Real Estate the Ramsey Way - Is it Finally A Buyer's Housing Market?

Episode Date: May 26, 2025

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Dave Ramsey here and welcome to another episode of Real Estate, the Ramsey Way, where you'll learn how to make smart home decisions, avoid costly mistakes, and navigate homeownership with confidence. One of the ups and downs of the financial world, George, in the past recent years, has been the housing market. Yep. Man, it's been, it's been. It's been... It's the elephant in the room. I shouldn't say ups and downs. It's kind of just been up, I guess. It's just been like a stagnant, scummy pocket.

of just like make something happen. Let's see some movement here. It's so hard. I know. So an article from USA Today came out and it says, is it finally a buyer's market? What to know about home prices outlook? Here we go. Prices surged during the pandemic up roughly 50% over the last five years.

And mortgage rates hit rock bottom. Americans reconsidered where they wanted to live during that time. Well, all these gains have had consequences. Homeowners are sitting on record levels of home equity. But it's increasingly challenging for. buyers, especially the first-time home buyers, to break into the market. But now prices, as they say, are falling back to earth and may continue to do so. So this is not a crash, but we're sort of getting back to reality instead of the inflated prices that we've seen. So the Mortgage Bankers

Association expects prices to rise only 1.3% in 2025, and Fannie Mae, economists forecast a 4% price gain. So it's worth noting many analysts have predicted a similar trend in the past, only to see a sharp imbalance between demand and available supply, keeping prices elevated. So I think that's kind of what's been happening is people are now just, they're like, all right, fine, we're ready to list our house. And so the market does have more supply than it used to. Yes, yeah. But there's not quite demand meeting it, which would cause prices to fall.

That's right. Well, Relater.com, their data shows that in April, there were 959,251 listings that were active, and that is 30% higher than April of last year. So 30% more houses sitting on the market, which again, for buyers out there, that means you actually can negotiate. Because for a while, I know at least in our area, George,

people were bidding to buy a house. Like they were one of 20 people sitting there being like, we all want this house who's going to take the highest offer. And now there is... And you just got to sit back and watch all these offers roll in. And now you're like, well, someone maybe want to look at our house in the next week? Yeah, that's right.

Anyone want to make an offer? So what's happening is, list the house and then a month in you go, all right, we got to lower the price by $10,000, $20,000 until finally you have a buyer. And so it's, they're saying it's too soon to call this a buyer's market and experts like kept caution that the national housing market is in fact increasingly local, which is a great reminder of, well, this happened in my town. Well, your town might be a real hot area where this is happening and some towns may not be experiencing this at all. So it's hard to say cross the board. It's a buyer's market. But realtor.

Com data. Yeah, they're only rising, again, 1.3%. Where in past years it's been 4.3%. Yeah. Realtor.com data is showing that more sellers are making price cuts, which is a signal that we're heading towards a buyer's market. There you go. Well, if you are looking to buy or sell a home, make sure to check out one of our Ramsey

trusted pros because they can help you when it comes to buying and selling because all that's a really big deal. And there's a lot of clickbait headlines out there and confusing data. And so, again, we're seeing, though, it's interesting. The median home prices went up slightly last month to $430,000. That's the median price of a home. So right in the middle, smallest to largest in the list. In America, that's right.

So if you want to know more about the housing market trends and, too, even get connected with an agent and some other free tools around real estate, go to ramsysolutions.com slash market, and we have tons of information there for you. Because again, buying and selling a home, it's one of the largest purchases or sales that you make in your life. And so making sure that you do that well with a lot of knowledge. John's with us in Dallas. Hey, John, how are you? I'm doing wonderful. How are you guys? Better than we deserve. What's up? Thanks for taking my call. So I guess a little bit of background. My wife and I are in our early 30s. We have a young growing family, and in the last year, we purchased her family home from my mother-in-law. Some things kind of changed in our lives

recently and decided we needed to move home and spend some more time with her. We are currently, I'm going to say, in between step six and seven. So home is paid off. We've been basically banking everything else. We're in a position where if the home is paid off. if you're in seven. Yes. Well, so the reason I say it that way, we know we're going to have to do some pretty serious renovations to the house to make it work for us long term.

It's on, you know, a decent amount of land. It's on a good school district. We see our family growing there, but there's going to be significant, you know, changes that need to be made to support our family long term.

And I'm wondering, is a HELOC the right way to do that? You know, I kind of went into the renovation process with the mine. instead of we do a little bit at a time and just kind of pick away, you know, room by room and talking to the general contractor, the changes that we're going to have to make. That's not really possible to do it that way. So it's kind of an all-orressing kind of thing, I think, in their minds.

And it's... Yeah, they're not paying the bill. That's true. Yep. If they won't pay the bill, they get an opinion on that. I mean, I understand that they have a structural concern or are they, approach to the construction, but, you know, they're not taken into consideration your family.

So what is your household income? Last year, low 200s. Okay. And so what's this project, if we looked at it in total, going to cost? The current budget is right now 150 to 250, and some of that they're not going to determine until, well, they need to get inside the, inside the wall. walls and inside the attic and the structural things. Oh, crap.

