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Real Wealth Network's Fettke to Moneynews: Housing Unfazed by Higher Rates

By    |   Monday, 22 July 2013 08:03 PM

Rising mortgage rates haven't stalled the housing rebound, says Kathy Fettke, CEO of Real Wealth Network, a California-based real estate investment club.

Indeed, the rate increase has accelerated the recovery, as buyers don't want to miss out before rates rise too high, she tells Newsmax TV in an exclusive interview.

The 30-year fixed mortgage rate averaged 4.37 percent during the week ended July 18, up from 3.35 percent in the week ended May 2, according to Freddie Mac.

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"There's been so much fear that if mortgage rates go up, it's going to slow down the housing recovery. But we're seeing the opposite, because as interest rates go up, people panic," Fettke said. "They don't want to get in too late, so they get off the fence and buy now."

While it may sound strange after seven years of glutted inventory, there's now a housing shortage, Fettke says. "So that's why investors like me are buying land, realizing that building is the future," she said.

"We have 4.5 million new residents in the U.S. every year, and building came to a complete stop, so we have a little catch up to do."

Editor’s Note: Put the World’s Top Financial Minds to Work for You

Part of the problem was that builders stopped buying land and didn't get titled, Fettke says. So now, "they're a little bit behind on that part of it."

A continuation of current trends could send home prices up for two to three years, Fettke says.

The S&P Case Shiller Index of home prices soared 12.1 percent for the year that ended in April.

Right now housing demand is strongest in coastal states, she says, and some of that increase stems from foreign buyers.

"Chinese buyers, they want to get their money out of China and into what they deem is safe, which is U.S. housing," she said. "And they're buying in what we call the 'sand states' — California, Nevada, Arizona and Florida."

Those states suffered the most during the real estate bust of 2007-11, Fettke says. "But in doing so, the prices went in such a steep decline, that . . . it [became] a total bargain."

But bargains are quickly disappearing in the sand states, she says.

"We're seeing the highest increase in home prices in the shortest period of time [there], so those areas could bubble sooner than the rest of the country. . . . In some of those sand states, it may already be at the peak."

As usual in real estate, it's all about location, Fettke says. "The most important thing that we focus on when buying houses, and we're buying rental properties, . . . are markets with new jobs," she said.

For example, near Pittsburgh Chevron is building a $250 million office building because of all the oil and gas that they have discovered in the area, Fettke says. "There are parts of the country that are doing better than others, and that's where housing is going to do well."

Editor’s Note: Put the World’s Top Financial Minds to Work for You


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Rising mortgage rates haven't stalled the housing rebound, says Kathy Fettke, CEO of Real Wealth Network, a California-based real estate investment club.
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Monday, 22 July 2013 08:03 PM
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