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Your Money

A look at real estate market

Aired November 29, 2003 - 13:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


JACK CAFFERTY, HOST: Welcome to the program. I'm Jack Cafferty. You're watching a special holiday edition of IN THE MONEY. We will be handing out gifts to each of our viewers at the end of the program today.
The focus of the broadcast is real estate. Coming up on the program, sticker shock on Main Street. We'll look at whether the hot housing market is in fact a bubble about to burst.

Plus, lifestyles of the rich and infamous. From Manhattan chic to Rocky Mountain swank, check out property owned by some of corporate America's most notorious names.

And the mice that moved a market. See how the Internet has kept the real estate business coming on strong.

Joining me, as always on the broadcast, a couple of our IN THE MONEY regulars, CNN correspondent Susan Lisovicz -- there she is -- and "Fortune" magazine editor-at-large, Andy Serwer.

So we're coming down to the wire on 2003, and George Bush has to just be giddy with the signs that the economy is continuing to strengthen. You've got that Medicare bill through. And unlike perhaps his dad, who was a one-term president because of his perceived lack of attention to the domestic agenda, the domestic economy, this president has it all working in his direction now as we go towards...

ANDY SERWER, EDITOR-IN-CHIEF, "FORTUNE" MAGAZINE: Yes, it's really preemption, taking the issues away from the Democrats, as you're suggesting. It's unassailable, the economy has been improving as we wind down this year. It's going to be very hard for the Democrats to respond, and the Republicans are going to say, look, our tax cuts worked.

CAFFERTY: Right.

SERWER: How do you counter that?

SUSAN LISOVICZ, CNN CORRESPONDENT: Well, I agree that Madison Avenue is working overtime right now, readjusting all those Democratic campaigns they had ready to unleash on the airwaves. But the fact is, as strong as the third quarter was, it was fantastic. Nobody really wants the economy to grow that fast in the fourth quarter.

SERWER: (UNINTELLIGIBLE) China, and the people are concerned about it overheating.

CAFFERTY: Right.

SERWER: I mean, no one's talked about that yet. But, I mean, it's out there.

LISOVICZ: I don't think there's any economist that's been out there that says it will continue. And that is a good thing, if you want interest rates to be low, and for people -- well, if we're talking about real estate, to keep buying homes.

CAFFERTY: What a segue. Funny you should mention real estate.

SERWER: Wow. She is good.

CAFFERTY: She is good. If you're thinking about buying a house, hunting anytime soon, just hope that the real estate agent you do business with knows a little about CPR. In places all over the country, property prices are a shock to the system. And even the economy in the last few years has not knocked real estate prices down.

Oh contraire. They continue to rise. For a look at whether this adds up to a housing bubble or just a strong market, we're joined from Washington by Dean Baker, who is the co-director for the Center of Economic Policy Research.

Mr. Baker, nice to have you with us again.

DEAN BAKER, CO-DIRECTOR, CENTER OF ECONOMIC POLICY RESEARCH: Thanks for having me on.

CAFFERTY: Kind of a two-part question: if this is a bubble, and you seem to think that perhaps it is, what makes you think so? And what's it going to look like if and when it bursts?

BAKER: OK. First off, in terms of what makes me think it looks like a bubble, just the basic arithmetic on it. We've seen a run-up of home prices nationwide over the last seven or eight years. It's been about 35 percentage points in excess of the overall rate of inflation.

That's never happened before. So as far back as we have data, basically the post-war period, home prices have pretty much kept even with the rate of inflation. Here we're seeing it go 35 percentage points in excess of the rate of inflation, and, of course, in the bubble areas, because they're local markets, not national markets. But the bubble areas, much of the East Coast, most of the West Coast, some pockets in between, Denver, a few other places, we've seen rises in home prices on the order of 60 percentage points in excess of inflation. So we simply have no precedent for that.

Now, the one mitigating factor, if we -- you know, I've debated a lot of people on this -- if it really was the case that people just value housing hugely in these areas, we should also see that in rental prices. And we're not. The fact is, rental prices did originally rise rapidly, not as rapidly as home prices, but they were rising in these areas. That's turned around, and some of the bubble areas, like Seattle and Silicon Valley, rental prices are flat or even falling now. So it's very hard for me to see a story that this run-up in prices make sense, except as a bubble.

LISOVICZ: Well, there are plenty of folks, Dean, that say of course 2002 was the strongest year for housing prices on record, but the last eight years in general were unprecedented in terms of the spiraling of housing prices. But still, there are people who disagree with your thesis.

Among them, the folks at Harvard University, that put out a study that said that the economy and the housing market will remain fine, because, among other things, that personal income has also gone up. Not quite as high as the housing prices, but it has gone to the point where it's almost very close to it.

What's your response to that?

BAKER: Well, Susan, I'm used to being in the minority back in '98, '99, 2000. I was arguing with people about the stock bubble. So, you know, I've had people disagree with me on things.

But you know, in terms of that Harvard study, it's actually a very peculiar study, because they matched up the wrong items. What you'd want to ask, what we'd expect, the sort of simply story is that, as my income grows, we expect I'll spend roughly the same amount on housing. So if my income goes up 20 percent, probably spend roughly -- you know, as a first approximation -- 20 percent more on housing.

I wouldn't spend 20 percent more on the same home. And that's what they're tracking there. It's a huge confusion.

Imagine we're talking about cars. If my income goes up 20 percent, well, I might spend 20 percent more on cars. But I wouldn't spend 20 percent more on the same car. I'd get a better car.

So it's a very peculiar study. I think they made a very fundamental and obvious mistake. And when you adjust for that, you know you have a real serious problem, a real serious bubble.

SERWER: Well Dean, it's hard to imagine they got something confused up there at Harvard University, but despite that...

BAKER: I know. People find it hard to believe.

SERWER: Yes. Despite that fact, isn't the real problem here that people keep thinking about housing more and more as an investment? I mean, people, this is not a 401k, it's shelter. And isn't that what's really driving a lot of this?

BAKER: Exactly. Exactly. That's where you have a problem, because as long as people are looking at a home and they see the price on it, $200,000, $300,000, $400,000, they're saying, can I afford to live in that, with the idea, you know, they'll sell it, you know, five, 10, 15 years down the road, more or less what they paid for it and adjusted for inflation. You know that's the question people should be asking.

But the problem you get is that in these bubble areas, people are looking at that home price. They're going, wow, $400,000 is a lot of money. But if I could sell it for $600,000 five years out, well, then that's worth doing.

So you're exactly right. People are thinking of it as an investment, and they think that it's going to continue to rise in price. And very often, that's not going to be the case. And of course it could very well go down in price.

LISOVICZ: Dean, what about the fact that the Fed, Federal Reserve, has repeatedly said interest rates are going to remain low for the foreseeable future? Doesn't that put a dent in your thesis?

BAKER: Well, you know, it's funny. I've been on a lot of panels with people, and they point to the interest rates. And I go, "Well, if you're arguing housing prices are high because of interest rates being low, then you really agree we me." Because no one expects over, let's say -- I don't know, I don't have a crystal ball here -- but over the next two or three or four years, no one expects interest rates to stay as low as they are at present.

So if we think that home prices are high and that makes sense, because now we have very low interest rates, well, a year from now, two years from now, three years from now, somewhere we will not have very low interest rates. So if you're buying a home today, the interest rates go up in the next two or three years, and therefore, the price falls by 30 percent, well, for most people that's a really big problem.

LISOVICZ: Dean baker, we're going to have you back on. And you may be saying, I told you so. Or we may be telling you that the others told you so. In any case, we will certainly be revisiting the issue.

Dean Baker, co-director of Center for Economic Policy Research. Thanks for joining us.

BAKER: Thanks for having me on.

LISOVICZ: Up ahead on IN THE MONEY, the high end of the high end. See what the billionaires are buying in one of the country's rich real estate markets.

Plus, what your bank won't tell you about landing a mortgage. We'll have tips for first-time homebuyers, and for old hands who want a few new tips.

And the den of Dennis. We'll show you how corporate bad boys, like Tyco's Dennis Kozlowski, lifted off before the Feds (UNINTELLIGIBLE).

(COMMERCIAL BREAK)

CAFFERTY: Well, here in the heart of New York City, a lot of the real estate rises sky high, and the prices forgo even higher. A little play on words there.

We were wondering what you get for your millions of dollars at the penthouse end at the Manhattan real estate market. So we asked one of the city's top realtors for a house tour that most of us will only dream about. We can live vicariously, though, for the next couple of minutes through the eyes of Pamela Liebman, who is the CEO of The Corcoran Group.

Pamela, nice to have you with us. Thanks for being on the show.

PAMELA LIEBMAN, THE CORCORAN GROUP: Thank you.

CAFFERTY: Where do we start here? High-end real estate has sort of a unique definition in New York City, doesn't it?

LIEBMAN: It certainly does. And I think high-end in New York tends to be very, very high end for anywhere else.

CAFFERTY: Like how high? Like millions plural, right?

LIEBMAN: Well, we've seen it go as high as $45 million this year, but I think when you're talking about over $5 million, we're certainly talking about high-end real estate in New York City.

CAFFERTY: All right. Let's go shopping. Try and sell me something. Not that there's any chance in the world I'd be able to buy anything but maybe the umbrella rack in the foyer.

LIEBMAN: Well, we would love to try and tell you something. Would you like townhouse?

CAFFERTY: Yes, let's do that. That's fine.

LIEBMAN: Great. Well, this isn't just a townhouse. What we'd love to sell you is a mansion.

This is a double wide mansion in the West Village. As you know, the West Village is one of New York's sexiest and hottest areas.

