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Open House

Foreclosure Surge in California; Pain at the Pump: How to Save Money on Gas; Going Green; Year of the Potato

Aired April 26, 2008 - 09:30   ET

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

GERRI WILLIS, CNN HOST: Hello, I'm Gerri Willis and this is OPEN HOUSE, the show that saves you money.
Coming up on today's program, pain at the pump with no relief in sight. We'll check our gas gauge from coast to coast and offer you money saving tips.

And we'll of course be talking about your house from going green to making necessary repairs, we've got the solutions you're looking for.

But first, the number of California homes lost to foreclosure surged nearly 328 percent in just one year. Peter Viles is the senior produce of "Real Estate" at the latimes.com. And Greg McBride is a senior analyst at bankrate.com.

Welcome to you both. I want to start with this California problem. You know, I read 518 foreclosures every single day in that state. That's astonishing to me, Peter. What's going on?

PETER VILES, LATIMES.COM: The foreclosure downward spiral is happening almost in a worst case scenario sense. We're getting to the point, the number of foreclosures in California now is three times greater than in the last real estate down turn. So, this is by far the biggest foreclosure crisis California has ever seen. And every indication from the data is it's getting worse.

It's getting worse -- I know this sounds kind or counterintuitive because prices are falling, it's not necessarily that the payments are too high it's that the value of the houses are slipping so fast that people have no option, they can't resell them, they can't refinance them. So, that's where your foreclosures are coming from.

WILLIS: Well, you know, Peter, you say that real estate activity in California is down some 40 percent this spring when we should be seeing some kind of rebound. Is there any glimmer of hope out there, right now. Is there any indicator that is starting to turn around, are you seeing any hope out there for people?

VILES: You can look for hope and see it if you want to see it. There is a slight bounce in activity in the Spring. But there's always a bounce of activity in the Spring and this is the weakest bounce on record as measured by the data companies out here. Prices are falling rapidly. I guess the glimmer of hope is that the foreclosure crisis, if you will, is contained to certain areas and certain metropolitan areas. It's generally inland California, it's not yet hitting coastal California.

But it is hitting very hard from Sacramento straight down the middle of the state all the way to the Mexican border. Anything sort of 15, 20, 30 miles inland, that's where your problem is.

WILLIS: Wow, OK. You know, there are programs out there, you know, the administration came up with programs, voluntary programs by lenders, Hope Now, to bail people out, help people our. Are folks in California the recipient of that bailout?

VILES: Well, certainly those programs are helping, but the problem is getting worse faster than those programs are making a difference and some of these situations are just going to resist a solution. If you bought a new house three years ago for 500,000 -- I know that sounds like a ton of money to most of the country, that's a median priced home in California.

In a new area, 500,000 three years ago, if the foreclosures are a problem in that area, the house might be worth 375, it might be worth 350. Who is going to refinance a loan at that much of a haircut when prices are still falling? It's hard to see how there's a solution to some of these situations.

WILLIS: All right, Peter. I want to bring in Greg McBride, right now, to talk a little bit about the rest of the country. You know, I was asking Peter, are folks getting legal from the federal level programs. Are you seeing much of an impact from those programs in other parts of the country?

GREG MCBRIDE, BANKRATE.COM: The reality is there were a lot of bad loans that were made, and a lot of foreclosures will result from that. The programs like Hope Now and some of the other initiatives that lenders are putting out there are helping somewhat, but as Peter mentioned, the magnitude of this issue is such that it's a real bottleneck. A lot of homeowners are saying they can't get somebody on the phone, they're waiting weeks if not months to get answers on things like short sale approvals and loan mark outs.

WILLIS: The problem with foreclosures is that they feed on themselves, you know you get one or two in a neighborhood, pretty soon you have three and four, it gets bigger and bigger. Where is the crisis going? How many foreclosures are we ultimately going to have -- Greg.

MCBRIDE: Well, that's very tough to call, I think everybody's trying to pin down that number. And when you add in the fact that with the economy slowing, unemployment on the rise, home prices still falling, you know, unfortunately we still have more foreclosures to come. And these initiatives, while that might limit the extent of foreclosures, it's not going to eliminate the problem.

WILLIS: Doesn't solve the problem. Greg McBride, thanks for that, Peter Viles, we appreciate your help today, as well. Thank you so much.

