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Open House

Upside-down Mortgage; Budget Nutrition; Summer Vacation; Gasoline Theft; Resurrecting Older Vehicles

Aired May 10, 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 NEWS ANCHOR: Hello, I'm Gerri Willis. This is OPEN HOUSE, the show to save you money. Coming up on today's program, living healthy for less -- summer vacations you can afford, and the realization ship between rising gas prices and the crime rate. But first, a new study out there says more than half of the homeowners who purchased during the market peak in 2006 now owe more on their mortgage than their home is worth. It's what's known at being upside- down in your mortgage. Thelma Gutierrez visited one gated community gone bust.
(BEGIN VIDEOTAPE)

THELMA GUTIERREZ, CNN NEWS CORRESPONDENT (voice over): Remember the housing frenzy just three years ago, when frantic buyers camped out in front of sales offices?

FAFIE MOORE, BROKER OWNER, REALTY EXECUTIVES: It was like getting rock star tickets. They would bring their sleeping bags, they'd spend the night so that when the next release came they could be in the lottery.

GUTIERREZ: A lottery to buy mega homes, sight unseen.

KATHLEEN BOYD JONES, HOMEOWNER: We stood in line to get this particular house. And my husband went out at until 7:30 the night before.

GUTIERREZ: For the Jones, it was their big chance to buy into this brand new, upscale, gated neighborhood in Las Vegas.

JONES: A dream house and then dream community, yes. Absolutely.

GUTIERREZ: So when Kathleen Boyd Jones and her husband Robert finally closed on their $800,000 custom home in the desert, it was like winning the lottery. Now it all seems like a distant memory.

(on-camera): Which homes are actually unoccupied?

JONES: Well, the one right here on our left and the one next to it. This is foreclosed on. Over here, nobody has ever moved into that house at all.

GUTIERREZ: And this home?

JONES: The house next to it was a renter and they got foreclosed on at the beginning of the year. GUTIERREZ (voice over): The Jones' gated neighborhood is virtually a ghost town, with 75 percent of the homes vacant. It's now up to Jones and two other families who live here to maintain the community because the homeowners association is broke.

JONES: With the dues not being paid, we can't pay the landscaper. The landscaper doesn't want to work. There is three of us that are going around spraying for the weeds, cleaning the shrubbery up on the outside of our property, which is one square block.

GUTIERREZ (on camera): So you found yourself not just having to take care of your yard and your property, but you're also pretty much taking care of this entire community.

JONES: Yes. Someone has to do it. And I have too much invested here.

MOORE: This is a four-bedroom home with three and a half baths and it's over 4,000 square feet.

GUTIERREZ (voice over): Fafie Moore is a Las Vegas real estate broker. She says even homes like this one are not immune to the mortgage meltdown.

MOORE: Well, in 2005 and even into some of 2006, we were like an out-of-control freight train here in Las Vegas. People were in a frenzy, they were buying, they were not thinking about what the values were. Now, we're like we're in the emergency room and we're trying to stop the flow of blood and stabilize everybody.

GUTIERREZ: The Jones say they will weather the storm and protect their investment, even though it's worth $300,000 less than when they bought it.

Thelma Gutierrez, CNN, Las Vegas.

(END VIDEOTAPE)

WILLIS: Wow. Tough to weather that storm.

Now, falling home prices and possibly some good deals for buyers, but before you sign on the dotted line, hey, there are things to keep in mind to prevent your dream home from becoming a nightmare. Joining us now, Tara-Nicholle Nelson from FrontDoor.com.

Tara, welcome, good to see you.

TARA-NICHOLLE NELSON, REAL ESTATE ANALYST, FRONTDOOR.COM: Thank you for having me.

WILLIS: So, red flags for buyers. Obviously, if you fall in love with a house, but there are empty houses next to it. What do you do?

NELSON: Definitely, we call that a mass exodus from the neighborhood. Is there a mass exodus happening from the neighborhood. That's the red flag and it just warrants additional information. You need to know why it is that everybody is moving. Is it the case that there is new development going in or is it simply their loan issues like what they were talking about in that last piece. We're seeing a lot of the phenomenon that we're calling now "slumburbia," which is basically...

