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Dave Ramsey: Now is the Time to Buy

Dave Ramsey: Now is the Time to Buy

Personal finance author Dave Ramsey said today’s economic conditions can favor homebuyers. But when interest rates go down, prices may go up.

NEW YORK – High interest rates understandably cause many people to shy away from buying homes, but there are a few other factors potential homebuyers should consider.

Dave Ramsey, personal finance author and host of The Ramsey Show, explained how taking a close look at the housing market — and one's own financial well-being — can lead to the conclusion that it's wise to buy a house now.

"The housing market is heating up with more homes for sale, but there still aren't enough to meet demand, so prices keep climbing," wrote the Ramsey Real Estate Team in an email sent to TheStreet on April 25.

The email cited housing market data it attributed to Realtor.com and Freddie Mac.

Specifically, the month-to-month median home price from February 2024 to March 2024 rose 2% from $415,500 to $424,900. Also, the 15-year fixed mortgage rate rose .08% from 6.10% in February 2024 to 6.18% in March 2024.

On a year-to-year basis, the data cited in the Ramsey email showed that total homes for sale rose from 562,444 in March 2023 to 694,820 in March 2024 for a 24% gain.

Ramsey explained one thing that is unlikely to change soon: high home prices.

"If you're ready to buy," the continued, "Now's the time."

Ramsey explains how economic conditions can favor homebuying now

Ramsey explained a few big reasons to buy a house now if your finances are in order for such a move.

First, there is a lot of speculation that interest rates will go down sometime late in 2024 or in 2025. Ramsey warns that lower rates would encourage more people to buy homes — and sellers would respond to the increase in demand by raising prices.

Second, Ramsey suggested that homeowners can always refinance at some point in the future.

"If you wait to buy and home prices go up, you're stuck with the higher prices," Ramsey wrote.

Ramsey also warned that the Federal Reserve is unpredictable. Sometimes the certainty of now is easier to plan for than the uncertainty of the future.

Putting these economic circumstances aside, however, Ramsey explained his views on how to tell if you are financially ready to buy a house.

Ramsey suggests four major financial items you should consider to be sure you are ready for homebuying in this economic environment.

The first is to be sure you are completely out of consumer debt, including car loans, credit cards, and student loans.

Ramsey also believes people should have three to six months of an emergency fund available, because there are usually expenses and financial circumstances that come up that are difficult to predict.

Ramsey also recommends a down payment of at least 5% to 10%. But he strongly encourages putting 20% down, if possible, to avoid paying for private mortgage insurance (PMI). PMI is a monthly fee that protects the lender if the borrower is unable to pay their mortgage.

Regarding house payments, Ramsey believes homebuyers should be sure their monthly payment will be no more than 25% of their take-home pay.

"Any more than that, and you run the risk of not having enough money left in your budget each month to put toward other important financial goals," Ramsey wrote. "You'll be house poor."

"We know how badly you want to be a homeowner and start building equity," Ramsey continued. "But we talk to people every day who bought a house before taking those steps and wound up regretting it because they got stuck with a giant, expensive burden."

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Thomas McDaniel, Realtor Associate
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Real Estate Sales Force
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814 Ponce de Leon , Suite 503 , Coral Gables , FL 33134
thomasmcdaniel@resf.com
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