SERWER: That's him.

LIEBMAN: They put together two homes here and added the carriage house in the back to create 43 feet of width. There's an unbelievable amount of windows here. You've got your own spa, 8,000 square feet, seven bathrooms, as many bedrooms as you can possibly want.

Ready for this one? Eight fireplaces. Look at the detail in this house.

CAFFERTY: Wow. Beautiful.

LIEBMAN: This is like having a suburban mansion in the heart of the West Village. And you'll live in the same neighborhood as Gwyneth and Liv Tyler and Julianne Moore. It's a celebrity neighborhood.

CAFFERTY: Is that Gwyneth Libowitz you're talking about? Perhaps not. I think I know.

LIEBMAN: You'll be walking your baby next to Sarah Jessica Parker and Matthew Broderick. This is really sexy.

Look at this roof deck. You can see all of the skyline of Manhattan from this roof deck. Big, high windows. High ceilings.

This is hard to duplicate. This is a very special home. And if you would like to write a check for $8.8 million, we'll be happy to sell it to you.

SERWER: What about $8.6? Would you take -- what kind of bids are you...

LIEBMAN: We might negotiate a little bit.

SERWER: What else do you have out there for us, Pamela?

LIEBMAN: Well, maybe somebody wants to live uptown. And obviously one of greatest parts of Manhattan is Central Park. So when people think high-end real estate, they think Central Park.

Now, it doesn't get much better than this. This is a corner apartment in one of Central Park's most beautiful and exclusive co-op apartments. Home to Harrison Ford, and many other well-known people.

The beauty of this apartment is, in every piece of it, there are nine rooms. Many of them are on the park, and the windows have no panes in them. So when you look at the park, you get a totally clear view.

You can see when you look out the window that it's just really, really majestic. And the way this home has been finished is very, very special. And many apartments in this building have sold for over $10 million. This is really a phenomenal way to live.

SERWER: So what's this one going for?

LIEBMAN: What do you think you would pay for it?

SERWER: Well, how about $9.875 million? I'm just going to throw that out.

LIEBMAN: OK. For just under $10 million, you can have this apartment.

SERWER: Just under.

LIEBMAN: Right. As long as you can pass the co-op board, which won't be easy.

SERWER: You're a bag of shells. LISOVICZ: Pamela, is there any negotiating at this very high end? I mean, you know, I cover Wall Street quite a bit, and we've heard this sad story for a lot of folks who are still working there, who haven't been laid off, that the bonuses are gone, or they're greatly diminished. And these are the type of people who used to buy the Central Park Wests and the double-wide townhouses. Are you seeing any softening at the very top?

LIEBMAN: Quite to the contrary. We're seeing the very top really taking off. Ever since the second quarter of this year, when the Iraq situation sort of resolved itself, all of those fence sitters popped back into the market. And a lot of people are talking about bonuses coming back this year, like they haven't been there for the past two years.

So we're seeing lots of action at the high-end of the market. And this year, New York City has had more $10 million-plus sales than any of the other year in the history of real estate. So no softening up there.

SERWER: Pamela, just quickly, because we've got to go, how does the New York market compare with the high ends of other markets?

LIEBMAN: Well, I think in New York, our high end is higher than most other high ends. I mean, here, $10 million-plus is the super luxury market. And I think if you're -- other than California or Aspen, or other real sexy parts of the country, I think $5 million would really be the top end of the market in most places.

LISOVICZ: Pamela Liebman, you know I live in a townhouse, too, but it's not 8,000 square feet, by the way.

She is the CEO of The Corcoran Group. It was a fantastic vicarious journey you took us on. Thanks for joining us.

LIEBMAN: Thank you very much.

LISOVICZ: Coming up on IN THE MONEY, where geriatric meets copacetic. We'll hear about "Money" magazine's top places to spend your retirement.

And the birds and bees for real estate virgins. We'll have mortgage tips for first-time homebuyers and the rest of us.

(COMMERCIAL BREAK)

SERWER: Back in your parents' day, picking a retirement spot used to be a matter of following the crowd. But unless you like palm trees, blue plate specials -- and I do -- and hanging out with lots of old people, that's just not good enough anymore.

"Money" magazine senior editor Marion Asnes joins us to run down "Money" magazine's list of the best places to retire. And some of them even have snow.

That kind of blows my mind, Marion. Ann Arbor, Michigan? Come on.

MARION ASNES, "MONEY" MAGAZINE: Well, you know, they do have actually a very large retirement of those old people you have such a problem with, Andy.

SERWER: I don't have a problem with them. I like that food.

CAFFERTY: Careful. I am an old person. So let's take it easy on that.

SERWER: I'd never call you that, by the way.

ASNES: Well, you know, one ever the women -- one of the retirees that we interviewed as we were doing this said a very interesting thing about Ann Arbor. She said, it's a city full of smart people, so you know you'll never get bored.

You know they've got the University of Michigan there, that has 38,000 students. So there's a huge cultural life and...

SERWER: And football.

ASNES: ... and sports life, yes...

SERWER: Yes, football.

ASNES: ... that revolves around the university. And a lot the people take part.

CAFFERTY: I have raised four daughters. The last thing I want to do is go spend my retirement around 38,000 children.

LISOVICZ: And they don't want to spend it with you, either.

CAFFERTY: That's right. They don't.

ASNES: Well, yes, it's true that the students have a very different social life from the retired.

LISOVICZ: No?

ASNES: I know. Isn't that shocking?

LISOVICZ: Well, Savannah, Georgia -- I used to live in the South, and that is such a beautiful town. I thought that was...

ASNES: It's beautiful.

LISOVICZ: I thought it was an expensive place to live.

ASNES: Well, you know, it is not cheap. That is absolutely true. But you're getting a lot for your money.

And as you noted, when you do your segments on what money gets you in different parts of the country, as a magazine based in New York City, I have to tell you, everything looks like a bargain. But we did note that the prices are high, but, you know, "Money's" readers are pretty affluent, and a lot them can afford it.

And what you have right now retiring is a group of very affluent people. Now, when my generation retires, I think I'm eligible for...

SERWER: Many decades from now.

ASNES: Yes. I'm eligible for Social Security in 2025, which I think is when a lot of economists have predicted that the whole system's going to fall apart.

SERWER: Oh, great.

ASNES: Yes, I know.

LISOVICZ: You'll be so happy.

ASNES: Will I get to Savannah? Maybe I'll get to live under the freeway in Savannah. But for those people who can afford it, it is a beautiful town. It has very good medical care. It has lots of volunteer opportunities for seniors.

It's got a strong cultural scene. So, you know -- and they've got a lot of great retirement communities opening up.

CAFFERTY: One of the places you recommend is La Paz, Mexico.

ASNES: Yes.

CAFFERTY: Put my anxiety to rest about moving outside of the United States. Should I be worried about that, the laws, the currency, the health and medical services? Things like that?

ASNES: Well, it is complicated legally and financially for a lot of people. One of the things that you should know is, since I know you're going to retire before 2025, Jack, I hope...

CAFFERTY: Yes. With any luck, very soon.

(CROSSTALK)

ASNES: You can collect Social Security no matter where you live.

CAFFERTY: You can? Even if I live outside country?

ASNES: Yes.

CAFFERTY: OK.

ASNES: Yes. But in order to remain eligible for Medicare, you must retain a residence in the United States.

Now, what a lot of people do who retire to places like La Paz or other places in Mexico, is they keep a place in the United States that they go to for the summer, when it gets very hot down in Mexico. And then they spend the rest of the year down there.

CAFFERTY: Any reason to be concerned about the quality, for example, of medical care that's available in a place like that?

ASNES: Well, if you go to a place with a large expatriate community, you can get very good medical care. And your American private health insurance remains in effect if you live in Mexico.

Now, in a place like La Paz, however, where you're on the coast of Mexico, there are special mechanisms for an American to own property. There is -- you have to get what's called a trust deed, because it is illegal to sell any property within 50 kilometers of the coast, which is about 31 miles to a non-Mexican.

So it is a more complex legal process, but it can be structured very well for both you and your heirs. So what the U.S. Consulate recommends is that you get a Mexican real estate attorney or an American real estate attorney who specializes in property there. And they will actually give you a list if you call and ask.

LISOVICZ: Marion, we're almost out of time.

ASNES: OK.

LISOVICZ: But one of the things that these vastly different locations have in common is that they have lots of activities. That's one of the things that determines a good place to retire.

ASNES: Yes. Well, you know, when you're looking at a retiree today, you're looking at...

LISOVICZ: Shuffle board.

ASNES: ... a relatively young and healthy person. Sixty-five today is not what 65 was 20 years ago. People are younger, they're healthier, they are more active. So what we look at when we look for a retirement community -- and we think everyone should look -- is not only the good hospital, but the things you want to do and access to travel, because retirees travel a lot.

LISOVICZ: And our thanks to Marion Asnes, who is a senior editor at "Money" magazine.

Ahead on IN THE MONEY, how to play like an old timer even if you're a first timer. We'll have mortgage advice for everyone from novices on up.

And later, Martha Stewart's living, but not like the rest of us. We'll check out the homes of the hostess with the mostess and other CEOs who have come under scrutiny.

Plus, online and in touch. The Web can take the pain out of researching a mortgage. We'll tell you which tools (UNINTELLIGIBLE).

(COMMERCIAL BREAK)

CAFFERTY: Real estate can be a tough row to hoe for first-time homebuyers. That whole process, looking for a home, getting a mortgage, surviving until closing time. It can be frightening and it can be more than a little confusing. But believe it or not, there are literally dozens of special programs and incentives out there designed to lighten the load for first-time homebuyers.