Up next on OPEN HOUSE, we've all heard the term "greenhouse," we're going to go inside one and see how you can go green and stay green.

And it's the year of the potato. How this nutritious veggie has remained affordable even in today's tough economy.

And we'll look at your gas gauge. How your fellow consumers are coping and what you can do yourself about it.

America's economy is issue #1 here at CNN. Tune in every weekday at noon eastern for complete coverage of your house, your debt, your savings, your job. OPEN HOUSE will be back.

(COMMERCIAL BREAK)

WILLIS: This week marked Earth Day, a time to focus on saving energy and the earth's resources. But, can you save money at the same time?

CNN's Miles O'Brien takes us on a tour of homes that are built just to do just that.

(BEGIN VIDEOTAPE)

MILES O'BRIEN, CNN CHIEF TECHNOLOGY AND ENVIRONMENT CORRESPONDENT (voice over): It's not easy being green, especially when you're a giant.

MARK HALLET ROBBINS, WINDERMERE ON THE LAKE: It's particularly hard to deliver a very sustainable environmentally-conscience and economical to operate home at this scale.

O'BRIEN: But the developers of Windermere in Stamford, Connecticut say it can be done. There's geothermal heating and cooling, ever so efficient insulation, sustainably harvested lumber, lots of LED and lots of light. And the homes are built in clusters to preserve the woods.

ROBBINS: I think we've pushed the envelope of green pretty far.

O'BRIEN: But can a jumbo size the envelope like this really lay claim to being green?

(on-camera): People who live in and own green mansions, are they hypocrites?

SOPHIE PIESSE, ARCHITECT: A little, yeah.

O'BRIEN (voice-over): Architect, Sophie Piesse designed this exquisite 2,000 square foot home near Chapel Hill, North Carolina.

PIESSE: People spend a lot of time on square footage and don't spend anything on the quality of the space.

O'BRIEN: The owners, Jan and David Markiewicz, moved from a mcmansion twice as big.

JAN MARKIEWICZ, HOME OWNER: There were rooms we never even walked into.

DAVID MARKIEWICZ, HOME OWNER: It never really felt comfortable, in terms of the way in which we really like to live.

O'BRIEN: Their new house fits them like a well-tailored suit. The cozy living room next to the kitchen with a banquet instead of a formal dining room.

SARAH SUSANKA, ARCHITECT: You can look at any part of our society and you can see excess.

O'BRIEN: Architect Sarah Susanka is author of the "Not So Big House" series.

SUSANKA: We're trying to balance our foot print on the planet. We each can make incredible shifts in how we're living to affect that shift. And gradually, I hope personally, that we gravitate to the smaller houses, because I don't believe we all need that much square footage.

O'BRIEN: But at Windermere, they say the owners of these huge eco-mansions will not owe us or the planet any apologies.

(on-camera): But wouldn't smaller be greener?

ROBBINS: No. It's actually not. It's how you build it, it's where the houses are cited and how they operate.

(END VIDEOTAPE)

WILLIS: I love this story. I have to tell you, I get in this argument all the time. How you can be green when you're huge? And you're going to tell me, OK, how much were they paying in utility bills in the first house.

O'BRIEN: Well, the big house there, is not occupied just yet. So, we have to put a little asterisk beside it, but the utility bill for the construction trailer on the site exceeds the utility bill for the big house.

WILLIS: Holy cow.

O'BRIEN: In excess of 600 bucks.

WILLIS: Wow, wow, wow, wow wow. So, price tags on these things? I love the numbers. I'd like to know the numbers.

O'BRIEN: Well, it's $3.8 million for the big green one we were in. That's like $475 a square foot. You're clearly paying a premium for a lot of these features. This is LEED certified house, this is platinum level LEED, which means the U.S. Green Building Council has given it its highest level of approval. That's actually unusual for a residential home. So while it's big, they have paid attention to those details.

WILLIS: I love that. And you know, of course, that's critically important, the LEED certification. And people are starting to use that as a way to sell their homes when they go to market.

O'BRIEN: Well, this is what they're trying to find out, here. If there truly is a market, if there's demand for this painstaking effort for LEED, among the things they have to do is they have to actually track the chain of custody of the trash that goes in their dumpster to make sure it gets in the dump or is recycled as intended in order to get that LEED certification.

