Tags: Kathy Fettke | Hedge Funds | Risk | Housing Recovery

Real Wealth Network's Fettke: Hedge Funds Are Biggest Risk to Housing Recovery

By Glenn J. Kalinoski and Kathleen Walter   |   Wednesday, 29 May 2013 07:53 AM

Investors represent the biggest risk to derailing the housing recovery, said Kathy Fettke, founder and CEO of Real Wealth Network, a California real estate services and consulting company.

"[This includes] big hedge funds coming in, not really understanding values, paying too much, driving prices up, that could create another bubble and then another crash," Fettke said in an exclusive interview with Newsmax TV. (Hedge funds are commonly defined as an investing group usually in the form of a limited partnership that employs speculative techniques in the hope of obtaining large capital gains.)

"If we could just get the first-time buyers back in the market: they're having a hard time competing. They're the ones who are going to be able to gauge value a little bit better because they'll know what they can and cannot afford."

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She said the markets Wall Street has invested in include Phoenix, Las Vegas, parts of California that include Riverside and Sacramento as well as sections of Florida.

Editor's Note: Billionaires Dump Stocks. Prepare for the Unthinkable.

"There' s just been too much investor activity and we're seeing prices go up as much as 2 percent every month, even more than that," she said.

She also cited a group of investors she spoke with in the Sacramento area.

"One was an old-time real estate agent and investor," Fettke said. "She knows the market. She knows what she's doing. And she confessed: 'I know I'm paying too much for a property, but I'm doing it anyway because I'm afraid there won't be any left,'" she said.

"When we are driven by fear, it doesn’t usually work. There will always be more property out there, maybe just not right now. One way you can tell if you're overpaying is the average home price needs to be no more than three to four times the average income."

She also commented on some banks that are not foreclosing.

"They've sold the notes, keeping those homeowners in their homes and maybe modifying the loans," she said. "What we thought was this big shadow inventory isn't really going to hit in those areas. That kind of surprised a lot of people."

Editor's Note: Billionaires Dump Stocks. Prepare for the Unthinkable.

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