Joining us now to help us unravel all the red tape is Gary Eldred, author of "The 106 Mortgage Secrets All Homebuyers Must Learn That Lenders Don't Tell." He was going to do a lorng title, but they ran out of room on the front of the book.

Gary, nice to you have with us. Thanks for joining us.

GARY ELDRED, MORTGAGE EXPERT: Thank you very much. Enjoy being here.

CAFFERTY: Sounds a little like there's a conspiracy on the part of the lenders against the buyers? Surely it's not as dire as all that? Is it?

ELDRED: No, no, not so bad as that. But a lot of the lenders don't really tell everything that the buyers need to know to get the best loan decision.

CAFFERTY: Why not? I mean, what is it -- what's the kind of stuff they would keep from buyers? And why would they want it key it from them?

ELDRED: Well, many loan officers only deal with certain types of programs. So they're not likely to tell about programs they're not handling.

SERWER: Gary, you talk about credit as being so important. Even more important than income. Why don't you talk about that a little bit, because I don't think people understand how important it is to get your house in order.

ELDRED: Well, one of the things these days, the lenders are all using credit scores. So everybody who's going to apply for a loan needs to go to myfico.com and get their credit score, get their credit reports and do what they can to improve it.

LISOVICZ: Gary, I'm a first-timer.

ELDRED: All right.

LISOVICZ: I've met you maybe 15 months too late. I've already refinanced. And I'm shortening the length of my mortgage. I guess those are good things, but...

ELDRED: Absolutely, yes.

LISOVICZ: ... but what are some of the special programs that I and other first-timers should know about?

ELDRED: Well, some of the best first-time programs are the FHA 203b, the FHA 203k, Fannie Mae has some good programs called Flex 97 and Flex 100. All of these are low down payment, easy qualifying loans. LISOVICZ: So how do you find out about those? Where do you go?

ELDRED: Well, one of the best places is hud.gov, which is the Web site for FHA, and it has links to all kinds of down payment, low down payment programs. Also, fanniemae.com also has a lot of links, a lot of information about their low down, easy qualifying loans.

CAFFERTY: As a first-time buyer, Gary, how do I go about deciding what kind of a mortgage is best for me? Do I go for a 30- year conventional, a 15-year conventional, a five-year with a balloon, a three-year with a balloon? I mean, there are dozens and dozens of different kinds of products. How do I look at my bank book, the house I want to buy, and decide what mortgage product is the best one I should have?

ELDRED: Well, the first thing you need to do is think how long you're going to be in the home. And if you're only going to be there five or seven years, something short term, then you definitely do not want a 30-year fixed rate mortgage. You want to go for something shorter, because the shorter the term, the lower the interest rates. And there are great short-term rates these days.

The other issue is, how much can you really afford to buy? And if you get a lower interest rate mortgage, you can afford to buy more home.

SERWER: Gary, I hear what you say, but I refinanced and went to a 30 year. And I've got to tell you why. I know that I'm not getting a good rate. And I knew you were going to disagree with me.

But I've got to tell you something, one thing you don't take into account. And that is me sleeping at night. I don't have to worry ever again. I really believe rates are pretty much at a historical low, and I feel good! What do you say to that?

LISOVICZ: And you have to pay for your kids' education.

ELDRED: Yes, that's the peace of mind factor. And if you knew you were going to be moving, though, in three or four or five years, then certainly the shorter term would be better for you. If you don't know that, if you think you might be there for the rest of your life and you like that peace of mind, go for it.

LISOVICZ: All right. Other than Andy's mistake, what are some of the other most common mistakes that homebuyers make?

ELDRED: Well, getting the first personal finances fixed up long before they ever begin thinking about applying for a mortgage is the best issue. You're going to need cash. You're going to need credit, and you're going to need income.

And the more you look in all of these different factors and work with a loan rep or a real estate agent who can look through these factors and run through your budget and get you shaped up long before you even think about applying for that mortgage. Because when you think about it, just before you want to apply, it's probably too late. SERWER: All right, Gary. Some very pertinent information. Thanks very much.

Gary Eldred is the author of "106 Mortgage Secrets That Homebuyers Must Learn But Lenders Don't Tell."

Up next on IN THE MONEY, (UNINTELLIGIBLE) deluxe. See how corporate big wigs hit by scandal have been spending their real estate dollars.

Also ahead, power to the people. The Web gives you the tools for doing your own mortgage research. Find out where to click on before you sign on that dotted line.

And, kill your television set. If somebody (UNINTELLIGIBLE) don't just throw stuff at the screen. Get even. Send us an e-mail at inthemoney@cnn.com.

(COMMERCIAL BREAK)

LISOVICZ: The wave of Wall Street scandals over the past couple of years has given America a new take on business and pleasure. Suddenly, some of the CEOs living the high life didn't look so much like role models as potential targets for the Feds.

We wanted to see how a few of the boss whose have come under scrutiny spent their millions on property. And here to help us out, Paul Purcell, partner in the real estate consulting firm of Braddock + Purcell.

Welcome.

PAUL PURCELL, BRADDOCK + PURCELL: Thank you. It's a pleasure to be here.

LISOVICZ: And what a delicious interview this will be, because in addition to the ranches and the fancy cars, these people, a lot of these CEOs who are now in trouble, bought a lot of real estate. Let's look at Ken Lay, for instance, of Enron. It is fortuitous for him to be living in Texas, is it not?

PURCELL: Absolutely fortuitous to be living in Texas. Texas is one of the five states, along with Florida and some others, that protect people's real estate investments against creditors in the case or eventuality of the bankruptcy. So he's in a very good spot with some of his property.

LISOVICZ: He can't retain all of it, though, right?

PURCELL: No. Primary residence.

SERWER: You know, I want to ask you a second here, Paul, about Martha Stewart's pad. Before we get to that, do these -- the fact that celebrities and CEOs lived in these places, does this get a premium? I'm thinking about Kathryn Hepburn's home up in Connecticut that was on the block. It seems like that was a lot more than market value.

PURCELL: That's a great question. It sort of depends on the person. Famous or infamous? And truly, someone who lives next door to Madonna might actually, when selling their apartment, reap a reward of perhaps 30 percent higher than the market value.

I always use the example of Jacqueline Onassis' apartment. It sold for double its true value when it was sold after she passed away. So again, it depends on the individual.

CAFFERTY: Let's go back to talking about these weasels. You've got your Ken Lay, you've got your Dennis Kozlowski, you've got Martha Stewart. Kozlowski, of course, is on trial for a whole long laundry list of bad things he supposedly did, but his lawyer says, hey, the company owned the apartment and it's not a big deal.

But this is the one that had the $6,000 shower curtain and the $15,000 umbrella rack. And I mean, he throws this thing in Sardinia for his wife. I mean, these guys know a little about how to spend somebody else's money.

PURCELL: This is probably the most creative example of purchasing real estate that I could find ever. I think he does get the reward for creativity.

CAFFERTY: Yes.

PURCELL: He is accused of doing several things with their company's relocation policy. There are tremendous tax advantages when a company moves you, versus when you move yourself. So moving his corporate headquarters from New Hampshire down to Boca Raton, Florida, so that key executives could perhaps take advantage of real estate there, it almost was as though they really built an internal policy and plan in their relocation, 1995 relocation plan, I believe, that so benefited people investing in real estate. And they really do get the prize on this one.

LISOVICZ: But let's talk about Martha Stewart. Martha Stewart has a lot of her portfolio tied up in real estate. For instance, Turkey Hill has been both a home, as well as a production studio. Has she been a smart buyer in your view?

PURCELL: I think Martha Stewart -- actually, I think all of these people are incredibly smart buyers. I think perhaps they had, what would I say, a window to the future of what was going to happen in corporate America, and they stuck a lot of their investments in real estate. But Martha's brilliant.

She has properties in the east end of Long Island, on Lily Pond Lane in East Hampton, which is probably one of the best addresses in the world. She has an apartment in New York City, Turkey Hill, as you mentioned. A place in Maine. And she just recently bought a lot of land in Bedford, New York in upper Westchester.

CAFFERTY: And yet she's going to go on trial for allegedly monkeying around with a few hundred thousand dollars worth of stock. I mean, you've got to strach your head a little. What goes through their minds?

PURCELL: Absolutely. I can't imagine on that one. I really can't even speculate.

CAFFERTY: It's unbelievable.

SERWER: Paul, let me ask you about another property very much in the news today. And that's -- lately -- and that's Neverland. What's up with MJ's pad? I understand he paid, what, $28 million for that? But it's not worth anything near that today, right?

PURCELL: Well, this is a great example of someone building a shrine to themselves.

SERWER: Love that.

PURCELL: And I think that sometimes I would use the example, if you're going to buy -- like real people, you and me, buying a nice apartment, we should not ever make something so specific that no one else will ever want it. And I think there's a tremendous amount of acres there.

There are thousands and thousands of acres. And it really is a beautiful place to be in the (UNINTELLIGIBLE) valley north of Santa Barbara. However, he's built this thing, an amusement park. How many buyers want an amusement park? I can't even begin to speculate on that one, either.

SERWER: Yes.

PURCELL: So I think the appraised -- or rather the assessed value of Neverland is somewhere around $12 million. Again, there may be someone crazy who wants to come in and spend $20 or $30 million.

LISOVICZ: Paul, very quickly, because we're almost out of time, on the one hand, you have the Michael Jacksons, who build these testimonials to themselves. On the other hand, you have plenty of very wealthy individuals in the U.S. who buy anonymously or through other names. Oprah is a good example of that.