We're not to that point yet. We're not going to start a project when we don't know within $100,000. That's crazy. That's going to cost. Okay. You don't have a contractor. You've got a guy. I want some money.

No, I mean, we're going to have this dialed in in detail as to what we're going to get into here. This range. Let me tell you what that'll turn into, 350 is what that'll turn into because this guy's making this crap up as he goes. No, thank you. No. So anyway, all right, let's just pretend it's a $200,000 tight, detailed budget that we know is accurate as opposed to what you're dealing with now. And let's use that.

You make $200. Okay. Then what I'm going to do is I'm going to break the project down into chunks as small as I possibly can, which is what you were trying to do room by room. You may not be able to approach it room by room. You may have to have another angle on it. You may have to say, okay, the first chunk is $75,000. box because we got to do this whole whatever, right? And then the next chunk is 10 and the next chunk is 30 and the next chunk is whatever. And just to break it out in chunks and then you save

up into a chunk at a time. And, you know, if the first one is a big one, you hold off until you save that much money making 200K. Yep. Okay. I'm not going in debt to do it. Why would you need to? You make plenty of money. And you're going to be there anyway. So you can do this over. time. What are they telling? What's, is there a, is there a danger? Like, is there a, I think it's a convenience. I think it's a convenience thing. I think there's some load bearing walls that, you know, really to do it, I think it's going to be the first big chunks. They're going to do all that together. And then I think there are some separate smaller chunks they can break it into. I mean, I tell the guy, you're either getting paid or you're not. So you're either getting paid a little,

but little or nothing at all. What's just house worth? Not counting the land. So that's a harder question. Probably $2.50 maybe. The house is worth $2.50 and you're going to pay $2.50 to repair it? That's the, yep. Wow.

And that goes back to the emotional element of it being a child at home. It's on a decent amount of land and would be hard to replicate for that price elsewhere. too. I'm hearing it's a bad idea. If you don't have a good architect and you guys don't really spend a bunch of time thinking this through, you're going to build. Overbuild? No, you're going to build a horrible property because you're trying to take something that was not designed to be a $400,000 property and turn it into that. And so it's going to feel like what we call a country house where you just add rooms,

and move walls around, and every time some other kids born, we add another room to it or something, and that's country built, is what we used to call it anyway. It doesn't mean that if you build a house in the country, you're doing it wrong. That's not the point. If you're doing it this way, it's wrong.

I'm afraid, this is such a massive renovation ratio-wise. That what you're trying to pull off is very hard to do. Let me say it that way. it's very hard to end up with a great end product that is a reasonable thing when you spend as much on it as it's worth. It's almost easy. It's from a tactical standpoint, not a financial standpoint, it's easier to push it down and build something else. A lot easier than try to take this clay pot that's already been through the kill and reshape it. Right? That's what we're, it's very difficult to do what you're doing.

Minor, you know, if you're, you told me you're going to spend 50,000 or 60,000 on a $250,000 house, you can do that. You can do a lot of stuff for that. That's a different thing. But you're talking about basically rebuilding this whole house and you could really end up with a piece of crap. I feel like there's a way that he could do that and still salvage parts of it and use that for the rebuild. You really need to think that you need an architect to lay this. this out so that when you're done, you don't build something that looks like a pretzel. You know, it doesn't look like old man, old lady in the shoe or something. And because that's what this kind of stuff, it evolves into a grotesque thing that, that all because of the emotion of it being a childhood home. And then you made a bad decision. So what your, it can be done. And I'm not telling you not to do it, John. I'm saying you got

to really back back up from this. You got to have a good, solid, detailed, accurate budget that you're going to hold everybody accountable to. We've got to break it into parts that we can cash flow, and we really need a good floor plan, engineering plan, wiring and plumbing plan that we end up with that looks like somebody thought it through instead of like,

well, we need an extra bedroom, boom. You know, that's, geez, man. It's a mess. So you really, what you're trying to do is very hard to do for somebody's never done it before and not end up with a mess yeah it's very hard to do be very careful sir get every t crossed every i dotted everything thought through before you raise a hammer toward a wall and everything dialed in because if you don't you're going to end up in a financial mess with a bad product and something that takes

years and years and years to accomplish and shouldn't and then when you're done you don't have a good thing. Yeah, it's very scary, very scary. I mean, it honestly is a lot easier to build a house. Yeah. From the dirt. A whole lot easier and end up with a great product than it is to do even a 40% or 20% rehab, much less 100% rehab. Yeah. That's, it's just got to feel tough because he's already paid it off. He's paid it off and then he's like demolishing the thing. Yeah, yeah. But I mean, a lot of people do tear down. down just to get the lot. That's true.

That's true. And obviously we're not going to get to tear this one down because it's childhood home. Yeah. But and all the emotion he brought that up three times. So obviously we're not bulldozing it. But, um, wow, tough, tough, tough. You can do it, but you really need to lean in on the details. You need to be project manager extraordinaire.