WILLIS: What is that? Yeah, I saw that. I've never seen that word before. What does that mean?

NELSON: Yeah, I don't know if you're going to find it in the dictionary just yet, but "slumburbia" is the term we're using to refer to, basically the result of all this overbuilding that happened in a lot of the suburbs that are fairly far away from major metropolitan cities. So, all of those homes were build, they're new -- newish, they're very nice, but they're kind of ghost towns because most of the people who bought them took short-term, adjustable rate mortgages at the same time, they all reset at the same time and the all ended up in foreclosure at the same time.

WILLIS: Boy, I have to tell you, I've seen that. That's a very sad situation and, you know, people don't really realize what they're getting into in some of these neighborhoods. You get another red flag you call a foundation failures, but is this something that people really miss? If there's a three or four inch crack in the foundation, don't you typically find that?

NELSON: Well, something that, it's pretty obvious, but a lot of home buyers are not actually getting in the crawl space or if it's a newer home, they can't necessarily even see the slab foundation under the home. This one really is not a do-it-yourself thing that you should be trying to find on your own, though.

WILLIS: How do you do it then? Do you have to hire an inspector or...

NELSON: Definitely, just hire an accredited or licensed, depending on your state, general home inspector and they'll look for the signs and systems of foundation issues and the they'll tell you, you know, you need to get a specialist out here to tell you what's really going on.

On the site, we actually have a story of a client of my own, she was in contracted to buy a fully-remodeled -- this place had been gutted down to the studs. Beautifully newish home that was sitting on a fully rotten foundation.

WILLIS: Oh my goodness.

NELSON: Without our inspector -- I know. I mean, literally, I brushed my hand across it and it just crumbled. So, we never without inspectors would have known that because the place looked like it was brand new.

WILLIS: All right, I love this one. And this is very subtle. New paint can hide things. NELSON: And again, this is sort of like the mass exodus thing in that it could just be with all the homes on the market in the area that the seller, you know, has taken really good care of it and staged it for sale. There's lots of homes out there that are being repainted and brushed up, or it could be that they're trying to hide the fact that there are cracks and leaks and all of that sort of a thing. Again, it underscores the need for you to get a general home inspection. They can -- it's amazing some of the things that they use to see whether the property is actually in good condition or not, even if it's been freshly painted.

WILLIS: Tara, great information, thanks so much for your help today. We really appreciate it.

NELSON: Thank you.

WILLIS: So much more ahead. Organic foods, vitamins, the best water -- your body and your budget.

Then, overworked, underpaid, time to get away and blow off some steam, travel tips coming your way.

And two very different angles to the rising gas price tag. Some are stealing and some are finding new ways to get the most out of every drop. America's economy is issue No. 1, here at CNN. Tune in every weekday at Noon Eastern for complete of your house, your debt, your savings, your job. OPEN HOUSE will be right back.

(COMMERCIAL BREAK)

WILLIS: Whether it is hitting the gym or picking up organic foods, vitamin supplements, bottled water, everybody wants to live a healthier life and you don't have to spend an arm and a leg to do it. Dr. Rashini Rajapaksa is with the NYU School of Medicine, she is a contributor to "Health" magazine.

And I got to tell you, this article she has on living healthy, it's terrific, you really want to read it. Let's talk about some of these issues here starting with toothbrushes. You had some bad news for me. I just bought one of these fancy-schmacy toothbrushes, paid an arm and a leg. You said I didn't have to do it.

DR ROSHINI RAJAPASKA, HEALTH MAGAZINE: Right. Well you know what? If you're really good about brushing your teeth after every meal and flossing every day, you probably don't need an expensive one like this. However, there have been studies that showed using a powered toothbrush actually does reduce gum disease and plaque formation because people are better about oral hygiene, they're actually brushing for longer. Some of these even have timers do know you are brushing for the required two minutes. So, it can help if you need that extra...

WILLIS: That's what I need, exactly. Talk about vitamin supplements. People spend so much money on extra vitamins and I have no idea if they do any good or not. RAJAPASKA: Well, you know what, if you are really eating a healthy balanced diet, you don't need any extra vitamins; however, for the most Americans, that's hard to do. Just a regular multivitamin with , you know, the daily vitamins that you need, that's all you need. The additional supplements are really not necessary unless, perhaps, if you're pregnant, if you have a certain medical condition you need to talk to your doctor about, then you may need an extra supplement. But for most of us, just the regular multi.