PURCELL: Yes, she's a great example. Oprah -- properties that we've identified with Oprah are probably worth about $100 million. This is a woman who made the "Forbes" billion dollar list, if you remember last year.

Ten percent clearly of her net worth is in real estate that we're able to identify. And she's another savvy, smart person. But yes, a lot of the real estate is bought in corporate name, in shells that we wouldn't be able to readily identify. I guess for privacy issues and things like that.

CAFFERTY: Paul, it's interesting stuff. We're going to have to leave it there. I thank you for coming on the program.

PURCELL: Pleasure being with you.

CAFFERTY: Thanks very much. Paul Purcell, partner of Braddock + Purcell.

As we continue, up next on IN THE MONEY, the high-tech side of the housing boom. Find out how refinancing online has been driving the property market skyward.

And don't make us do all the work. Let us know what we are doing right and what we could do better. Actually, just let us know what we're doing right. I don't want to read anymore criticisms this week. I'm very sensitive and it's been a touch week on my ego.

Our e-mail address is inthemoney@cnn.com.

(COMMERCIAL BREAK)

SERWER: If you pay attention to the commercials on this network, you already know there are a lot of online mortgage lenders out there. Joining us now for a look at the plusses and minuses of online mortgage services and more, is our own Webmaster, Allen Wastler.

Allen, how are you doing?

ALLEN WASTLER, MANAGING EDITOR, CNN MONEY: I'm doing fine. I'm doing fine.

Online mortgages makes it easy, talking about it all program. You know, you go and you look at this and that and the other. So you go to these sites, all of it's there.

You can compare rates, you can check out different scenarios. If I do a 15-year on an ARM versus a 30-year on a fixed, how much is -- it's lots of fun. But you know what?

SERWER: What?

WASTLER: For all of those plusses, for all of those great things, Tower Research Group thinks that online mortgages will only account for about 12 percent of the total volume of mortgages in 2005.

LISOVICZ: I am not surprised at all, because I can buy online sneakers, pajamas. But for something as substantial as a mortgage, I want to talk to someone. I actually want to look at that person.

WASTLER: You want someone in a bad suit there going through the calculations, just telling you...

SERWER: Can you really get better rates? Is it really worth it?

WASTLER: Actually, you can, because they squeeze out a lot of the middle-man work. And also, they're very aware of the fact, that they're online. You click, click, you don't like that rate, it's easy to click over to another site and find another rate. OK? So very competitive on there.

Also, they're able to hook up their software right to your application. So they can tell right away if they can shuffle off your mortgage to Freddie Mac, Fannie Mae, or the others if you're going to conform to those standards, or if they've got to go after you on a sub-prime rate or some sort of deal rate.

(CROSSTALK)

CAFFERTY: The nice thing I was going to say about -- it would seem to be about going to an online mortgage center, is that one of the earlier guests we had on the program talked about, if you walk into a bank, and the guy you're talking to specializes in 15-year fixed rates or five-year ARMS, of 30-year conventions, he's not going to try to sell you off the stuff that he gets the specialization commission on.

WASTLER: He's going to stay with the stuff he knows about, and he's not going to bring up these others. Now, if you look at the sites that do this kind of online mortgage activity, you're seeing something interest in the industry going.

SERWER: And there are a lot of these sites, right?

WASTLER: A lot of these sites. And here's just a few of the top ones right now. You've got Bankrate.com, Realtor.com, you know, all of these places.

What they do is they sort of steer you to the right lenders and the right originators. OK?

CAFFERTY: OK.

WASTLER: Banks haven't been blind to what's going on. So a lot of banks are also getting into that sector. They're a little bit lower down on the list, but you've got like Wells Fargo, Bank of America. They're all building their own mortgage businesses. OK?

And what they figured out is what you were referring to before. You know, why should I go there? This is the biggest purchase of my life. I want a human being and stuff.

The banks are going, ah-ha. We can have an online presence, and once you do your preliminary online, go to this bank, conveniently located to you, this branch, talk to this guy. And they can make that cross between cyber and human. So you get some of the convenience of online and some of the, oh, please hold my hand.

LISOVICZ: Have you found any bogus Web sites, though? In other words, where you can be scammed?

WASTLER: And here's the trick. Whenever you have a big, booming market -- we've got low interest rates, so you've got a lot of people coming in, we can give you this, we can give you that. You should sort of stay with established players. And it's pretty -- you know, if you look at the list, you can figure out pretty much who those are.

And keep in mind, the same warnings on regular mortgages. You got to keep that.

CAFFERTY: Yes.

SERWER: Thirty-year fixed.

WASTLER: When you say, hey, what's the rate, well, make sure you qualify for that rate. And your APR, does that include all of your fees? Make sure you get the lock. Because, hey, "We lost it in the e-mail."

SERWER: How much can you save? I mean, is there any way or anything you can...

WASTLER: I haven't seen any concise study.

SERWER: But you can save basis points and...

WASTLER: You know, you can just...

SERWER: ... a quarter of a percentage point.

WASTLER: It's not far from that commercial you see where, you know, you're going to do this for me? Hold on a second. And run to the computer and double check.

SERWER: Right.

WASTLER: And actually, if you look, a lot these places report that, of the traffic they get, only 20 percent actually follow through. You know, that extra 80 percent is just going in and comparing rates. Of the 20 percent that they to do the deal on, 80 percent of those are actually doing refinances, which is a lot less scary than the first time.

SERWER: I think we messed up by not going online.

LISOVICZ: I think so.

CAFFERTY: I wonder how much of that 12 percent of the mortgage that's done online is done by that obnoxious little dweeb that goes, "Oh, no I just lost another..."

SERWER: A loveable little guy.

CAFFERTY: I want to throw things at my TV set every time that spot comes on.

SERWER: He pays our...

WASTLER: Irritation is a good advertising strategy.

(CROSSTALK)

CAFFERTY: Allen, thank you.

WASTLER: Sure thing.

CAFFERTY: On to other things, chump change in Manhattan's (UNINTELLIGIBLE) in Boise, but that's because it's Boise. And nothing makes the point like the real estate market. We wanted to find out what $500,000 will get you in three different cities around the country.

First stop here in New York. Now, a half a million here buys you this. So one bedroom, one bathroom apartment, 850 square feet. You probably have a view of the brick wall of the building next door.

SERWER: Well, throw that stool in.

CAFFERTY: Yes. The 850 square feet, that's for the whole apartment. That's not just the bathroom.

Now take the half a million and go West, young man. Go out to Denver, Colorado. There, $500,000 gets you suddenly something that looks a lot heftier. Mile High City, 3,000 square feet, three bedrooms and four bathrooms.

And then if you want to go to Boise, Idaho and live, take your half a million bucks and look at this joint.

SERWER: Living large.

CAFFERTY: Four thousand square feet, four bedrooms, three baths. You could pack four of those Manhattan apartments we showed you at the beginning of this into this house and still have room in the three-car garage for three cars.

I lived in the Midwest. And the...

SERWER: All right. That's it. I'm going to Boise.

CAFFERTY: You know, well...

(CROSSTALK)

SERWER: I like Boise. Boise's great. Nice people, fresh air.

CAFFERTY: No, I used to live -- yes, I've been to Boise, actually. Have you?

SERWER: Yes, I have.

CAFFERTY: OK. Boise's not a bad town. But the difference in price when I moved from the Midwest to New York City and started to look around for a place to live, it was just like -- the shock is unbelievable. You really do get a lot more house for the money.

WASTLER: You get so much more to do here, though. You get public transportation. Take you around to museums, culture. God knows you could use culture, Jack. Culture.

(CROSSTALK)

LISOVICZ: People pushing and shoving. You have to factor that in, too.

CAFFERTY: All right. Enough of this. LISOVICZ: All right. Stick around. We're going to find out about some of your real estate values when we dip into our e-mail bag. And remember, you can always e-mail us at inthemoney@cnn.com.

(COMMERCIAL BREAK)

CAFFERTY: For this special program on real estate, we asked viewers a fairly straightforward question about their own real estate situation. The question was this: Is your home worth more, less or about the same as when you bought it?

Most of the responses went a lot like this one from Joe in North Carolina: "My main residence has almost doubled in 10 years. I bought a beach house five years ago and it's doubled in value. Is this a great country or what?" And those gains do seem to spur spending in, what else, more real estate.

Richard in Louisiana wrote this: "My house was just appraised 18 percent higher than it was last year, so I put it up for sale. And I will buy a nicer house . I'll also get the same low interest rate I got when I bought the original home."

But Lee in Los Angeles, been around a little longer, and is a little more spentical about all of this. She said, "Our house cost $51,000 when we bought it in 1967. Now it's worth -- and she puts that in quotation marks -- more than $1,000,000. But this doesn't seem real and I feel it will all crash very soon."

You can get in touch with us to talk real estate, the markets, politics, animal welfare, by e-mailing us at inthemoney.com. You can keep up with all the IN THE MONEY comings and goings by checking out our special show page. Go to money.com/inthemoney.

And that brings us to the end of a special edition of the program. Thank you for watching. Thanks to our panel of regulars around here, CNN correspondent Susan Lisovicz; "Fortune" magazine editor-at-large Andy Serwer, leaving for Boise right after the show today; and money.com magazine manager, Allen Wastler.

Thanks to all of them. Join us next week, Saturday at 1:00, Sunday at 3:00 Eastern Time for IN THE MONEY. Or you can catch Andy and me all week long on AMERICAN MORNING, which starts at 7:00 Easter Time.

