Kathy Fettke has spent the last two decades in real estate doing what she calls “offering hope” – and what many others consider to be making great calls on the real estate industry. Fettke is often asked to comment on the housing market on television and radio as well as in print, and she has appeared on CBS MarketWatch, in the Wall Street Journal and Fox News. Fettke will be debuting her 2017 real estate market predictions in a more intimate setting than usual this year, at the Think Realty Group Event in San Diego, California, on Feb. 18, 2017. Think Realty sat down to get the details on her presentation.
TR: So tell us straight, is the national housing market heading up or down in 2017?
I’ve been saying for more than 20 years there is no such thing as a national housing market – and I’ll say it again this year! I started out in this business as a mortgage broker and a landlord, as well as having a radio show. As I was interviewing expert after expert on making money in real estate, I realized the “professionals” in the industry, at the time, were not telling people the truth about what those successful real estate professionals all knew – but people starting out did not. To this day, people still hear about the “national housing market” when in reality, the housing market is a whole bunch of economies all operating in different parts of the real estate cycle. Learn to identify and time the cycles, and you can, for example, sell at the peak in California and then buy at the trough in another market. Real Wealth Network has been doing this for years, since before the market crashed.
TR: Which of those individual economies do you like then? Which ones make you nervous?
Well, I think you’ll have to wait for my presentation in San Diego. As we all know, things are changing in this country so rapidly right now. I really don’t want to get into a lot of specifics until that time. However, I’ll tell you what is really more important than which particular market I like, it’s the definition of where I want to be investing.
For me, I want to be in areas where there is something happening – whether that’s job growth, population growth, new infrastructure, trends or demographic shifts. I look for something happening in an area because it will cause growth. With the economy changing so quickly right now, if you’re not growing, you’re basically dying. When we see shifts happening, we act. Because we want to be in growing markets. On the other hand, some areas that are growing, do not always offer cash flow for investors. For me to really like a market, there also has to be affordability. The numbers have to work in a growing area, and of course, property taxes cannot be too high. It’s also nice if there are no state income taxes since that offsets other costs, and the landlord laws have to be investor-friendly. For example, even if I found a cash-flowing property in California, I’d be scared to buy it just because you can’t kick your tenant out if they’re “naughty” and tear up your property or never pay their rent! We only flip and build in California for this reason. We don’t hold here. Oops, I may have just given a little bit of my forecast away there…
TR: Since you’re already at it and we’re talking about California, what areas of the state do you like for the investments you make there?
Well, I would say the key markets for California definitely have to be more inland. San Francisco is severely overvalued in my opinion, and LA is probably doing OK. But I wouldn’t expect it to go up much more in value because it’s met its affordability cap. Honestly, I would say I like the Inland Empire, which people might know as Riverside and Palm Springs. Bakersfield and Fresno look like they might be taking off as well – but Bakersfield has a lot of oil dependency, which could slow it down. I also think there is an upside in Sacramento, at least for now.
TR: So on a broader scale, can you give us a hint about your predictions for this year?
Honestly, here is the truth, things are changing so fast right now because of our new president. It is hard to make predictions because no one knows exactly what he’s going to do next! Whatever he does, and whatever he decides, will affect our industry. Since I can’t predict what he’ll do, I’m going to be talking about the things I know are coming no matter what he does. I’ll get into up coming demographic shifts, changes in the landscape of the high-tech world, and even a little bit of robotics – which is going to have a bigger effect on real estate than most people realize. Also, I’ve got a somewhat unpopular opinion about President Trump’s jobs initiatives, not in terms of whether I support him or not, but how well they’re going to work. Regardless of his good intentions, he’s got a battle ahead of him, and I’m going to explain exactly why that should be of grave concern to investors in certain areas of the country.
TR: So you won’t give us any markets at all to be thinking about leading up to the San Diego event?
Well, I’ll say this for now, with 10,000 Baby Boomers turning 65 every day for the next 10 years, we, as real estate investors, need to be paying attention to where they are heading for retirement. They are looking at Florida, Nevada and Texas – to give a few examples. These are places with no income taxes and fairly affordable costs of living.
Next, we need to be thinking about the Millennials. They’re looking for affordability, too. But they also want high-tech jobs. This means they’re looking in places like Pittsburgh, Detroit, Cleveland and Kansas City. Right now, you see a lot about how the Millennials are living in high-priced cities and don’t want to move, but I’m telling you from experience, bunking with four roommates will not be fun forever!
I believe this because these are the market factors which will shape 2017, for most real estate investors, the best opportunity in real estate lies solidly in rental properties. There is a huge demand for affordable housing, which rentals provide. And with household growth set to double over the next decade, there are going to be a lot of potential tenants out there eager to pay your monthly rates.
Kathy Fettke is the founder and co-CEO of Real Wealth Network, the author of Retire Rich with Rentals, and the host of “The Real Wealth Show.” She will present her predictions for 2017 and her advice on the best investment strategies today at Think Realty’s San Diego Group Event on February 18, 2017. Register to attend her presentation here.