WILLIS: So, none of those, you know, D, E, C, forget about it, just one nice multivitamin and you're done.

RAJAPASKA: Exactly.

WILLIS: The other think I have a question bout, people spend a lot of money on specialty waters that are supposed to do all kinds of things for you -- worth it, not worth it?

RAJAPASKA: This is one of those, you know, marketing genius type things because it's water and actually here in New York City we have great water to drink, you know, but a lot of these waters, they're not necessary, and in fact, some of them have hidden calories, they actually put sweeteners in, sugars. You really got to read the label and make sure it's not...

WILLIS: Actually, you say just get some regular old tap water, put it in one of these with maybe some cut up fruit.

RAJAPASKA: Sure, if you want some extra flavor, just put some lime, orange, or lemon and then you have your own flavored water for free.

WILLIS: A couple weeks ago, for the first time in I can't remember how long, I bought some frozen food, meals. And I thought, am I doing the right thing, this must be terrible for me, but they are so expensive.

RAJAPASKA: Yeah, they're very convenient, they can be inexpensive and they can be healthy. You just have to read the label, make sure the calories are OK, there's not a lot of fat. And it's a great way to exercise portion control because you just have that one meal that you're putting in there. If you eat only that, you actually could lose weight on these.

WILLIS: Oh I love that. That's a great idea. Now, one of the big things for folks, when they're out shopping in the grocery store, you see all this organic food and if you buy it, it feels like you're paying so much money for it. Do you recommend buying these and how do you choose them?

RAJAPASKA: Well yeah. Organic food definitely can be more expensive. And if you're worried about pesticides and that kind of thing which can be on fruits and vegetables, just be smart about which ones you're spending on. For example, a banana, where you're actually peeling the banana, there's not going to be pesticides on that in the inside, on the actual banana. So you don't need to worry about that. But if it's a piece of fruit where eating the whole thing, skin and all, like an apple or a pear, that may be something you want to invest in the organic because there may be pesticides on the...

WILLIS: Well, how do I know? It's the thickness of the skin?

RAJAPASKA: Right, so if it's soft skin like a peach or a nectarine, that's something that you're going to be more prone to getting pesticides, you should probably go organic. But if it's something thick or something that you're peeling off, then you don't have to worry as much about it.

WILLIS: All right, when you're in the grocery store, what are you looking for? What is healthy and cheap at the same time?

RAJAPASKA: Well, fruits and vegetables are the healthiest and they have so many antioxidants, vitamins and minerals that we need. Fiber, wheat products are always good. And in terms of what's cheap and what's not, well, if you're going to go organic, like we said, be choose about which ones. But regular vegetables and fruits are fine if you wash them very carefully, especially with soap. You don't need some of these fancy washes that people recommend. Just wash them carefully, get rid of those pesticides and you're good to go.

WILLIS: Dr. Raj, great information, thanks for being with us today.

RAJAPASKA: Thanks, Gerri.

WILLIS: Still ahead on OPEN HOUSE, we're taking the poll to the U.S. tourism industry. We'll tell you how to plan a summer vacation without worrying about your wallet.

And stealing from gas stations and siphoning fuel. Rising gas prices mean a rise in gas theft. We've got the story, straight ahead.

(COMMERCIAL BREAK)

WILLIS: Welcome back to OPEN HOUSE. We talk so much about high gas price and high airline ticket prices. It makes you wonder how U.S. tourism is being affected and if there are any ways you can travel this summer without breaking the bank. Mark Orwoll is the senior consulting editor for "Travel and Leisure" magazine.

(BEGIN VIDEOTAPE)

So Mark, High gas prices, probably a recession, job losses, what does this mean for the travel industry?