Thanks for watching. Have a great holiday weekend.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com







Aired November 29, 2003 - 13:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JACK CAFFERTY, HOST: Welcome to the program. I'm Jack Cafferty. You're watching a special holiday edition of IN THE MONEY. We will be handing out gifts to each of our viewers at the end of the program today.
The focus of the broadcast is real estate. Coming up on the program, sticker shock on Main Street. We'll look at whether the hot housing market is in fact a bubble about to burst.

Plus, lifestyles of the rich and infamous. From Manhattan chic to Rocky Mountain swank, check out property owned by some of corporate America's most notorious names.

And the mice that moved a market. See how the Internet has kept the real estate business coming on strong.

Joining me, as always on the broadcast, a couple of our IN THE MONEY regulars, CNN correspondent Susan Lisovicz -- there she is -- and "Fortune" magazine editor-at-large, Andy Serwer.

So we're coming down to the wire on 2003, and George Bush has to just be giddy with the signs that the economy is continuing to strengthen. You've got that Medicare bill through. And unlike perhaps his dad, who was a one-term president because of his perceived lack of attention to the domestic agenda, the domestic economy, this president has it all working in his direction now as we go towards...

ANDY SERWER, EDITOR-IN-CHIEF, "FORTUNE" MAGAZINE: Yes, it's really preemption, taking the issues away from the Democrats, as you're suggesting. It's unassailable, the economy has been improving as we wind down this year. It's going to be very hard for the Democrats to respond, and the Republicans are going to say, look, our tax cuts worked.

CAFFERTY: Right.

SERWER: How do you counter that?

SUSAN LISOVICZ, CNN CORRESPONDENT: Well, I agree that Madison Avenue is working overtime right now, readjusting all those Democratic campaigns they had ready to unleash on the airwaves. But the fact is, as strong as the third quarter was, it was fantastic. Nobody really wants the economy to grow that fast in the fourth quarter.

SERWER: (UNINTELLIGIBLE) China, and the people are concerned about it overheating.

CAFFERTY: Right.

SERWER: I mean, no one's talked about that yet. But, I mean, it's out there.

LISOVICZ: I don't think there's any economist that's been out there that says it will continue. And that is a good thing, if you want interest rates to be low, and for people -- well, if we're talking about real estate, to keep buying homes.

CAFFERTY: What a segue. Funny you should mention real estate.

SERWER: Wow. She is good.

CAFFERTY: She is good. If you're thinking about buying a house, hunting anytime soon, just hope that the real estate agent you do business with knows a little about CPR. In places all over the country, property prices are a shock to the system. And even the economy in the last few years has not knocked real estate prices down.

Oh contraire. They continue to rise. For a look at whether this adds up to a housing bubble or just a strong market, we're joined from Washington by Dean Baker, who is the co-director for the Center of Economic Policy Research.

Mr. Baker, nice to have you with us again.

DEAN BAKER, CO-DIRECTOR, CENTER OF ECONOMIC POLICY RESEARCH: Thanks for having me on.

CAFFERTY: Kind of a two-part question: if this is a bubble, and you seem to think that perhaps it is, what makes you think so? And what's it going to look like if and when it bursts?

BAKER: OK. First off, in terms of what makes me think it looks like a bubble, just the basic arithmetic on it. We've seen a run-up of home prices nationwide over the last seven or eight years. It's been about 35 percentage points in excess of the overall rate of inflation.

That's never happened before. So as far back as we have data, basically the post-war period, home prices have pretty much kept even with the rate of inflation. Here we're seeing it go 35 percentage points in excess of the rate of inflation, and, of course, in the bubble areas, because they're local markets, not national markets. But the bubble areas, much of the East Coast, most of the West Coast, some pockets in between, Denver, a few other places, we've seen rises in home prices on the order of 60 percentage points in excess of inflation. So we simply have no precedent for that.

Now, the one mitigating factor, if we -- you know, I've debated a lot of people on this -- if it really was the case that people just value housing hugely in these areas, we should also see that in rental prices. And we're not. The fact is, rental prices did originally rise rapidly, not as rapidly as home prices, but they were rising in these areas. That's turned around, and some of the bubble areas, like Seattle and Silicon Valley, rental prices are flat or even falling now. So it's very hard for me to see a story that this run-up in prices make sense, except as a bubble.

LISOVICZ: Well, there are plenty of folks, Dean, that say of course 2002 was the strongest year for housing prices on record, but the last eight years in general were unprecedented in terms of the spiraling of housing prices. But still, there are people who disagree with your thesis.

Among them, the folks at Harvard University, that put out a study that said that the economy and the housing market will remain fine, because, among other things, that personal income has also gone up. Not quite as high as the housing prices, but it has gone to the point where it's almost very close to it.

What's your response to that?

BAKER: Well, Susan, I'm used to being in the minority back in '98, '99, 2000. I was arguing with people about the stock bubble. So, you know, I've had people disagree with me on things.

But you know, in terms of that Harvard study, it's actually a very peculiar study, because they matched up the wrong items. What you'd want to ask, what we'd expect, the sort of simply story is that, as my income grows, we expect I'll spend roughly the same amount on housing. So if my income goes up 20 percent, probably spend roughly -- you know, as a first approximation -- 20 percent more on housing.

I wouldn't spend 20 percent more on the same home. And that's what they're tracking there. It's a huge confusion.

Imagine we're talking about cars. If my income goes up 20 percent, well, I might spend 20 percent more on cars. But I wouldn't spend 20 percent more on the same car. I'd get a better car.

So it's a very peculiar study. I think they made a very fundamental and obvious mistake. And when you adjust for that, you know you have a real serious problem, a real serious bubble.

SERWER: Well Dean, it's hard to imagine they got something confused up there at Harvard University, but despite that...

BAKER: I know. People find it hard to believe.

SERWER: Yes. Despite that fact, isn't the real problem here that people keep thinking about housing more and more as an investment? I mean, people, this is not a 401k, it's shelter. And isn't that what's really driving a lot of this?

BAKER: Exactly. Exactly. That's where you have a problem, because as long as people are looking at a home and they see the price on it, $200,000, $300,000, $400,000, they're saying, can I afford to live in that, with the idea, you know, they'll sell it, you know, five, 10, 15 years down the road, more or less what they paid for it and adjusted for inflation. You know that's the question people should be asking.

But the problem you get is that in these bubble areas, people are looking at that home price. They're going, wow, $400,000 is a lot of money. But if I could sell it for $600,000 five years out, well, then that's worth doing.

So you're exactly right. People are thinking of it as an investment, and they think that it's going to continue to rise in price. And very often, that's not going to be the case. And of course it could very well go down in price.

LISOVICZ: Dean, what about the fact that the Fed, Federal Reserve, has repeatedly said interest rates are going to remain low for the foreseeable future? Doesn't that put a dent in your thesis?

BAKER: Well, you know, it's funny. I've been on a lot of panels with people, and they point to the interest rates. And I go, "Well, if you're arguing housing prices are high because of interest rates being low, then you really agree we me." Because no one expects over, let's say -- I don't know, I don't have a crystal ball here -- but over the next two or three or four years, no one expects interest rates to stay as low as they are at present.

So if we think that home prices are high and that makes sense, because now we have very low interest rates, well, a year from now, two years from now, three years from now, somewhere we will not have very low interest rates. So if you're buying a home today, the interest rates go up in the next two or three years, and therefore, the price falls by 30 percent, well, for most people that's a really big problem.

LISOVICZ: Dean baker, we're going to have you back on. And you may be saying, I told you so. Or we may be telling you that the others told you so. In any case, we will certainly be revisiting the issue.

Dean Baker, co-director of Center for Economic Policy Research. Thanks for joining us.

BAKER: Thanks for having me on.

LISOVICZ: Up ahead on IN THE MONEY, the high end of the high end. See what the billionaires are buying in one of the country's rich real estate markets.

Plus, what your bank won't tell you about landing a mortgage. We'll have tips for first-time homebuyers, and for old hands who want a few new tips.

And the den of Dennis. We'll show you how corporate bad boys, like Tyco's Dennis Kozlowski, lifted off before the Feds (UNINTELLIGIBLE).

(COMMERCIAL BREAK)

CAFFERTY: Well, here in the heart of New York City, a lot of the real estate rises sky high, and the prices forgo even higher. A little play on words there.

We were wondering what you get for your millions of dollars at the penthouse end at the Manhattan real estate market. So we asked one of the city's top realtors for a house tour that most of us will only dream about. We can live vicariously, though, for the next couple of minutes through the eyes of Pamela Liebman, who is the CEO of The Corcoran Group.

Pamela, nice to have you with us. Thanks for being on the show.

PAMELA LIEBMAN, THE CORCORAN GROUP: Thank you.

CAFFERTY: Where do we start here? High-end real estate has sort of a unique definition in New York City, doesn't it?

LIEBMAN: It certainly does. And I think high-end in New York tends to be very, very high end for anywhere else.

CAFFERTY: Like how high? Like millions plural, right?

LIEBMAN: Well, we've seen it go as high as $45 million this year, but I think when you're talking about over $5 million, we're certainly talking about high-end real estate in New York City.

CAFFERTY: All right. Let's go shopping. Try and sell me something. Not that there's any chance in the world I'd be able to buy anything but maybe the umbrella rack in the foyer.

LIEBMAN: Well, we would love to try and tell you something. Would you like townhouse?

CAFFERTY: Yes, let's do that. That's fine.

LIEBMAN: Great. Well, this isn't just a townhouse. What we'd love to sell you is a mansion.

This is a double wide mansion in the West Village. As you know, the West Village is one of New York's sexiest and hottest areas.

