Real Estate the Ramsey Way - Why Homes Are So Expensive Today

Episode Date: August 24, 2026

Why are homes so expensive today? Dave Ramsey and Brian Buffini break down the biggest factors driving housing prices higher and explain what today's buyers need to understand before entering the market. Next steps: ·   🏠 Not sure what to do next when buying or selling your home? Check out our ⁠⁠Real Estate Home Base⁠⁠ for free tools and resources to guide your next steps. ·   🏠 And if you’re ready to buy or sell your home, ⁠⁠connect with a RamseyTrusted® real estate agent⁠⁠. They’re experts who’ll help you confidently navigate homeownership the way we teach. Explore more from Ramsey Network: 💸 The Ramsey Show Highlights 🧠 The Dr. John Delony Show 🍸 Smart Money Happy Hour 💰 George Kamel 📈 EntreLeadership   Ramsey Solutions Privacy Policy

The median age of the first time home buyer has gone up from 30 years old to 40 years old in the last 10 years. We have a shortage of inventory. We talked about there's three things that the government can do. One is lower regulations and get home building going again. Two is do away with capital gains. And three is limit corporate buying thousands of single family homes and starving that inventory. As an individual, what can you do? Well, quit being desperate and swinging for the fence.

And so stay off of draft kings and crypto. Quit buying crap you can. afford and letting these companies screw you like Lexus and you've got a car you can't afford for $1,250 and then you whine because you can't buy a house. It's your fault. You did that. Okay. So you've got to stay out of the stupid, you got to get the stupid student loan paid off like it's some kind of pet in your house. You got to get that credit cards cut up and get Samuel L. Jackson out of your life. What's in your wallet? All of your money apparently. But yeah, so all, you know, we got to fix all of that. And then the one last thing I wanted to bring up,

and I want your input on this because you and are about the same age. And I've been hammered negatively on this subject because, and I was on Fox yesterday talking about it, as a matter of fact. And the anchor John on there is about our age. And he said, what did you pay for your first house, David? And I went 675. What did you pay for your is 88,000? Would you do that on $18,000 a year? Okay.

Well, wages have not kept up with house prices because house prices shot up in the last 10 years due to inventory shortage and COVID. garbage, right? And so wages have not kept up. That is real. However, the other thing we've never adjusted for in our psyche out there in the land of TikTok where you're 27 years old living in your mother's basement bitching about this is you've never adjusted your entitled viewpoint, because let me tell you what was in that $67,000 house. No stove, no refrigerator, had to go buy them used, no washer and dryer, no dishwasher. no microwave, no disposal, roll out vinyl floor on the kitchen,

and a fermika top, a chipped-up sink that had little chips in the ceramic. The carpet, you had to mow it because it was seven inches tall. It was, remember shag in the 1970s? Shaggedellie. Yeah, Shagadilly, baby. One bathroom. And it had one and a half baths. And it was 1,200.

square feet with one car garage. So you can't compare that house to your little McMansion that you're bitching about that you can't afford. So you don't compare that. I grew up in a 1,000 square foot house with an unfinished basement. We had no living room furniture until I was 13. And the living room wasn't as big as this desk. And so, you know, you adjust all of that before you say, well, you're a boomer.

You had it be good. It was easy for you. No, we didn't, I mean, I had one and a half cars. You guys got three, sir. You know. And so you really got to adjust for that in your expectations. And then lastly, you need to think about where you're buying. And in most markets, and you know this better than anybody, probably urban, basic urban growth is if you go out of town a ways, as we say in Tennessee out in the country, it gets cheaper the further from downtown you move.

Yep. Yeah. And look, I mean, the average home. used to be 1,210 square feet and now the average home is 2,900 square feet. And so it's much bigger. And the difference in those is not necessity. It's luxury. It's, you know, this is what people were buying and the prices and the market and the way it went and all that kind of stuff. Here's the bottom line. You know, the first house I bought, it looked like it had been in a drive-by shooting, okay? And I was a housepanter son, you know, and I've fixed it up. And there's a thing called

sweat equity. And everybody watches the homes and garden show. The truth of the matter is, You know, I was out here in Tennessee there. They just looking at stuff. And I was looking at the model homes and they have them all tricked out. And they're lined up out the door and everybody's buying the model homes. The money is not in the model home and the new construction. The money's in the old beater down the street without, you know, with the, it looks like it needs a coat of paint. Because it does.

Because it does. You know, you make money in real estate when you solve somebody's problem. That's how you buy, though, people. Yeah. You stay out of the traps and you set yourself up and you adjust your expectations and act like a first-time homebuy. quit acting like you've been saving money for 25 or 30 years. You haven't. You're 27 years old.

Look, how bad do you want it? Yeah. And, you know, I hear a lot of the younger folks. You know, the math isn't mathing, and I'm a lifestyle person, all this. The average homeowner has 44 times the net worth of the average renter. And if you want to get on the right side of the net worth equation, the number one way people make money in America and all over the world is housing. And so I've trained in 47 countries, and housing is the same all over the world.

Food, shelter, clothing. The three necessities. And so you've got to fight and grind to do it. And again, I know, I think you're right. Get your foot in the door. People have losing hope. But people are also listening to all this garbage out there. 100%.

You can do it. You can bite, fight, scratch, go out. Look, I'm an immigrant, came to America, got run out by a car. I have $250 grand in medical bills in 1986. I don't know what $250 grand is worth today. It would be a fortune. And I bought my first house. And I fought like the dickens for it.