WILLIS: Holy cow.

O'BRIEN: It's onerous, it really is.

WILLIS: That's tough. All right, well, maybe somebody will really pay up for that.

O'BRIEN: Maybe so.

WILLIS: All right, Miles.

O'BRIEN: Still awfully big, though, isn't it.

WILLIS: Yeah. Thank you for being with us, today.

O'BRIEN: You're welcome.

WILLIS: With rice and wheat pricing rising all eyes are on one food that has remained stable, as far as price is concerned, and that is the potato.

CNN's Deb Feyerick stopped by to tell us why the United Nations is calling 2008 the year of the potato.

(BEGIN VIDEOTAPE)

WILLIS: OK, so the pay potato is gaining momentum?

DEBORAH FEYERICK, CNN CORRESPONDENT: Well, I think that's really the big question. The reason it's the potato is because after rice, wheat and corn, the potato is the forth most important food crop in the world. It's cheaper and easier to produce than rice, for example, it needs less land, less water and that's a big benefit for parts in sub-Saharan Africa or also parts of Asia where farms are shrinking and so it's becoming a big problem.

WILLIS: So clearly, a food crisis here, but around the globe, right?

FEYERICK: Absolutely, I think a lot of people just don't understand just how bad this food crisis really is. You're talking about multiple nations; you're talking about all at the same time. I mean, you look at the place like Haiti, for example, the prime minister there had to step down after protesters chanted "we are hungry," and if you look at the numbers, one billion people live on $1 a day, 1.5 billion live on $1 to $2 a day.

And because of food inflation, because there's not enough food for all these people, the World Bank estimates that more than 100 million people are sliding back into poverty and that means a lot of very, very hungry people. That's why it's a big crisis.

WILLS: You know, it's a sad story, but I'm wondering about the nutritional value of the potato, I don't think it's high on the list.

FEYERICK: Well, certainly here in America, it's been slammed because people are on these low carb diets, but in fact, it really is very, very nutritious. It's got a high vitamin C content. In fact, it's about half that of an orange. It's also got more potassium than bananas, 22 amino acids, 26 different carbohydrates and nutrients, so for people who need one small staple, this really is the staple, and that's why you have so many people now looking to grow the potato and eating it in many places.

WILLS: All right, well, what is the U.N. hoping to accomplish, here, the year of the potato? I mean, is it all words or is there really substance behind this?

FEYERICK: It's a lot of words. Don't get me wrong. When we went onto the Web site, we saw a lot of repeat language, but the goal is a good goal. The goal is to get other countries thinking about the potato as an alternative.

What that means is that farmers can grow the potato, consumers can begin to eat the potato and that creates food security, so that means less hunger and certainly less poverty and that is the aim. Make the potato hot and maybe it'll be the answer when rice and wheat and corn are just too expensive for the average person.

WILLS: Well less hunger or less poverty, I hope we can get there. Deb, thanks for that report.

(END VIDEOTAPE)

WILLIS: Still ahead on OPEN HOUSE, fill 'er up. A tank full of sticker shot. Gas prices in record territory once again this week. How Americans are cope and what you can do about it.

And spring cleaning, today is the day to set aside some time to make those home improvements. We've got the projects and the solutions when OPEN HOUSE comes right back.

(COMMERCIAL BREAK)

WILLIS: More pain at the pump for Americans from coast to coast. The national average gas price rose higher than $3.50 a gallon this week, that according to AAA. Now, if you think that's tough, folks in the San Francisco Bay area are dealing with even higher prices. At $4 a gallon, people there are making permanent changes to the way they live.

CNN's Chris Lawrence has that story.

(BEGIN VIDEOTAPE) CHRIS LAWRENCE, CNN CORRESPONDENT (voice over): In San Francisco drivers are getting past the shock, now they're changing their lives to live with $4 gas.

DEBBIE JASMIN, CANCELED VACATION: We don't take our expedition out, usually.

LAWRENCE: People have permanently parked their SUVs. Traffic is down on Bay area bridges, and the trains have seven percent more riders than this time last year.

MARLOWE DOUGLAS, SWITCHED TO RIDING TRAIN: That's why I'm riding BART today, because of the price of gas, right now.