SERWER: That's him.

LIEBMAN: They put together two homes here and added the carriage house in the back to create 43 feet of width. There's an unbelievable amount of windows here. You've got your own spa, 8,000 square feet, seven bathrooms, as many bedrooms as you can possibly want.

Ready for this one? Eight fireplaces. Look at the detail in this house.

CAFFERTY: Wow. Beautiful.

LIEBMAN: This is like having a suburban mansion in the heart of the West Village. And you'll live in the same neighborhood as Gwyneth and Liv Tyler and Julianne Moore. It's a celebrity neighborhood.

CAFFERTY: Is that Gwyneth Libowitz you're talking about? Perhaps not. I think I know.

LIEBMAN: You'll be walking your baby next to Sarah Jessica Parker and Matthew Broderick. This is really sexy.

Look at this roof deck. You can see all of the skyline of Manhattan from this roof deck. Big, high windows. High ceilings.

This is hard to duplicate. This is a very special home. And if you would like to write a check for $8.8 million, we'll be happy to sell it to you.

SERWER: What about $8.6? Would you take -- what kind of bids are you...

LIEBMAN: We might negotiate a little bit.

SERWER: What else do you have out there for us, Pamela?

LIEBMAN: Well, maybe somebody wants to live uptown. And obviously one of greatest parts of Manhattan is Central Park. So when people think high-end real estate, they think Central Park.

Now, it doesn't get much better than this. This is a corner apartment in one of Central Park's most beautiful and exclusive co-op apartments. Home to Harrison Ford, and many other well-known people.

The beauty of this apartment is, in every piece of it, there are nine rooms. Many of them are on the park, and the windows have no panes in them. So when you look at the park, you get a totally clear view.

You can see when you look out the window that it's just really, really majestic. And the way this home has been finished is very, very special. And many apartments in this building have sold for over $10 million. This is really a phenomenal way to live.

SERWER: So what's this one going for?

LIEBMAN: What do you think you would pay for it?

SERWER: Well, how about $9.875 million? I'm just going to throw that out.

LIEBMAN: OK. For just under $10 million, you can have this apartment.

SERWER: Just under.

LIEBMAN: Right. As long as you can pass the co-op board, which won't be easy.

SERWER: You're a bag of shells. LISOVICZ: Pamela, is there any negotiating at this very high end? I mean, you know, I cover Wall Street quite a bit, and we've heard this sad story for a lot of folks who are still working there, who haven't been laid off, that the bonuses are gone, or they're greatly diminished. And these are the type of people who used to buy the Central Park Wests and the double-wide townhouses. Are you seeing any softening at the very top?

LIEBMAN: Quite to the contrary. We're seeing the very top really taking off. Ever since the second quarter of this year, when the Iraq situation sort of resolved itself, all of those fence sitters popped back into the market. And a lot of people are talking about bonuses coming back this year, like they haven't been there for the past two years.

So we're seeing lots of action at the high-end of the market. And this year, New York City has had more $10 million-plus sales than any of the other year in the history of real estate. So no softening up there.

SERWER: Pamela, just quickly, because we've got to go, how does the New York market compare with the high ends of other markets?

LIEBMAN: Well, I think in New York, our high end is higher than most other high ends. I mean, here, $10 million-plus is the super luxury market. And I think if you're -- other than California or Aspen, or other real sexy parts of the country, I think $5 million would really be the top end of the market in most places.

LISOVICZ: Pamela Liebman, you know I live in a townhouse, too, but it's not 8,000 square feet, by the way.

She is the CEO of The Corcoran Group. It was a fantastic vicarious journey you took us on. Thanks for joining us.

LIEBMAN: Thank you very much.

LISOVICZ: Coming up on IN THE MONEY, where geriatric meets copacetic. We'll hear about "Money" magazine's top places to spend your retirement.

And the birds and bees for real estate virgins. We'll have mortgage tips for first-time homebuyers and the rest of us.

(COMMERCIAL BREAK)

SERWER: Back in your parents' day, picking a retirement spot used to be a matter of following the crowd. But unless you like palm trees, blue plate specials -- and I do -- and hanging out with lots of old people, that's just not good enough anymore.

"Money" magazine senior editor Marion Asnes joins us to run down "Money" magazine's list of the best places to retire. And some of them even have snow.

That kind of blows my mind, Marion. Ann Arbor, Michigan? Come on.

MARION ASNES, "MONEY" MAGAZINE: Well, you know, they do have actually a very large retirement of those old people you have such a problem with, Andy.

SERWER: I don't have a problem with them. I like that food.

CAFFERTY: Careful. I am an old person. So let's take it easy on that.

SERWER: I'd never call you that, by the way.

ASNES: Well, you know, one ever the women -- one of the retirees that we interviewed as we were doing this said a very interesting thing about Ann Arbor. She said, it's a city full of smart people, so you know you'll never get bored.

You know they've got the University of Michigan there, that has 38,000 students. So there's a huge cultural life and...

SERWER: And football.

ASNES: ... and sports life, yes...

SERWER: Yes, football.

ASNES: ... that revolves around the university. And a lot the people take part.

CAFFERTY: I have raised four daughters. The last thing I want to do is go spend my retirement around 38,000 children.

LISOVICZ: And they don't want to spend it with you, either.

CAFFERTY: That's right. They don't.

ASNES: Well, yes, it's true that the students have a very different social life from the retired.

LISOVICZ: No?

ASNES: I know. Isn't that shocking?

LISOVICZ: Well, Savannah, Georgia -- I used to live in the South, and that is such a beautiful town. I thought that was...

ASNES: It's beautiful.

LISOVICZ: I thought it was an expensive place to live.

ASNES: Well, you know, it is not cheap. That is absolutely true. But you're getting a lot for your money.

And as you noted, when you do your segments on what money gets you in different parts of the country, as a magazine based in New York City, I have to tell you, everything looks like a bargain. But we did note that the prices are high, but, you know, "Money's" readers are pretty affluent, and a lot them can afford it.

And what you have right now retiring is a group of very affluent people. Now, when my generation retires, I think I'm eligible for...

SERWER: Many decades from now.

ASNES: Yes. I'm eligible for Social Security in 2025, which I think is when a lot of economists have predicted that the whole system's going to fall apart.

SERWER: Oh, great.

ASNES: Yes, I know.

LISOVICZ: You'll be so happy.

ASNES: Will I get to Savannah? Maybe I'll get to live under the freeway in Savannah. But for those people who can afford it, it is a beautiful town. It has very good medical care. It has lots of volunteer opportunities for seniors.

It's got a strong cultural scene. So, you know -- and they've got a lot of great retirement communities opening up.

CAFFERTY: One of the places you recommend is La Paz, Mexico.

ASNES: Yes.

CAFFERTY: Put my anxiety to rest about moving outside of the United States. Should I be worried about that, the laws, the currency, the health and medical services? Things like that?

ASNES: Well, it is complicated legally and financially for a lot of people. One of the things that you should know is, since I know you're going to retire before 2025, Jack, I hope...

CAFFERTY: Yes. With any luck, very soon.

(CROSSTALK)

ASNES: You can collect Social Security no matter where you live.

CAFFERTY: You can? Even if I live outside country?

ASNES: Yes.

CAFFERTY: OK.

ASNES: Yes. But in order to remain eligible for Medicare, you must retain a residence in the United States.

Now, what a lot of people do who retire to places like La Paz or other places in Mexico, is they keep a place in the United States that they go to for the summer, when it gets very hot down in Mexico. And then they spend the rest of the year down there.

CAFFERTY: Any reason to be concerned about the quality, for example, of medical care that's available in a place like that?

ASNES: Well, if you go to a place with a large expatriate community, you can get very good medical care. And your American private health insurance remains in effect if you live in Mexico.

Now, in a place like La Paz, however, where you're on the coast of Mexico, there are special mechanisms for an American to own property. There is -- you have to get what's called a trust deed, because it is illegal to sell any property within 50 kilometers of the coast, which is about 31 miles to a non-Mexican.

So it is a more complex legal process, but it can be structured very well for both you and your heirs. So what the U.S. Consulate recommends is that you get a Mexican real estate attorney or an American real estate attorney who specializes in property there. And they will actually give you a list if you call and ask.

LISOVICZ: Marion, we're almost out of time.

ASNES: OK.

LISOVICZ: But one of the things that these vastly different locations have in common is that they have lots of activities. That's one of the things that determines a good place to retire.

ASNES: Yes. Well, you know, when you're looking at a retiree today, you're looking at...

LISOVICZ: Shuffle board.

ASNES: ... a relatively young and healthy person. Sixty-five today is not what 65 was 20 years ago. People are younger, they're healthier, they are more active. So what we look at when we look for a retirement community -- and we think everyone should look -- is not only the good hospital, but the things you want to do and access to travel, because retirees travel a lot.

LISOVICZ: And our thanks to Marion Asnes, who is a senior editor at "Money" magazine.

Ahead on IN THE MONEY, how to play like an old timer even if you're a first timer. We'll have mortgage advice for everyone from novices on up.

And later, Martha Stewart's living, but not like the rest of us. We'll check out the homes of the hostess with the mostess and other CEOs who have come under scrutiny.

Plus, online and in touch. The Web can take the pain out of researching a mortgage. We'll tell you which tools (UNINTELLIGIBLE).

(COMMERCIAL BREAK)

CAFFERTY: Real estate can be a tough row to hoe for first-time homebuyers. That whole process, looking for a home, getting a mortgage, surviving until closing time. It can be frightening and it can be more than a little confusing. But believe it or not, there are literally dozens of special programs and incentives out there designed to lighten the load for first-time homebuyers.

