Real Estate the Ramsey Way - Should We Sell Our House in Case of Economic Collapse?

Episode Date: January 13, 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 home ownership with confidence. Shane is in Denver. Hi, Shane. What's up? Good afternoon, sir. How are you doing today? Better than we deserve. How can we help? Of course. Yeah, hey, I was, I'm just calling to my wife and I, we bought our house in 2021. for about, we bought it for 500,000. We put 100 down on it.

We had about 100 in our savings account that we kept in there too for our emergency fund. We have now paid it down to about two, we owe about 280 on it as today. Very good. So in three years, we've put down another 115,000 into it. You're killing it, dude. We have no debt. Our cars are paid off. We have no debt, and we have still about 100 in our savings account today as well.

We are worried about the house economy crashing here in the next six months or so, and our mortgage rate is at 2.5%. Let me stop you. I'm sorry. Why are you worried about the housing economy in Denver, Colorado crashing? I don't know. I think my, I don't know. My wife is, she's more of a realist than I am.

And so I'm just kind of going with the flow, and we're just trying to. I'm sorry, what does being a realist mean? You mean a pessimist? I guess so. I'm not trying to talk down on her. Oh, I wasn't either. I'm just saying there's a realist to someone who observes facts. There are no facts in the marketplace that indicated a housing crash in Denver,

Colorado in the next six months. Absolutely zero facts. Well, that's good to know. So, and then also we're trying to, we're wanting to see if we should sell our house. No. And then collect our revenue, collect, because it's already at 700. No. No. Okay. You guys need to get off the internet.

That's what I say, too. Yeah. I'm sitting next to the Ramsey family conspiracy theorist. I'm a conspiracy theorist. I don't know when AT&T went out last month. Rachel, what is the, what is the? What's the Denver housing conspiracy? I missed this one. You're up on all the conspiracies.

It does have the Denver airport. You are close to the bunker that could happen if it all goes down, Shane. That's your greatest asset right now. Again, at the same time, too, my son, we have a seven-year-old son. And I travel a lot for work in the state, and we're trying to maybe move to the southern part of Colorado to where I don't have to travel as much, and I can work from my office. If you want to do that, but please don't do that. because the Denver housing market is going to collapse in the next six months. That should not be one of the factors that drives your decision.

Okay. Because it's not. It's not going to collapse. Okay. Well, and then percentage-wise, we didn't want to go get a new house and then pay a percentage on something with a higher interest rate when we're at 2.5. You're not going to have a higher interest rate for much longer because you're paying it off so fast. Yeah, that's true.

I mean, it might be three or four years you carry it, but you're not going to carry it for 30 years. so it doesn't matter. But make your decisions out of a glass half full, not out of panic, and really quit reading the Internet. I'm serious. There's some really dumb, dark people out there. Yeah, and I'm too busy with work. My wife's a nurse practitioner in psych,

and the last couple of years she's been just a stay-home mother with our kids during these years, and now my son's getting to be where he can be in full-time school, so she's about to go back to work too now. So we're going to have a double income. Yeah, that'd be great. But, you know, but I mean, psych nurse is, you know, maybe she, oh, oh, my gosh. She's just seen a lot of crazy stuff, no pun intended, right? And so, you know, it can, that can leave a mark on you.

And so, but I don't want her to live in fear. I don't meet people who anticipate the end of the world who prosper. None. Great. I just don't. The people who, who, I mean, there's preppers and then there's crazy preppers. Okay? Prepper's one thing, but crazy prepper, that's anticipating the end of the world.

Like, I've got a friend who has gold bar, I have a friend who has gold bars in his basement. Well, okay. And it's not, it's just not right. And let's keep talking about this, though, Shane, because the housing market is a point in our economy that a lot of people are panicked about. And back, you know, during COVID, when everything surge in 2021, we sat here at this desk and people like, it's a bubble, it's a bubble. It's going to bust. And you're like, it's not supply and demand.

Supply and demand. We did the real estate. It's gone up. Yes, we did the real estate, you know, hour and all of it. So it is, though, Shane, to your wife's credit, it is a point of fear for a lot of people. Because I think it's not to her credit, empathize with it. I understand how people are afraid. But that doesn't mean that it's going.

No, I'm not saying that. Okay. So then give us the logic behind it. Well, the logic is there's a housing shortage. Still. There's still three buyers for every stinking house on the market. And houses have. gone up right now today in most major markets. Homes that are on the market are getting multiple

offers. But they're sitting on it longer, though. It's not, like, like eight days. No, it's, no, but it's not, the average days on the market has gone up eight days in the past 12 months. It just, my wife sent me something the other day, and it says new home sales fall as mortgage rates way down. Well, people, I know, when the mortgage rates, it slowed it down, though. No one, no one clicks on stuff unless it bleeds. That's a clickbait lead. Okay. mortgage housing starts fall as mortgage rates go up which they did a lot of builders slowed down there's not as many houses coming out of the ground you know what that does it means there's an even bigger shortage of inventory which makes your home even that much more but house prices didn't fall builders slowed down building because they didn't want to get caught with specs if the market slowed down on but not if the market crashed housing starts did drop but headlines always go everyone's dying. That's what the headlines always say, because that's what people click on is that stuff. Yeah. So, you know, yeah, so look, that's what I mean by don't read the internet, okay?

