Dave Ramsey was right! The Housing Market Still NOT Crashing!

Dave Ramsey was right! The Housing Market Still NOT Crashing!

In July, Dave Ramsey hosted a "Real Estate Reality Check" with millions of viewers to analyze where the real estate market was headed. And while so many news sources and blogs and "experts" were predicting a housing crash, Dave Ramsey said that there were too many buyers available and ready to buy and not enough houses for a crash to happen.

Well, he was right.

In that time, while interest rates have continued to increase to 20-year record highs, and while sales activity has declined, the prices of housing have continued to increase, although a slower rate than before, yet still higher than the rate of inflation.

This week, mortgage rates actually declined about 0.375% of a point in interest, but still closed slightly above 7

Finally, even the real estate news industry is acknowledging that rates have closed above 7%, even though we crossed that threshold 3 weeks ago.

So, what does this mean for the market?

The real estate industry is still desperate to prove something worthy of fear and drama, but, really, it does not really appear, yet.

For example, one of the drama queens of the real estate news industry is MSNBC, who reports that mortgage demand from homebuyers is nearly half what it was a year ago.

But, remember, how a year ago, the industry was talking about how unaffordable housing was? And the storyline was there for every sale there were 10 disappointed shoppers who lost out. So, now there are only 5 disappointed buyers for each sale? Is that significant? Well, it turns out that this change is enough to reduce the increase in housing prices, but not to cause a decrease.

What we do know is despite all the news and drama and interest rate changes and other economic chaos, overall, housing prices have continued to increase, though at a slower rate than other times during the COVID period. So, while in some pockets there are price reductions, the median price has continued to increase both nationally and in every region of the US.

There are two leading factors causing housing prices to continue to go up.

First, with a general economy with inflation, and the only alternative to buying a home is renting a home, rental prices have continued to rise making the alternative of buying seem relatively desirable.

As you can see, the rate of rental increasing has slowed recently but still is increasing.

The second factor is the inventory. In order for prices to go down, there has to be more homes available for sale for buyers to use to compete with each other for sellers then to reduce their prices. And the inventory remains at record lows.

As Redfin's inventory shows, our current inventory is still lower than at any time before the COVID era. And when you plot the increase in price against the inventory, you can see the past 4 months' inventory are at levels associated with continued increases in housing prices.

And when you combine the limited inventory with the increase in households in the US (5 million more now than in 2018), you can see there are just too many buyers to let prices go down at all.
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Bill Gross, The LAProbate Expert
I am a real estate broker in Los Angeles, CA focused on probate real estate and the leader of a team of over 1,100 agents nationally probate experts.

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