Like many people his age, Ethan from South Carolina is waiting for the perfect moment to hop onto the property ladder.
In an email to The Ramsey Show, the 28-year-old said he and his wife earn more than $200,000 a year and have roughly $180,000 in savings and investments. They’re just waiting for home prices to slide lower before snapping up their dream home.
But according to finance personality Dave Ramsey, that’s a big mistake.
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“Interest rates are going to do what they’re going to do,” he told Ethan during a recent episode. “House prices are not coming down … there’s no fix on the horizon for that.”
Here’s why the veteran property investor is so confident about the resilience of the property market in 2025 and beyond.
‘Seventh-grade economics’
In theory, home prices are correlated to interest rates. When the cost of borrowing money for a mortgage rises, housing affordability craters, dragging demand lower.
However, Ramsey highlights the fact that interest rates have been elevated for a while but that so far, the impact on housing has been minimal.
As of late April, the average 30-year mortgage rate is 6.81%, according to the Federal Reserve — significantly higher than the 3% rate during much of 2021.
Put simply, home prices have softened, but not nearly as much as expected. To understand why, Ramsey points to another factor: supply.
“There’s a serious shortage of housing,” he says, which is effectively putting a floor on the price of a home.
According to him, this supply-demand imbalance is “seventh-grade economics.”
The formation of new households has exceeded the rate of home-building for an extended period. That, according to calculations by the Brooking Institute, has created a shortage of approximately 4.9 million housing units as of 2023.
With that in mind, Ramsey and his co-host Jade Warshaw encourage Ethan to pull the trigger right away.