And I literally didn't eat. a meal that I didn't prepare for three years. But that house I bought for 107 grand. I sold it for 164. The next one I bought was 220 and I fixed it up and I sold it for 394. And then I bought the next one and I bought it for 900. And then I bought the next one. It was one eight. And I bought the next one and that one eight now turned into four and the next one four turned into seven and a half million. And so here's a house painter's son with not a dime goes from in 22 years from zero to seven to a half million. That doesn't happen by rent and that doesn't happen with crypto. And it doesn't happen with draftings. Yep. I'm engaged. Yay! When you're getting married? Super excited. End of November,

sorry, September. End of September coming up. Yay. Good for you. Thank you. So listen, my fiance owns a house. She's got three kids. The house is the house where the divorce went down, all the, you know, the bad stuff, I guess, that led us here. And so we are now trying to make a decision on what to do with this house. And the realtor is recommending a short sale. I don't love that idea. But I'm just, I guess, trying to decide whether to take this financial hit now for kind of a clean break, a fresh start, or preserve cash. Stay put here temporarily while we stabilize, even though that will delay sort of this, I guess, breaking free of that baggage.

So anyway, we love some insight. So she owes more on the house than she can get for it? Yes, sir. Yes, sir. Anywhere from 25 to 40-ish is what the realtor is recommending. And the house is obviously in her name. Yes. And does it have the X on it?

I believe that the X is on it. The X has got medical issues out of a job right now. We're basically not considering him as... No, does he have to sign to sell it? Yeah. He may. Yeah, yeah. Yeah, I guess.

If he's on the deed and he's on the mortgage, if you're going to do a short sale, he has to sign that he's not paying his bill because that's what a short sale is. Mm-hmm. So a short sale is like a voluntary repossession. Okay. It's like turning in a car on a repo. Mm-hmm. and not paying the difference.

So if you do a short sale, or if she does a short sale, you're not involved, okay? But if she does it technically, if she does a short sale, make sure you remember these words, it is without recourse, without recourse. And what that means is they can't come after her for the difference. That 25 or 40, they're accepting that the house is, If they foreclose on it, their analysis tells them, the mortgage company, that if they foreclose on it and resell it after foreclosure, they're not going to get any more for it than you're offering them. Okay. You see what I'm saying?

In other words, if they go through all that and they lose $45,000 or they accept a buyer's offer and do a short sale, they lose $45,000, that's their analysis. If they think they can take it back and sell it for enough to get all their money, they would rather foreclose than take a short sale. But that means that the house is worth more than your realtor says it is, and I doubt it. Right. Why has the house gone down in value in Twin Falls, Idaho? I wouldn't think that's the case. I don't understand it, to be honest. I'm trying to get to the bottom of the...

Is there something wrong with the house? The house is fine. I suspect that there was some mortgage payments not being made. Yeah, I'm still trying to get to the bottom of it. I feel like there's details I'm missing, but... $45,000 were the mortgage payment? it's not made? I doubt it. Yeah. The thing is, Dave, I've got, I've been saving, I've been following your principles, I don't have any debt. I have money set aside that I've been saving up

for a house payment myself before her. Does she have debt other than this? Only a small student loan of 5K, which I'm expecting to just kind of ride off as soon as we are together. As soon as you're married. And we've got a car. Yes, sir. And you've got to pay. off the car, okay. Yes, sir. If you're debating on doing that, you know, paying it all down right now. So you could either pay the $45,000 and keep this house with all the bad memories and still not be shed of the X because he's on everything, or you can let it be, let her do a short sale before you're married. But she's going to have the equivalent of a repo. Her credit score is going to disappear. No, you wish it would disappear. It's just going to be very low.

And would that be a problem when they go to buy a house? Yeah, it's going to be a problem when you get ready to buy something later. Could I not do it my own? Probably. Have everything in my name? You probably can, depending on Idaho law, yeah. Yeah. Okay.

And she probably has marital rights, even if she's not on the mortgage. So you could talk to Churchill mortgage and they can tell you, you know, if your spouse has a super low credit score in Idaho and you have the money in a good score or no score, in your case it would be a good score, then, you know, can I qualify that way and get a house? I really,

I think this lady and these three kids needs to be, need to physically be off of that site. Yeah, I agree. I think I heard you say that clearly between the lines. And so,

you know, based on their emotional well-being and being rid of the medical, the guy with medical problems, which that can mean a whole lot of, a whole lot of bad stuff I don't even want to get into. Yeah, I'm going to ask her, I'm going to ask her to put this house on the market and get it sold.

I will tell you that the short sale is a long and arduous process, though. Mortgage companies don't forgive debt easily. Right. They're going to want appraisals. They're going to go. They're going to drag this thing out. It's very difficult. It's a pretend job for a bit.

Real estate has appreciated in most areas enough that they don't do many short. sales anymore so they're not as adept at it as they used to be like back in 2008 everybody got to be experts on short sales but um yeah it's where the bank agrees to accept a price that yields them less than their payoff and they eat the difference if you do it without recourse for god's sakes there's no point in doing it with recourse i'd let her be foreclosed on before i did it with recourse. Because then they, that's the same thing they got in. Is that hard for them to agree to? No. No, they pretty much, that's what a short sale usually is. Yeah. But just make sure they don't forget to put that in there. City Bank forgets to do stuff. Hey, guys, thanks for listening to

Real Estate the Ramsey Way. Now, if you're here, you're probably thinking about buying or selling a house. It's exciting. And one of the biggest financial decisions you'll ever make. But you don't want to do it with an inexperienced agent who will rush you into costly mistakes, like the ones some of our callers find themselves in. You need a pro who knows what the flip they're doing and will keep you on track with your financial goals. That's why we only recommend Ramsey trusted real estate agents. These are vetted, hand-picked pros who actually listen to your needs, guide you through the process, and fight to get you the best deal. To find a Ramsey trusted agent near you, go to Ramsey Solution, com slash trusted agent. That's ramsysolutions.com slash trusted agent.