Dave Ramsey, who is one of the most conservative financial educators we have right now, came out this week and said that home prices will not decline.
He stated three reasons for this.
1. High Demand
If we look at demand, currently, we are about 3,000 homes short on inventory when compared to the actual demand of buyers that want to purchase. This is primarily because of a lack of starter home new construction. If we go back to the year 2000, we would see, on average, about 300,000 homes being built on an annual basis that were the ideal home for the starter buyer.
Fast forward to today and we are only seeing about 50,000 homes being built on an annual basis. These are homes that appeal to the starter home buyer.
2. Continuous Home Appreciation
Ramsey also stated that right now is the best time to buy in the next five years. He stated that home price appreciation will slow but will continue to appreciate despite rising interest rates.
3. Dwindling Inventory
The final piece comes down to inventory. If we go back to the year 2008, we saw we had about 4 million homes available for sale. Fast forward to today and there are less than a million homes available on the current market.
For these three reasons, Dave Ramsey believes that home prices will not decline.