Tags: Kathy Fettke | housing | homes | economy

Expert Kathy Fettke: No Need to 'Freak Out' Over Housing-Sales Drop

By David A. Patten   |   Monday, 21 Oct 2013 05:05 PM

Real-estate expert Kathy Fettke cautions that “a lot of people are freaking out that we're moving into another housing downturn” as prices rise and sales slow, but adds “I don't think that's the case.”

National Association of Realtors (NAR) issued its month report on existing home sales Monday. It showed existing home sales declining by 1.9 percent in September. Sales are still up almost 11 percent compared to one year ago, however.

Fettke, the CEO of the Real Wealth Network and host of the Real Wealth Show, tells Newsmax TV in an exclusive interview that she’s “not a bit surprised” by the decline.

Watch our exclusive video. Story continues below.

She largely attributes last month’s downturn to seasonal factors, such as the inertia that sets in with the beginning of each new school year.

Downplaying the impact of climbing mortgage costs, Fettke recalls that as recently as 2005 markets were “real comfortable with a 6 percent mortgage,” compared to today’s 4.5 percent.

“Mortgage rates are still incredibly low,” she says. “Look at home prices — still well below what they were back in 2004 in most parts of the country. So, no, I don't see anything to worry about.”

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That view varies somewhat from the NAR’s perspective. It attributes the fall in home sales to rising home prices and limited inventory.

Fettke agrees that higher prices and shutdown-related delays are affecting housing, but says the biggest headwinds stem from the difficulties first-time homebuyers are encountering.

“If you talk to first-time homebuyers, you'll see that many of them are really trying,” she says.

“They’re making lots of offers and they're getting disappointed time and time again. So we need to be able to get this sector back into housing because the truth is, in many areas, the mortgage payment would be much lower than the rent.

“I know that because that's the business we're in as an investment group,” she adds. “We're looking for cash flow, which means that if we're going to buy rental properties, the mortgage has to be much lower than the rent because we want the difference," she said.

"We want the cash flow, right? And we're still finding it everywhere. So I really don't believe it's an affordability issue. It's the problem of getting the loan.”

Other highlights from the exclusive interview:

• Fettke says U.S. housing is not overheated generally, although there are bubbles in specific regional markets such as the San Francisco Bay area, which she calls “a complete and total bubble.”

She adds: “But you've got other parts of the country where it's definitely not going to be an issue for a long, long time. The increase we've seen in home prices is really more of a bounce back to normal because there was such an over-correction that happened.”

• The Chinese are getting nervous about their own domestic housing bubble, and are starting to look to the U.S. market as an alternative. They see U.S. real estate as “incredibly affordable,” she says.

• President Barack Obama’s nomination of Janet Yellen to run the Federal Reserve is good news for the housing market in the near term. But she adds that she’s concerned the Fed “is playing a lot of funny-money games.”

Says Fettke: “For the economy, we've never played with money like we're doing today. So I don't know how it will impact us in the long term. It scares me for the bond market. Yes, but for the time being, it will help housing.”

Editor’s Note:
New Video Exposes a ‘Great Retirement Heist’

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Real-estate expert Kathy Fettke cautions that "a lot of people are freaking out that we're moving into another housing downturn" as prices rise and sales slow, but adds "I don't think that's the case."
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