It's Always Been Expensive': Dave Ramsey Defends Housing Costs, But Is He Overlooking A Bigger Problem?

Comedian Theo Von recently chatted with Dave Ramsey on the "This Past Weekend" podcast. During the conversation, Ramsey didn't hold back when Von asked for his thoughts on the housing crisis. 

"There’s a lot of energy in the air," Von said. "It feels like the American dream isn’t possible and doesn’t exist. Where do you think a lot of that energy comes from?"

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Ramsey got straight to the point, stating that millennials and Gen-Zers complain that they feel stuck and will never be able to afford a house and that housing is more expensive today than it was for older generations. 

"Honey, it's always been expensive," Ramsey said. He then spoke of an interview he did on NPR where someone said their daughter wasn't able to afford a home on her dual salary of dancing and working as a barista. "If you serve coffee and you’re in Nashville and you’re a dancer, those are not career fields that you’re going to make enough to be able to afford a house. That’s not a new thing. That doesn’t mean the system has failed."

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While Ramsey may have a point that part-time and service-industry jobs are not the best path to homeownership, his take doesn't tell the whole story. 

Sure, in 1980, someone working a minimum-wage job, earning $5,000-$6,000 a year, would have struggled to own a median-priced home of $47,200. But let's take a look at the average middle-income family in 1980. 

Back then, the median family income was $21,020 and the median home price was only 2.24 times that. Fast-forward to 2024, and the median income across major U.S. cities is about $77,345. While the median price of a home varies based on location, it ranges between $229,000 and $787,000. At the low end, the median salary is about three times that, but at the high end, the median home price is more than ten times that median salary. 

While Ramsey's comments touch on some truth, they don't account for the fact that it has become more difficult for middle-class families to afford a home. The gap between income and home prices has grown wider in the last few decades.

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In fact, according to the National Association of Realtors, the housing affordability index was at 93.1 as of May 2024, down from 208.1 in 2012 when both home prices and interest rates were more manageable. Basically, the higher the housing affordability index rating, the more affordable it is to purchase a home. A value of 100 means that a family with a median income should be able to afford a median-priced home. That number has continued to drop over the last couple of years. 

This growing gap is why many people feel the American dream is slipping away. While Ramsey's belief in hard work and perseverance is a value many hold, it's also important to acknowledge the challenges that younger generations face. Housing has always been expensive, but the current market presents unique hurdles that some previous generations didn't have. 

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