Personal finance expert Dave Ramsey says it’s time for the government to step in and do something about the housing crisis, and he believes there are a few specific moves that could actually work.
“We’ve got large REITs, real estate investment trusts, and American corporations and Chinese corporations buying thousands and thousands and thousands of single-family homes,” Ramsey said in an episode of The Ramsey Show.
“And taking them off the market and putting them up for rent.”
He estimates it’s hundreds of thousands of homes, not just a few. And while he’s typically against regulating free enterprise, Ramsey made it clear that when housing stops serving its primary purpose, giving families a shot at building wealth and stability, it might be time to act.
“When that’s being affected by foreign organizations and by out-of-control capitalism, then yeah, you’ve got to put some limits on that.”
Airbnb Is Also To Blame
Ramsey also pointed to the rise of short-term rentals as another major drag on housing availability.
With people buying homes strictly to turn them into Airbnbs, it’s become harder for regular families to compete.
“They’re bought by people at unrealistic prices only because they’re turning them into a hotel,” he said. “And they’re making tons of money, and people are buying 8, 10, 20, 15 of them at a time.”
He’s not calling for a total ban on Airbnb, but believes there should be limits on how many units can be converted so young couples can actually find homes to buy.
Outdated Tax Rules Keep Homes Off the Market
Ramsey says part of the problem is that many homeowners, especially baby boomers, aren’t selling because they don’t want to pay massive capital gains taxes.
Currently, married couples can make up to $500,000 in tax-free profit on the sale of their primary home. That may have been a big deal 20 years ago, but today it barely moves the needle in high-cost markets.
Raising the exemption to $1 million, he says, would encourage more homeowners to downsize, which would “create a domino down the price points” and free up inventory.
He also suggested extending a similar exemption to owners of rental properties. Ramsey said he owns about 15 homes himself and would gladly sell them if it didn’t result in a huge tax bill.
“If you gave people a tax break on the rentals that they own and on their personal residence, there’d be a bunch of houses going to market.”
Make It Easier for Developers to Build
Another idea? Let developers write off their costs upfront. Right now, developers must depreciate big infrastructure costs like sewer systems over many years, which Ramsey says kills momentum.
“If you just said they can expense it instead of depreciating it, that would stimulate developers to start building subdivisions.”
Young Adults Are Being Crushed By Debt
Ramsey ended his rant by calling out how much debt young adults are carrying, and how that alone is making homeownership feel impossible.
“You cannot buy a house when you have a $1,200 car payment. When you have a student loan that’s $85,000, and you got credit card debt coming out your ears,” he said.
He argues that large banks and financial institutions have created a system where young people are set up to fail.
“If you’re 25 or 26, you’ve been screwed by the big banks like you’ve never been screwed before.”
The Bottom Line
Ramsey said the answer might be simpler than it seems: let people hang onto more of their money, place some limits on big investors, and fix a few tax rules to help bring more homes back onto the market.
“Quit. Let me keep my money and I’ll go do stuff,” he said. “It’ll stimulate the stinking inventory.”
Whether or not policymakers take those ideas seriously remains to be seen.
But for once, Ramsey says this is one problem the government can help fix.
IMAGE CREDIT: ”Dave Ramsey” by Gage Skidmore, via Flickr. Licensed under CC BY-SA 2.0. Image adjusted for layout.