Dave Ramsey Believes the Next Generation Won't Be Priced Out of the Housing Market. Here's Why.
- Today's housing market is extremely difficult for new buyers to break into.
- But the conditions at play today may not be in place in a year or two from now.
Home prices may be sky-high now, but that won't last forever.
It's fair to say that today's housing market is tricky. So is the economy on a whole, for that matter.
Supply chain shortages led to rampant inflation, while a lack of housing inventory caused home prices to reach some of the highest levels buyers have ever seen. Throw in rising mortgage rates, and it's easy to see why first-time home buyers may be losing hope.
But financial expert Dave Ramsey thinks the next generation of homeowners doesn't need to worry about being perpetually priced out of the market. That's because at some point, the red-hot market is apt to cool off. And so buyers who may be sidelined now should have more opportunities once the market starts to normalize.
Buyers shouldn't give up
The reason homes are so expensive these days is because the demand for housing exceeds the availability of supply. It's the same reason why things like groceries, cars, and apparel are more expensive. We're still grappling with shortgages and consumers have money to spend thanks to a strong economy with low levels of unemployment.
But if you ask Dave Ramsey, he's convinced that what we're looking at in the housing market is a temporary situation where younger or first-time buyers are being priced out. But as the market cools, opportunities should open up.
Ramsey says that right now, there are millions of millennials in their mid-30s that are in their prime earning and home-buying years. And while higher home prices and mortgage rates may be temporarily forcing those buyers to sit things out, as housing supply opens up, things should settle down -- meaning, we should see a narrowing of the gap between real estate supply and buyer demand. Once that happens, home prices should begin to drop.
To be clear, Ramsey isn't anticipating a housing market crash. That's because home values are likely to hold strong even once prices decline, and there's also a lot of demand for homes.
But right now, what we're dealing with is too many buyers chasing too few homes. Once that situation reverses, the next generation of buyers should have an easier time getting into a home.
Gearing up for a home purchase
New buyers may not be in the best position to make an offer on a home right now. And it could be a few years until the market settles down and reaches a level that makes homeownership more broadly affordable.
But buyers who are sidelined now should take the opportunity to boost their finances so that when the housing market does calm down, they'll be in a stronger position to make an offer. That means working on boosting their credit scores to increase their chances of securing a mortgage, paying down existing debt, and socking away more funds for a down payment.
Home prices can only stay as high as they are today for so long. Younger buyers may have to exercise patience and wait things out, but in time, the dream of homeownership should become far more attainable.
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