MARK ORWOLL, TRAVEL AND LEISURE: Well, you know, one of the most recent set of figures that I've seen is from AAA, they just came out and said that international travel from Americans is going to be up this summer by about 2.6 percent, which surprised me a little bit. On the domestic side, I think it's a little less clear. We had a very strong spring break travel season. Disney theme parks just came out with its most recent quarterly reports saying that their theme parks saw a seven percent increase in attendance, three increase in spending, and yet another survey says that 16 percent of Americans are going to travel a little bit less this summer than last year. So, as I said, it's still in flux.

WILLIS: Yeah, still in flux. But, do you believe that Americans are going to spend more or is there going to be some cost cutting?

ORWOLL: No, that is -- that's a very good question because I think that is exactly what Americans will do. See, Americans think a vacation is not just a right, but almost as an obligation. So, they are going to travel, but I think they're going to saving money by driving instead of flying, by maybe staying fewer days, driving closer to home than they might have otherwise. They're going to looking for cost-saving measures.

WILLIS: All right, OK, now the airlines are really going to take it on the chin here, I think, especially with the high gas prices. I keep hearing how tough this is for the airline industry. What does this mean to consumers, do you think?

ORWOLL: Well, you know, because we have seen four or five airlines, small airlines, go out of business in the last month and Frontier filed for bankruptcy. There are mergers in the works. What that means is fewer choices for consumers when it comes to air travel. Fewer choices generally translates into higher prices.

So, I don't think anybody is going to expect that airfares are coming down any time soon, but people, as I said before, are going to be looking for ways of saving money so they can still get out there on the road, whether it's driving or flying.

WILLIS: You know, I think of my vacation as a right, not a privilege, I have to tell you. OK, let's talk a little bit about specifically, U.S. destinations that are also hard hit by the foreclosure crisis. Here, I'm thinking of California, I'm thinking of Florida, I'm thinking of Arizona. What do you see their -- tell me where I can find some price cutting. Is there some price cutting going on there that I can take advantage of or are you not seeing that?

ORWOLL: I do think that you are going to see conventional visitor's bureaus, around the country, offering discounts, promotional rates on things like family transit, passes for visitors, discounts for member hotels and restaurants to make people not only come to those destinations, but stay longer and spend more money. But, in terms of places like California, Las Vegas, Florida, places that have been hard hit by so many economic factors, those are still going to be the top destinations for the summer. Travelocity, the online booking agent, just came out and said that those places, in particular, are among the most top booked destinations for this coming summer. Also remember that we have a lot of European people coming in with their Euros to spend. It's very attractive to come to the United States from overseas. So, if there is some decline in domestic travel by Americans, we may even see a compensation by those Europeans traveling here.

WILLIS: Well Mark, just quickly, if you had one piece of advice to give to Americans booking vacation, what would it be?

ORWOLL: I would say, do your research. Go online, check the best prices that you can find online, read the Sunday travel supplements, read the travel magazines, listen to the TV shows. Be informed, that way you're going to get the best price and you're going to get the best vacation for your money.

WILLIS: Educated consumer gets the best price. Mark, thank you for that.

ORWOLL: You're welcome. See ya.

(END VIDEOTAPE)

WILLIS: Still ahead, we'll check our gas gauge.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: I wake up on the morning on the way to work and the gas tank is empty. I mean, this happened probably about four or five different times.

(END VIDEO CLIP)

WILLIS: You heard him, gas prices are up and so is gas theft.

And resurrecting old rides for maximum fuel efficiency. You won't want to miss this one.

(BEGIN VIDEOTAPE)

(voice over): Nebraska, the site of Tuesday's Republican primary. And with more than one million people within a 50-mile radius, Omaha is Nebraska's largest city. Bike or jog through one of Omaha's many outdoor parks or gardens or check out more exotic wildlife at Omaha's Henry Doorly Zoo, considered one of the best zoos in the country.

But Omaha isn't all about the outdoors. Warren Buffett often called the "Oracle of Omaha," calls Omaha home. And Berkshire Hathaway, his conglomerate holding company, is headquartered there.

Omaha Steaks, an area institution since 1917, also employs over 1,800 area residents. And t\That's your "Local Lowdown."

(END VIDEOTAPE)

WILLIS: One place crime is surging is at the gas station. Gas is more expensionive than ever. You'll be amazed at the lengths thieves will go to steal your gas. CNN's Kathleen Koch takes a look at this disturbing new trend.

