Mortgage rates are the highest they’ve been in over 20 years, and everywhere you turn, there’s talk about the inevitable burst of a housing bubble that has been growing over the past few years since the 2020 COVID-19 pandemic.
The housing market has cooled down a bit since the Federal Reserve raised interest rates five times to stem inflation. But does that mean home prices will drop considerably? When is the best time to buy a house? Personal finance guru Dave Ramsey has the answer. Keep reading to find out.
When is the best time to buy a house? Dave Ramsey shares insights.
“This is an unusual market because we’re kinda at this midpoint. It’s like it’s getting ready to flip. It’s not going to flip quick,” he said.
Prospective homebuyers shouldn’t be scared away by higher mortgage rates. You can always refinance your home when interest rates go back down, Ramsey said.
“Buy the house. Don’t not buy waiting on mortgage rates to come down,” he said. “Prices aren’t going to go down. They are going to go up slower, but they're not going to go down. Five years from today, houses are going to be more expensive.”
Ramsey says now is the best time to sell a house.
Now is also the best time to sell a house because there's still a semblance of the crazy white-hot market, Ramsey says. Even if the market cools down, sellers won’t lose money. They just may need to sit on their house longer to get a good price, he said.
“If you have a nice house and you put it on the market right now, it will go, and it will go for a really good price. It may not be that way six months from now,” Ramsey said in June.
Home prices aren’t going to get cheaper, Ramsey said. There has been only one time in the last 100 years when home prices declined, and that wasn’t due to high-interest rates, he said. Even in 1982, when mortgage rates climbed as high as 19 percent, home prices didn’t decrease, he said.
We aren’t in a housing bubble, Ramsey says.
Ramsey also rejects the idea that the U.S. is in a housing bubble. The only bubble he sees is in how fast home prices increase, and that bubble has already burst, he said.
“We saw in 2020 prices go up 32 percent nationwide. This year we’re predicting 7 percent,” Ramsey said. “That 32 percent bubble is going to burst. It already has.”
Home prices decrease when the supply of homes for sale exceeds the demand from buyers. The continuing short supply of homes is going to keep home prices high, Ramsey said.
“All the data we have shows that there’s an extreme shortage of housing. And new housing starts aren’t coming up fast enough to offset it, so we are not going to have an oversupply,” he said.