LAWRENCE: It's also changing when people drive and what. Overall, car and truck sales are down, but hybrids are up almost 40 percent.

SCOTT DOUGLAS, PRIUS DRIVER: I used to have the luxury of not really even worrying about the price, partly because I got the Prius, but now $43.

LAWRENCE: Think that's bad?

S. DOUGLAS: Oh, my God. Wow.

LAWRENCE: Scott Roberts (ph) just saw what the guy before him paid to fill up.

UNIDENTIFIED MALE: When was the last time you saw $115 spent on gas? (INAUDIBLE), it's unreal.

LAWRENCE: Especially for taxi drivers who buy their own gas.

DIDDY DENNIS, TAXI DRIVER: When I first started, you know, it was like two something.

LAWRENCE: Now every press on the pedal eats into his wallet.

(on camera): Why don't you just raise the rates to make up the difference?

DENNIS: Well, that would be a good thing if I could, but unfortunately, I don't have any control over that.

LAWRENCE (voice over): Only the city can raise taxi rates to keep customers from getting gouged. But, it's killing the cabbies and will probably force Diddy Dennis to quit.

DENNIS: It seem like I'm bringing home almost 60 percent less during what I was when I first started.

LAWRENCE: And a lot of Bay area family says there's no end in sight.

JASMIN: I don't think we'll be doing any big travels this year or this summer, at least by car.

LAWRENCE: Especially when you're paying $50, $60, $70 a pop just to fill up. A lot of folks here have canceled vacations, sold some of their big trucks and some companies here in the Bay area are now running shuttles to pick up and take their employees to work.

Chris Lawrence, CNN, San Francisco.

(END VIDEOTAPE)

WILLIS: Well, the good news is you can do something to fight back against high gas prices, shopping around can mean savings of 30 to 40 cents a gallon and that is not chump change in this market.

Here's how you do it. First off, check out some Internet sites that track gas prices in your area, go to gasprices.mapquest.com, now plug in your zip code and you'll get information on the cheapest gas stations along with addresses, directions and phone numbers.

Also, check out big warehouse stores or discount retailers like Costco and Wal-Mart, these retailers sometimes have gas pumps with the lowest gas prices in town so that people are enticed to spend more inside the store.

And finally, consider a gas rebate card so you can get cash back on your gas purchases. To compare offers, go to cardratings.com.

As always, if you have an idea on how to save money, send us an e-mail to openhouse@cnn.com and if you want to check out this project savings again, check out our Web site, cnn.com/openhouse.

Up next, necessary fix up projects in and around your house, we'll tell you how to get started, but first, your "Local Lowdown."

(BEGIN VIDEOTAPE)

WILLIS (voice over): Los Angeles, California, famous for its glitz and glamour, but you don't have to spend like a movie star to have a good time in this town. Head to Grauman's Chinese Theater to measure your hands and feet against the prints of Hollywood legend or stroll the Hollywood Walk of Stars.

And if you really want to get in on the action, attend a free taping of one of your favorite sitcoms or game shows. Free audience tickets can be online, daily at tvtickets.com and hollywoodtickets.com. But don't forget to check out L.A.'s Getty Museum. This modern hilltop space houses one of the finest art collections in the world, and admission is absolutely free.

And that's your "Local Lowdown."

(END VIDEOTAPE)

(COMMERCIAL BREAK)

WILLIS: All right, household budgets across the country, they are tight, but hey, that doesn't mean you should let the state of your house slide, after all your home is your castle, your domain. Here to offer some advice on how to best maintain your house and save you money at the same time is our favorite handyman, Ed Del Grande.

Ed, welcome, great to see you.

ED DEL GRANDE, HGTVPRO.COM: Well, it's great to be back, Gerri, you know that.

WILLIS: All right, well you know, you brought me presents.

DEL GRANDE: I always bring you something nice.

WILLIS: And the first thing you brought me are what they call some HEPA filters and here we have them, right here. I just want to show you, exciting stuff.

DEL GRANDE: Well, the HEPA one is really...

WILLIS: Am I that excited? I don't know. But, I should be, right?

DEL GRANDE: Yes, well you should be because see the one in your right hand over there, that's a standard filter, and you can see, this is kind of thin. And I'm going to show you a little demonstration here with some fine sand. Watch this, Gerri, do you see the way that sand is going right through that?