(BEGIN VIDEOTAPE)

KATHLEEN KOCH, CNN NEWS CORRESPONDENT (voice over): It's become a new feature on convenient store security cameras, a driver taking off without paying, despite the owners' efforts to chase him down.

UNIDENTIFIED FEMALE: The driveoffs are becoming more frequent.

KOCH: One Seattle-area thief would pull in after hours and use a master key to unlock the pumps filling barrels with hundreds of gallons.

Individuals, too, are becoming targets. Thieves hit Almir Vilacheck's Atlanta apartment building.

ALMIR VILACHECK, GAS THEFT VICTIM: I wake up on the morning on the way to work and the gas tank is empty. I mean, this happened probably about four or five different times.

KOCH: Matri Edwards says two of her Shelton, Washington neighbors awoke to find their gas tanks bone dry.

MATRI EDWARDS, GAS THEFT VICTIM: That was ours, you know, why would you take that from someone?

OFC MIKE FIOLA, SHELTON, WA POLICE DEPT: Whenever we have an increase in gasoline prices, we have an increase in gasoline thefts.

KOCH: Convenience stores report so-called drive-offs surge every spring, gas thefts cost the industry $134 million in 2007. Who pays? The station owners, most who have just one store and make little profit on gas sales.

JEFF LENARD, NATL ASSN OF CONVENIENCE STORES: In the course of the year, they'll make about a penny-and-a-half profit per gallon. So, you're looking at about $60 a day in profit at the pump. When somebody peels out stealing $60 worth of gas, you're essentially looking at the day's profits.

KOCH: How to stop thieves? Switch all stations to pre-pay.

(on camera): But, some store owners are reluctant because many customers then use credit card, which charge the stores fees of nine cents a gallon or more.

(voice over): Increased penalties, 27 states allow judges to suspend the license of someone convicted of gas theft. Parking garages, or on the street in well-it will areas with a gas cap on the traffic side.

EDWARDS: They're at $20 each.

KOCH: Matri Edwards bought locking gas caps to protect an increasingly valuable commodity.

EDWARDS: People are going to be trying to get it however they can, if they can't afford it.

KOCH: Kathleen Koch, CNN Washington.

(END VIDEOTAPE) WILLIS: Now, faced with rising gas prices, some drivers in Denver are parking their big SUVs and trucks and resurrecting older, more efficient cars for their daily commutes. The story now from Russell Haythorn of our Denver affiliate KMGH.

(BEGIN VIDEOTAPE)

CARSON SUMMERS, DRIVER: I own a '95 Dodge diesel.

RUSSELL HAYTHORN, KMGH REPORTER (voice over): But, that's not what he's driving to work these days.

SUMMERS: Give it a nice little spray paint job and got it on the road.

HAYTHORN: Like countless other commuters, Carson Summers (ph) has parked his gas guzzler, opting instead for an older more fuel- efficient ride.

SUMMERS: I bought this truck from my grandpa and use that for my daily driver and use the diesel for others.

HAYTHORN: And Carson is not alone.

BUDDY OSBORNE, DRIVER: Oh, this is my baby. It's a '79 brat (ph).

HAYTHORN: Buddy Osborne got rid of his Chevy pickup all together and now cruises a Subaru.

OSBORNE: It was my wife's grandfather's, he bought it new back in 1980.

HAYTHORN: Michael Southworth, owner of Breaks Plus in Loveland, says downsizing is a growing trend.

MICHAEL SOUTHWORTH, OWNER, BREAKS PLUS: It saves them money in the long run to invest $1,000 on an older vehicle, because the gas that they would be putting in it on a weekly basis on their new vehicle is outrageous.

HAYTHORN: And Osborne, for one, doesn't give much thought to cars as status symbols.

OSBORNE: Yeah, I get between 25 and 30.

HAYTHORN: Or what others think of his wheels.

OSBORNE: Well, I always thought of cars as like a horse, basically. Get you from point A to point B.

(END VIDEOTAPE)

WILLIS: 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. Eastern and Sundays at 3:00, right here on CNN. As always, we thank you for spending part of your Saturday with us. Don't go anywhere, your top stories are next on the CNN NEWSROOM, have a great weekend.