Joining us now to help us unravel all the red tape is Gary Eldred, author of "The 106 Mortgage Secrets All Homebuyers Must Learn That Lenders Don't Tell." He was going to do a lorng title, but they ran out of room on the front of the book.

Gary, nice to you have with us. Thanks for joining us.

GARY ELDRED, MORTGAGE EXPERT: Thank you very much. Enjoy being here.

CAFFERTY: Sounds a little like there's a conspiracy on the part of the lenders against the buyers? Surely it's not as dire as all that? Is it?

ELDRED: No, no, not so bad as that. But a lot of the lenders don't really tell everything that the buyers need to know to get the best loan decision.

CAFFERTY: Why not? I mean, what is it -- what's the kind of stuff they would keep from buyers? And why would they want it key it from them?

ELDRED: Well, many loan officers only deal with certain types of programs. So they're not likely to tell about programs they're not handling.

SERWER: Gary, you talk about credit as being so important. Even more important than income. Why don't you talk about that a little bit, because I don't think people understand how important it is to get your house in order.

ELDRED: Well, one of the things these days, the lenders are all using credit scores. So everybody who's going to apply for a loan needs to go to myfico.com and get their credit score, get their credit reports and do what they can to improve it.

LISOVICZ: Gary, I'm a first-timer.

ELDRED: All right.

LISOVICZ: I've met you maybe 15 months too late. I've already refinanced. And I'm shortening the length of my mortgage. I guess those are good things, but...

ELDRED: Absolutely, yes.

LISOVICZ: ... but what are some of the special programs that I and other first-timers should know about?

ELDRED: Well, some of the best first-time programs are the FHA 203b, the FHA 203k, Fannie Mae has some good programs called Flex 97 and Flex 100. All of these are low down payment, easy qualifying loans. LISOVICZ: So how do you find out about those? Where do you go?

ELDRED: Well, one of the best places is hud.gov, which is the Web site for FHA, and it has links to all kinds of down payment, low down payment programs. Also, fanniemae.com also has a lot of links, a lot of information about their low down, easy qualifying loans.

CAFFERTY: As a first-time buyer, Gary, how do I go about deciding what kind of a mortgage is best for me? Do I go for a 30- year conventional, a 15-year conventional, a five-year with a balloon, a three-year with a balloon? I mean, there are dozens and dozens of different kinds of products. How do I look at my bank book, the house I want to buy, and decide what mortgage product is the best one I should have?

ELDRED: Well, the first thing you need to do is think how long you're going to be in the home. And if you're only going to be there five or seven years, something short term, then you definitely do not want a 30-year fixed rate mortgage. You want to go for something shorter, because the shorter the term, the lower the interest rates. And there are great short-term rates these days.

The other issue is, how much can you really afford to buy? And if you get a lower interest rate mortgage, you can afford to buy more home.

SERWER: Gary, I hear what you say, but I refinanced and went to a 30 year. And I've got to tell you why. I know that I'm not getting a good rate. And I knew you were going to disagree with me.

But I've got to tell you something, one thing you don't take into account. And that is me sleeping at night. I don't have to worry ever again. I really believe rates are pretty much at a historical low, and I feel good! What do you say to that?

LISOVICZ: And you have to pay for your kids' education.

ELDRED: Yes, that's the peace of mind factor. And if you knew you were going to be moving, though, in three or four or five years, then certainly the shorter term would be better for you. If you don't know that, if you think you might be there for the rest of your life and you like that peace of mind, go for it.

LISOVICZ: All right. Other than Andy's mistake, what are some of the other most common mistakes that homebuyers make?

ELDRED: Well, getting the first personal finances fixed up long before they ever begin thinking about applying for a mortgage is the best issue. You're going to need cash. You're going to need credit, and you're going to need income.

And the more you look in all of these different factors and work with a loan rep or a real estate agent who can look through these factors and run through your budget and get you shaped up long before you even think about applying for that mortgage. Because when you think about it, just before you want to apply, it's probably too late. SERWER: All right, Gary. Some very pertinent information. Thanks very much.

Gary Eldred is the author of "106 Mortgage Secrets That Homebuyers Must Learn But Lenders Don't Tell."

Up next on IN THE MONEY, (UNINTELLIGIBLE) deluxe. See how corporate big wigs hit by scandal have been spending their real estate dollars.

Also ahead, power to the people. The Web gives you the tools for doing your own mortgage research. Find out where to click on before you sign on that dotted line.

And, kill your television set. If somebody (UNINTELLIGIBLE) don't just throw stuff at the screen. Get even. Send us an e-mail at inthemoney@cnn.com.

(COMMERCIAL BREAK)

LISOVICZ: The wave of Wall Street scandals over the past couple of years has given America a new take on business and pleasure. Suddenly, some of the CEOs living the high life didn't look so much like role models as potential targets for the Feds.

We wanted to see how a few of the boss whose have come under scrutiny spent their millions on property. And here to help us out, Paul Purcell, partner in the real estate consulting firm of Braddock + Purcell.

Welcome.

PAUL PURCELL, BRADDOCK + PURCELL: Thank you. It's a pleasure to be here.

LISOVICZ: And what a delicious interview this will be, because in addition to the ranches and the fancy cars, these people, a lot of these CEOs who are now in trouble, bought a lot of real estate. Let's look at Ken Lay, for instance, of Enron. It is fortuitous for him to be living in Texas, is it not?

PURCELL: Absolutely fortuitous to be living in Texas. Texas is one of the five states, along with Florida and some others, that protect people's real estate investments against creditors in the case or eventuality of the bankruptcy. So he's in a very good spot with some of his property.

LISOVICZ: He can't retain all of it, though, right?

PURCELL: No. Primary residence.

SERWER: You know, I want to ask you a second here, Paul, about Martha Stewart's pad. Before we get to that, do these -- the fact that celebrities and CEOs lived in these places, does this get a premium? I'm thinking about Kathryn Hepburn's home up in Connecticut that was on the block. It seems like that was a lot more than market value.

PURCELL: That's a great question. It sort of depends on the person. Famous or infamous? And truly, someone who lives next door to Madonna might actually, when selling their apartment, reap a reward of perhaps 30 percent higher than the market value.

I always use the example of Jacqueline Onassis' apartment. It sold for double its true value when it was sold after she passed away. So again, it depends on the individual.

CAFFERTY: Let's go back to talking about these weasels. You've got your Ken Lay, you've got your Dennis Kozlowski, you've got Martha Stewart. Kozlowski, of course, is on trial for a whole long laundry list of bad things he supposedly did, but his lawyer says, hey, the company owned the apartment and it's not a big deal.

But this is the one that had the $6,000 shower curtain and the $15,000 umbrella rack. And I mean, he throws this thing in Sardinia for his wife. I mean, these guys know a little about how to spend somebody else's money.

PURCELL: This is probably the most creative example of purchasing real estate that I could find ever. I think he does get the reward for creativity.

CAFFERTY: Yes.

PURCELL: He is accused of doing several things with their company's relocation policy. There are tremendous tax advantages when a company moves you, versus when you move yourself. So moving his corporate headquarters from New Hampshire down to Boca Raton, Florida, so that key executives could perhaps take advantage of real estate there, it almost was as though they really built an internal policy and plan in their relocation, 1995 relocation plan, I believe, that so benefited people investing in real estate. And they really do get the prize on this one.

LISOVICZ: But let's talk about Martha Stewart. Martha Stewart has a lot of her portfolio tied up in real estate. For instance, Turkey Hill has been both a home, as well as a production studio. Has she been a smart buyer in your view?

PURCELL: I think Martha Stewart -- actually, I think all of these people are incredibly smart buyers. I think perhaps they had, what would I say, a window to the future of what was going to happen in corporate America, and they stuck a lot of their investments in real estate. But Martha's brilliant.

She has properties in the east end of Long Island, on Lily Pond Lane in East Hampton, which is probably one of the best addresses in the world. She has an apartment in New York City, Turkey Hill, as you mentioned. A place in Maine. And she just recently bought a lot of land in Bedford, New York in upper Westchester.

CAFFERTY: And yet she's going to go on trial for allegedly monkeying around with a few hundred thousand dollars worth of stock. I mean, you've got to strach your head a little. What goes through their minds?

PURCELL: Absolutely. I can't imagine on that one. I really can't even speculate.

CAFFERTY: It's unbelievable.

SERWER: Paul, let me ask you about another property very much in the news today. And that's -- lately -- and that's Neverland. What's up with MJ's pad? I understand he paid, what, $28 million for that? But it's not worth anything near that today, right?

PURCELL: Well, this is a great example of someone building a shrine to themselves.

SERWER: Love that.

PURCELL: And I think that sometimes I would use the example, if you're going to buy -- like real people, you and me, buying a nice apartment, we should not ever make something so specific that no one else will ever want it. And I think there's a tremendous amount of acres there.

There are thousands and thousands of acres. And it really is a beautiful place to be in the (UNINTELLIGIBLE) valley north of Santa Barbara. However, he's built this thing, an amusement park. How many buyers want an amusement park? I can't even begin to speculate on that one, either.

SERWER: Yes.

PURCELL: So I think the appraised -- or rather the assessed value of Neverland is somewhere around $12 million. Again, there may be someone crazy who wants to come in and spend $20 or $30 million.

LISOVICZ: Paul, very quickly, because we're almost out of time, on the one hand, you have the Michael Jacksons, who build these testimonials to themselves. On the other hand, you have plenty of very wealthy individuals in the U.S. who buy anonymously or through other names. Oprah is a good example of that.

