Kathy Fettke Stresses Investors’ Need to Understand Market Cycles
“I’m going to depress all of you, and offend about half of you,” Kathy Fettke, co-founder of California’s Real Wealth Network (RWN), said as she kicked off her 2017 Market Predictions session at the Think Realty San Diego Group Event Feb. 18, 2017. “Hopefully at the end, though, I can give you some solutions,” she added, emphasizing that in her opinion, preparation is always the best route to profit in real estate.
“Understanding market cycles helps you avoid getting shocked by what’s coming,” she explained, adding that she believes a real estate “tsunami” is coming for the U.S. market in the next few years. “What happens during a tsunami?” she asked the audience. “Before the wave comes in, the ocean pulls back. People are out on the beach looking at the seashells and the fish they’ve never seen. Then they get wiped out! Don’t be those people!”
Fettke asked the audience, “If you knew what was going to happen in 2009, what would you have done? Something different!”
In her analysis, she said that there are several facts about our national economy “that no one wants to talk about.” One of the biggest, she said, is that the United States has a debt of $20 trillion that did not go toward creating assets for the country. “America does not have good debt,” she said. “68 percent of that $20 trillion went to pay entitlements and to service our existing debt.”
Even though housing is not necessarily in trouble right now, Fettke maintains that investors still need to be prepared because an economic crisis will affect all participants in the market. “If you were paying your mortgage during the financial meltdown, it still affected you when the global economy tanked,” she pointed out, adding that preparation for the next potential meltdown is key.
“I believe that we’re dealing with a number of wild cards in 2017,” Fettke said, highlighting President Trump’s election as one of the biggest. “Right now, people are optimistic about a lot of his predictions, but we don’t know what we’ll get,” she said, turning to more traditional economic factors.
Fettke said that she predicts interest rates will actually go lower, the country will experience GDP growth (at least in the short term), and that although lenders will probably benefit from deregulation, it will not get much easier to get a traditional loan. In light of those predictions, she said, real estate investors hoping to profit in the 2017 real estate market should work hard to stay “in the path of progress” and invest in affordable housing in areas of the country that will attract aging Baby Boomers and Millennials.
“That means states with low income tax rates or no income taxes, states with a good climate, and states where Millennials are moving,” she said. “Baby Boomers like their kids and are moving to be near their kids and grandkids. Follow the Millennials because the Boomers will follow them.”
About the Author
Carole VanSickle Ellis is the host of Real Estate Investing Today, a daily nine-minute investing podcast, and the editor of the Bryan Ellis Investing Letter. Contact her at editor@bryanellis.com
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