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Sentiment gap

Economic indicators, such as gross domestic product, growth and low unemployment usually boost consumer sentiment. However, economists have noticed a dislocation in this trend in recent years.

According to the St. Louis Federal Reserve, consumer sentiment has slumped in recent years and hit a record low in 2022, below even levels seen during the 2008 financial crisis. This detachment is “puzzling” for economists, according to the bank, while also pointing toward “negative economic news on social media.”

Shane’s situation highlights this disparity. He explained his home was purchased for $500,000 in 2021. Just a few years later, the house is now estimated to be worth $700,000. The family has also managed to aggressively pay down the mortgage, so they only owe $280,000 on the loan. Shane says they have no other debt and $100,000 in savings.

“You’re killing it dude!” Ramsey exclaimed.

However, Shane’s tone is noticeably more pessimistic, partly because of the sensational headlines he and his wife have been seeing online recently.

“No one clicks on stuff unless it bleeds,” Ramsey said. “There’s some really dumb, dark people out there.”

Although he admits his daughter and co-host, Rachel Cruze, is the “family conspiracy theorist.”

“You are close to the bunker [at Denver Airport] if it all goes down, Shane,” Cruze joked.

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Shortage of homes

Instead of getting caught up in online conspiracies, Ramsey encourages Shane to look at the facts of the housing market.

“There are no facts in the marketplace indicating a housing crash in Denver in six months, absolutely zero facts,” Ramsey said.

Instead, there’s growing evidence that the U.S. housing market is undersupplied, which the host believes puts a floor on the value of existing homes. The start of new construction of homes has lagged behind the formation of new households across the country for several years, according to a recent analysis by Realtor.com. Between 2012 and 2023, the gap between single-family home constructions and household formations is estimated to have grown as big as 7.2 million units.

Shane’s home state of Colorado is at the epicenter of this crisis, with a shortfall of 101,000 housing units, according to housing research firm Up for Growth.

“Logic is there’s a housing shortage,” Ramsey said.

He believes Shane shouldn't be in a hurry to sell.

“You’re going to see your home values rise in 12 months, just write it down and say the old, bald guy said it.”

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Vishesh Raisinghani Freelance Writer

Vishesh Raisinghani is a freelance contributor at MoneyWise. He has been writing about financial markets and economics since 2014 - having covered family offices, private equity, real estate, cryptocurrencies, and tech stocks over that period. His work has appeared in Seeking Alpha, Motley Fool Canada, Motley Fool UK, Mergers & Acquisitions, National Post, Financial Post, and Yahoo Canada.

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