WILLIS: Holy-moly. So, if this is in my house.

DEL GRANDE: All those beg particles get through the standard filters.

WILLIS: OK, well, this is the HEPA filter.

DEL GRANDE: Yeah, now watch this one. See how this is like an accordion.

WILLIS: Can I do it?

DEL GRANDE: Yeah, go ahead, sprinkle some on. There you go, it's piling right up.

WILLIS: Nice.

DEL GRANDE: That's a nice test, there. Look, even shaking it, hardly anything is coming through.

WILLIS: Now, the reason we're bringing this up, is this is the time of year that, you know, you've got you air conditioner, you're either turning it on, you're maybe putting the wall units into the wall and you need a really good filter.

DEL GRANDE: Yeah. Well, you also don't want to change filters like every two or three weeks. And what the HEPA filters have, also, see that accordion shape? That gives you more filter area, so it's slower to clog up. So, it's not only a finer filter, it will last longer, too. So, it's worth the extra money.

WILLIS: How long do they last?

DEL GRANDE: Well, this one over there, you can see that one on your right, is about a 30 day filter. You'll probably get about twice as much out of a HEPA filter.

WILLIS: Thirty days?

DEL GRANDE: Yes. Yep.

WILLIS: Excellent.

DEL GRANDE: Yes, perhaps a little less.

WILLIS: OK, that's great. Now, the big problem I have this time of year, ants, all over my kitchen.

DEL GRANDE: You and me the rest of the world. Well, I got the best solution, don't go spraying them, once they come out and you spray them, that's too late. What you want to do, Gerri, is you want to set up some traps. Yeah, just peel that off, now you get a scissor...

WILLIS: What do I do?

DEL GRANDE: Hold it out like this so nothing spills out, and then get a scissor and cut right across these two dots.

WILLIS: There's goo in there, Ed.

DEL GRANDE: Yeah, well don't touch the goo, now. This is an ant bait. As a matter of fact, when you put it down like that, guess what, you opened up a pub in the ant neighborhood. Trust me on this, the ants will come out of the woodwork to drink up that goo.

WILLIS: And then what happens?

DEL GRANDE: Well, this is where it gets tough, and my wife goes crazy at this stage. You got to let them go. It's going to be two or three days of these ants like a highway coming back and forth and your first instinct, this is spray them, let them go, Gerri. After two or three days, they go back and take the goo to the nest, in two weeks you won't see an ant in that house.

WILLIS: OK, you got a termite solution, as well. Tell me about that.

DEL GRANDE: Absolutely. If you get these termite kits. You can see this is a stick that goes in the ground and you can get them at your local home center.

WILLIS: You just plug it into your yard.

DEL GRANDE: Yeah, first you get this little (INAUDIBLE), if you want to hold that and twist it around, see that, you're drilling down and then pull the auger out. This goes in the ground. Set them up around your house.

WILLIS: And the termites eat that? Is that...

DEL GRANDE: And the termites love that and they hit that first before your house, so you stop them from getting in.

WILLIS: I like that. OK, big problem for a lot of people in the springtime, they have flooding in their basement. What do I need to be aware of?

DEL GRANDE: Well, you have to realize, whenever you have water and you have electrical outlets down there, you don't want the two to mix. So, in an area that's in your house that's wet, or outside for electrical outlets outdoors, make sure you always have GFCI outlets and that's what this is. See those buttons?

WILLIS: Is it this stuff?

DEL GRANDE: Yeah, well see the red one? The red one is set it and that charges everything up and then the black one is to test it and you check around because some manufacturers may have different buttons that do different functions. So what you want to do is always test them, make sure they're working and make sure you have that ground (INAUDIBLE) protection so you'll be safe around water.

WILLIS: All right. Ed, thank you.

DEL GRANDE: Thank you, Gerri.

WILLIS: Great stuff.

You can hear much more about the impact of this week's news on your money on "YOUR MONEY" with Christine Romans and Ali Velshi, Saturdays at 1:00 p.m. and Sundays 3:00 p.m. right here on CNN.

OPEN HOUSE will be back next week, same time, same place, and you can catch us on "Headline News" every Saturday and Sunday at 3:30 p.m. Eastern Time.

Don't go anywhere, your top stories are next in the CNN "NEWSROOM." Have a great weekend.