Is a Housing Market Crash Coming? Here's What Dave Ramsey Thinks

If you're thinking of buying a home and wondering if a crash is coming, it might help to hear what Dave Ramsey thinks.

If you are thinking of buying a home, you may be hoping for a market crash. Home prices rose rapidly during the pandemic and mortgage interest rates have also been rising this year, so it may feel difficult to purchase a property under current conditions. But, if a crash happened and prices plummeted, houses would become more affordable.

While some people believe a crash may be coming because they fear the real estate market became a bubble due to record low interest rates during COVID-19, this is not necessarily going to happen. In fact, if you listen to personal finance expert Dave Ramsey, no crash is likely to come at all for the foreseeable future. Here's why.

Dave Ramsey has a clear answer to the question of whether a housing market crash is imminent

Ramsey's opinion on whether a market crash is coming soon is unequivocal and very firm. "If you're in a position to buy or sell, don't wait on the "Housing Market Crash" because it's not coming," the Ramsey Solutions blog reads.

Whether you're a buyer who is hoping for a crash or a seller who is fearing one, it's helpful to understand why Ramsey has such a definitive position on the direction of the real estate market. That's because he has a lot of data to back up his belief that prices are not going to fall anytime soon.

Here's why Ramsey doesn't believe a crash is coming

There are several key reasons why Ramsey thinks the housing market is not going to experience a major downturn anytime soon.

The first reason is that most projections suggest home prices are going to continue to rise over the coming year. While the increase won't be anywhere near the double-digit rise in prices that occurred in 2018 or 2019, it is expected costs will go up around 3% to 4% over the course of 2023. And this estimate makes sense because, as Ramsey points out, that "gets us back to the average increase for residential single-family homes the last 50 years."

Ramsey also explained that supply and demand will drive the price of houses (and everything else). And demand is high while supply of homes is low. "Since we've had a shortage of homes for about the last two decades, plus the demand is high, the prices are therefore high." The supply dipped even more during the pandemic when no one wanted to sell a property and many people wanted to buy one as a result of record low mortgage rates.

But even post pandemic, Ramsey does not believe that supply is likely to meet the demand anytime soon. There have been few new homes built in recent years, a lumber shortage cut construction rates further, and millennials have entered their prime home-buying years. "That's 12 million more households wanting to own a home today," Ramsey said. "This makes for too many buyers chasing too few houses."

Since all these points are valid ones, there's reason to suspect Ramsey is right about whether a crash is imminent -- although no one can predict that with certainty. For that reason, those who are hoping to buy a home soon may not want to put off the purchase in hopes of a crash because that could backfire if high demand and continued low supply push prices even higher.