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Open House

Should You be Worried about the Value of Your Home?; Rebuilding in New Orleans Historic Districts Post Katrina; Keys to Finding that Perfect Vacation Home

Aired August 26, 2006 - 09:30   ET

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

GERRI WILLIS, CNN ANCHOR: Are you worried about the value of your home? We'll have the information you can trust. Plus, find out why owning a second home may be within reach. And we'll show you how your trees could be saving you money.
Good morning, everyone. I'm Gerri Willis, and this is OPEN HOUSE. We've been talking on this program for some time about the softening housing market. This month, the numbers continue to slide. