Dave Ramsey Says These 2 Changes Could Save the Housing Market

These days, it appears that almost nobody is happy with the state of the housing market.

Buyers continue to wait for homes to become more affordable, but prices have only corrected modestly. Meanwhile, sellers are now finding it more difficult to unload their homes than was true just a few years ago.

Money guru Dave Ramsey believes a recently passed federal law should have saved the housing market, but is unlikely to do so.

Find out why he is disappointed and learn about the smart homeowner moves you can use in a tough real estate market.

What is the 21st Century ROAD to Housing Act?

In June, Congress passed the 21st Century ROAD to Housing Act. The legislation is intended to make housing more affordable, chiefly through encouraging more building of homes.

President Donald Trump refused to sign the bill, mostly as an act of protest against Congress' inaction on a separate election reform bill. Despite not having Trump's signature, the bill automatically became law on July 11.

Why Dave Ramsey dislikes the 21st Century ROAD to Housing Act

On his radio show, Ramsey acknowledged that the 21st Century ROAD to Housing Act "had good intention." But as it made its way through the legislative process, it became "full of a bunch of pork and crap," he said.

"Congress could screw up Christmas," Ramsey said.

Ramsey likes that the legislation was partially focused on limiting the number of homes that institutional investors are allowed to buy. But he maintains that ultimately, he is disappointed in how the legislation turned out.

"By the time they got it through Congress, they screwed it up, putting all this crap in it," Ramsey said.

Dave Ramsey's plan to save the housing market

Ramsey's dismay over the final version of the 21st Century ROAD to Housing Act prompted him to muse on how he would fix the housing market.

On his radio show, he mentioned two things that he says would go a long way toward turning things around.

Limit purchases by foreign buyers and corporations

Ramsey says entities such as big corporations, hedge funds, and foreign nationals are purchasing large amounts of single-family homes and essentially "stealing them from first-time homebuyers."

These purchases are "starving that supply" of homes for sale, Ramsey contends.

Stopping this practice would give some breathing room to the average home shopper who simply wants to find something affordable.

"Limit...the Chinese buying 5,000 houses in Memphis, Tennessee," Ramsey said. "Or Blackrock doing the same thing and taking them off the market."

In fact, the 21st Century ROAD to Housing Act does place limits on institutional investors. Investors with investment control of at least 350 single-family homes cannot purchase single-family homes apart from manufactured homes.

However, the legislation includes statutory exceptions to this rule. Although Ramsey did not explicitly identify the source of his disappointment with the act, these exceptions are a likely culprit.

Eliminate capital gains taxes on home sales

Currently, homeowners who sell their primary residence can avoid paying capital gains taxes on some of the profit they make.

The law exempts the first $250,000 from such taxes if you are an individual, or the first $500,000 if you are a married couple.

Ramsey says making this provision more generous could kickstart the housing market.

"Do away with capital gains tax completely on single-family personal residences — or personal residence, period," Ramsey said.

Supporters of reducing or eliminating capital gains taxes on home sales believe such a move would motivate older homeowners to sell their homes rather than simply sitting on trillions of dollars in assets.

"You would stimulate sales like crazy," Ramsey said.

Ramsey's advice to first-time homebuyers

While Ramsey is disappointed in how the 21st Century ROAD to Housing Act turned out, he urges today's first-time homebuyers not to become too upset about the end result.

"That's stuff that we can't control if we're 35," he said. "But we can control if we are giving all our money to crypto or DraftKings. We can control if we go into debt to Ford Motor Company for a $90,000 pickup, and so we don't have any money to save for a house."

As always, Ramsey is emphasizing that average people should ignore the noise and focus on efforts to take control of their own finances.

"These are controllables that the individual can do to put themselves in a position where they have disposable income to start moving towards buying," he says.

Bottom line

Buyers searching for affordable homes have had a tough time in recent years. Ramsey says a new law that should have made more homes available for sale is likely to fail.

But that doesn't mean you should give up on your dreams of owning a home.

Taking on an extra part-time job or starting a side hustle can put extra cash in your pocket that you can use to eventually fund a down payment on a home of your own.

This article is for informational purposes only and should not be considered investment advice.

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