PURCELL: Yes, she's a great example. Oprah -- properties that we've identified with Oprah are probably worth about $100 million. This is a woman who made the "Forbes" billion dollar list, if you remember last year.

Ten percent clearly of her net worth is in real estate that we're able to identify. And she's another savvy, smart person. But yes, a lot of the real estate is bought in corporate name, in shells that we wouldn't be able to readily identify. I guess for privacy issues and things like that.

CAFFERTY: Paul, it's interesting stuff. We're going to have to leave it there. I thank you for coming on the program.

PURCELL: Pleasure being with you.

CAFFERTY: Thanks very much. Paul Purcell, partner of Braddock + Purcell.

As we continue, up next on IN THE MONEY, the high-tech side of the housing boom. Find out how refinancing online has been driving the property market skyward.

And don't make us do all the work. Let us know what we are doing right and what we could do better. Actually, just let us know what we're doing right. I don't want to read anymore criticisms this week. I'm very sensitive and it's been a touch week on my ego.

Our e-mail address is inthemoney@cnn.com.

(COMMERCIAL BREAK)

SERWER: If you pay attention to the commercials on this network, you already know there are a lot of online mortgage lenders out there. Joining us now for a look at the plusses and minuses of online mortgage services and more, is our own Webmaster, Allen Wastler.

Allen, how are you doing?

ALLEN WASTLER, MANAGING EDITOR, CNN MONEY: I'm doing fine. I'm doing fine.

Online mortgages makes it easy, talking about it all program. You know, you go and you look at this and that and the other. So you go to these sites, all of it's there.

You can compare rates, you can check out different scenarios. If I do a 15-year on an ARM versus a 30-year on a fixed, how much is -- it's lots of fun. But you know what?

SERWER: What?

WASTLER: For all of those plusses, for all of those great things, Tower Research Group thinks that online mortgages will only account for about 12 percent of the total volume of mortgages in 2005.

LISOVICZ: I am not surprised at all, because I can buy online sneakers, pajamas. But for something as substantial as a mortgage, I want to talk to someone. I actually want to look at that person.

WASTLER: You want someone in a bad suit there going through the calculations, just telling you...

SERWER: Can you really get better rates? Is it really worth it?

WASTLER: Actually, you can, because they squeeze out a lot of the middle-man work. And also, they're very aware of the fact, that they're online. You click, click, you don't like that rate, it's easy to click over to another site and find another rate. OK? So very competitive on there.

Also, they're able to hook up their software right to your application. So they can tell right away if they can shuffle off your mortgage to Freddie Mac, Fannie Mae, or the others if you're going to conform to those standards, or if they've got to go after you on a sub-prime rate or some sort of deal rate.

(CROSSTALK)

CAFFERTY: The nice thing I was going to say about -- it would seem to be about going to an online mortgage center, is that one of the earlier guests we had on the program talked about, if you walk into a bank, and the guy you're talking to specializes in 15-year fixed rates or five-year ARMS, of 30-year conventions, he's not going to try to sell you off the stuff that he gets the specialization commission on.

WASTLER: He's going to stay with the stuff he knows about, and he's not going to bring up these others. Now, if you look at the sites that do this kind of online mortgage activity, you're seeing something interest in the industry going.

SERWER: And there are a lot of these sites, right?

WASTLER: A lot of these sites. And here's just a few of the top ones right now. You've got Bankrate.com, Realtor.com, you know, all of these places.

What they do is they sort of steer you to the right lenders and the right originators. OK?

CAFFERTY: OK.

WASTLER: Banks haven't been blind to what's going on. So a lot of banks are also getting into that sector. They're a little bit lower down on the list, but you've got like Wells Fargo, Bank of America. They're all building their own mortgage businesses. OK?

And what they figured out is what you were referring to before. You know, why should I go there? This is the biggest purchase of my life. I want a human being and stuff.

The banks are going, ah-ha. We can have an online presence, and once you do your preliminary online, go to this bank, conveniently located to you, this branch, talk to this guy. And they can make that cross between cyber and human. So you get some of the convenience of online and some of the, oh, please hold my hand.

LISOVICZ: Have you found any bogus Web sites, though? In other words, where you can be scammed?

WASTLER: And here's the trick. Whenever you have a big, booming market -- we've got low interest rates, so you've got a lot of people coming in, we can give you this, we can give you that. You should sort of stay with established players. And it's pretty -- you know, if you look at the list, you can figure out pretty much who those are.

And keep in mind, the same warnings on regular mortgages. You got to keep that.

CAFFERTY: Yes.

SERWER: Thirty-year fixed.

WASTLER: When you say, hey, what's the rate, well, make sure you qualify for that rate. And your APR, does that include all of your fees? Make sure you get the lock. Because, hey, "We lost it in the e-mail."

SERWER: How much can you save? I mean, is there any way or anything you can...

WASTLER: I haven't seen any concise study.

SERWER: But you can save basis points and...

WASTLER: You know, you can just...

SERWER: ... a quarter of a percentage point.

WASTLER: It's not far from that commercial you see where, you know, you're going to do this for me? Hold on a second. And run to the computer and double check.

SERWER: Right.

WASTLER: And actually, if you look, a lot these places report that, of the traffic they get, only 20 percent actually follow through. You know, that extra 80 percent is just going in and comparing rates. Of the 20 percent that they to do the deal on, 80 percent of those are actually doing refinances, which is a lot less scary than the first time.

SERWER: I think we messed up by not going online.

LISOVICZ: I think so.

CAFFERTY: I wonder how much of that 12 percent of the mortgage that's done online is done by that obnoxious little dweeb that goes, "Oh, no I just lost another..."

SERWER: A loveable little guy.

CAFFERTY: I want to throw things at my TV set every time that spot comes on.

SERWER: He pays our...

WASTLER: Irritation is a good advertising strategy.

(CROSSTALK)

CAFFERTY: Allen, thank you.

WASTLER: Sure thing.

CAFFERTY: On to other things, chump change in Manhattan's (UNINTELLIGIBLE) in Boise, but that's because it's Boise. And nothing makes the point like the real estate market. We wanted to find out what $500,000 will get you in three different cities around the country.

First stop here in New York. Now, a half a million here buys you this. So one bedroom, one bathroom apartment, 850 square feet. You probably have a view of the brick wall of the building next door.

SERWER: Well, throw that stool in.

CAFFERTY: Yes. The 850 square feet, that's for the whole apartment. That's not just the bathroom.

Now take the half a million and go West, young man. Go out to Denver, Colorado. There, $500,000 gets you suddenly something that looks a lot heftier. Mile High City, 3,000 square feet, three bedrooms and four bathrooms.

And then if you want to go to Boise, Idaho and live, take your half a million bucks and look at this joint.

SERWER: Living large.

CAFFERTY: Four thousand square feet, four bedrooms, three baths. You could pack four of those Manhattan apartments we showed you at the beginning of this into this house and still have room in the three-car garage for three cars.

I lived in the Midwest. And the...

SERWER: All right. That's it. I'm going to Boise.

CAFFERTY: You know, well...

(CROSSTALK)

SERWER: I like Boise. Boise's great. Nice people, fresh air.

CAFFERTY: No, I used to live -- yes, I've been to Boise, actually. Have you?

SERWER: Yes, I have.

CAFFERTY: OK. Boise's not a bad town. But the difference in price when I moved from the Midwest to New York City and started to look around for a place to live, it was just like -- the shock is unbelievable. You really do get a lot more house for the money.

WASTLER: You get so much more to do here, though. You get public transportation. Take you around to museums, culture. God knows you could use culture, Jack. Culture.

(CROSSTALK)

LISOVICZ: People pushing and shoving. You have to factor that in, too.

CAFFERTY: All right. Enough of this. LISOVICZ: All right. Stick around. We're going to find out about some of your real estate values when we dip into our e-mail bag. And remember, you can always e-mail us at inthemoney@cnn.com.

(COMMERCIAL BREAK)

CAFFERTY: For this special program on real estate, we asked viewers a fairly straightforward question about their own real estate situation. The question was this: Is your home worth more, less or about the same as when you bought it?

Most of the responses went a lot like this one from Joe in North Carolina: "My main residence has almost doubled in 10 years. I bought a beach house five years ago and it's doubled in value. Is this a great country or what?" And those gains do seem to spur spending in, what else, more real estate.

Richard in Louisiana wrote this: "My house was just appraised 18 percent higher than it was last year, so I put it up for sale. And I will buy a nicer house . I'll also get the same low interest rate I got when I bought the original home."

But Lee in Los Angeles, been around a little longer, and is a little more spentical about all of this. She said, "Our house cost $51,000 when we bought it in 1967. Now it's worth -- and she puts that in quotation marks -- more than $1,000,000. But this doesn't seem real and I feel it will all crash very soon."

You can get in touch with us to talk real estate, the markets, politics, animal welfare, by e-mailing us at inthemoney.com. You can keep up with all the IN THE MONEY comings and goings by checking out our special show page. Go to money.com/inthemoney.

And that brings us to the end of a special edition of the program. Thank you for watching. Thanks to our panel of regulars around here, CNN correspondent Susan Lisovicz; "Fortune" magazine editor-at-large Andy Serwer, leaving for Boise right after the show today; and money.com magazine manager, Allen Wastler.

Thanks to all of them. Join us next week, Saturday at 1:00, Sunday at 3:00 Eastern Time for IN THE MONEY. Or you can catch Andy and me all week long on AMERICAN MORNING, which starts at 7:00 Easter Time.

Thanks for watching. Have a great holiday weekend.

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