And with the election year coming up, traditionally in election years, things slow down closer to the election too, so you may see that happening. Traditionally, interest rates go down because the sitting president doesn't want to get unseeded by a stinky economy. We'll see. Yeah, yeah. You'll see. But interest rates have come down a little bit in the last month and a half. They've come down a full point. And the market is, you know, some areas, the southern areas of the country, the grass is starting to get green.

People are coming out of their winter caves. They're starting to buy houses. And the house market is heating back up. It's a dirty little secret. Nobody's talking about it. Yeah. But I've been anecdotally involved in three or four deals lately where I'm watching, and there's multiple offers coming in on these.

Yeah. And so I'm getting ready to put our home. home on the market. And I was just looking, it's a different dollar amount, but I mean, I was just looking at the, you know, what's the average days on the market? The average days on the market, what's the inventory? Inventory's dried up. I'm sitting pretty. My timing is excellent to put a house on the market. It's far from a crash, quite the opposite. Yeah, you're going to see your homes go up in value in the next 12 months. Just write it down and say the old bald guy said it. Sammy is in Phoenix, Arizona. Hi, Sammy. How are you?

Hi, Dave. Hi, Rachel. How are you guys? Great. What's up? Well, I have a question regarding a loan. I know your favorite question. Basically, I live with my mom and husband. We would like to sell our home eventually, move out of the city. We have a decent amount of repairs. We need to do to the home to be able to sell it. We don't have good credit.

We don't have savings. We've heard about the home equity loan. We have a decent amount of that. equity in the home, or don't know much about it. What do you know about that? What do we know about it? Well, home equity loungers.

Is it a good idea? No. Okay. No, I mean, you're just borrowing. Yeah, you're just borrowing equity on your home is what you're doing. You're just, you're going backwards when it comes to you owning your home. So my question is, what are the repairs?

One is a brand new AC, which is about $10,000. Okay. One is the pool being fixed, which is about eight to 12 that we've gotten estimates for. Mm-hmm. And then the last small thing is a small, old, you know, very old, lots of miles used car for my mom because she's currently using my car. Okay, so just a car in general that hasn't into with the house. Yeah. Okay. What is your mom make? She makes about 80,000.

What do you make? I don't make much. I just am part-time. Why? Why? Because she has my car right now, and she makes a lot more than I could. What does your husband make? My husband, about 45.

Do you guys have kids? Not yet. Not yet, okay. And then the house, tell me how much, if you sold the house today, how much would it be? How much could you sell it for? We could probably sell it as is maybe $350. Okay. If we did all these repairs, maybe $400.

And what's the heck? Yeah. How much do you have left to? We bought it for $1.70, and we owe about $130 on it. Okay. Here's what I would do. I would sit down this week and tighten your budget down to nothing and go get a $2,000 car.

And then I want you to go get a $40,000 job. And that will pay for the repairs. When you guys, household income, you're making $125. Yeah. You only need $20,000. Whoa, whoa, whoa, whoa. You need $20,000. Go get it.

Yeah. Well, the AC, we're supposed to do it in the next, like, month, or else it's going to totally go out. How do you know? Who's the AC genie? How do they know? We've had a few people over now, and it has a broken compressor, and our bill is like $700 a month because of it.

Yeah. We don't have a lot of... 10 grand. That's 10 grand. So 10 grand is ASAP. So, I mean, yeah, Sammy, if I were you, I'd go get... So your husband's working overtime, you're working overtime, and you guys are three of your piling their money in a corner as fast as you can get in an AC as fast as you can.

It's still working. When it goes out, we'll call it an emergency. It's not out yet. And you do need to replace it, but I'm not talking about waiting. If you get a job making $40K, now you've got a household income of $165. I think you can come up with $10,000. I don't know how to find a job that pays that well for me. Well, you're going to have to be looking, which you haven't been doing.

That'd be the first step. And, I mean, that's only $20 an hour, $25 an hour. I mean, you're my targets paying $20 an hour. So go over at Target and then run over to Walmart right after. for that. They're both paying $20 an hour and just stack up these jobs and go get you. You need some money. Money comes from work, not borrowing. And then you get the AC fixed. And then you start talking about fixing the pool and you do all this with a $2,000 car. Y'all have the money. You just need to tighten down what you're spending to nothing by being on a budget and get your incomes up. All of you,

take extra jobs, all of you, until you get past this emergency. But I don't think you're going to do it, though. Well, tell me that would you, I mean, does it get messy, though, if the house is in their name. Mom's living there, though, or the house is in my, like, you know what I mean? Like at that point. She's living there free and using their car. Yeah. I'm taking her money.

Yeah. Okay. I mean, we're fixing the AC, Mom. I agree. I agree. Yeah. But I'm just thinking of, like, there's always those layers when you have people that don't own the home that are in the home.

You know what I mean? Like, yeah. I mean, it's. If she won't go get a job and you're taking mom's money, that mom might object. Yeah. Okay. But, hey, everybody's diving on the ball here.

We've got to fumble. Yep. And it's, you know, we got to recover here. We've got to recover. We got to recover. Everybody game on. It's a household emergency. I mean, air conditioning in Phoenix is an emergency.

Yeah, that's important. Yeah. Yep. It's 100 degrees, but it's a dry heat. Oh, you're killing me. It's like sticking your head in an oven. It's a confection oven is what it is. It's dry.

Hot. Love Phoenix. What they always say, though. It's hot. It's really hot. But I will say, we are in Utah, and the no humidity thing is different. It is different, but it's still hot. It is still very hot.