hard data. 

Dave Ramsey’s advice in a nutshell

In the following quote (from the second video) Ramsey sums up his answer to the question realtors are hearing all the time: “Is now a good time to buy a house, or should I wait?”

Right now is the best time to buy a house in the next five years. And here’s why: prices are not gonna go down… They’re gonna go up slower, but they’re not gonna go down. And so, five years from today, houses are gonna be more expensive… So, this is the best price right now if you’re gonna buy a house… If interest rates come back down, refinance. But don’t not buy waiting on interest rates to come down.

Dave Ramsey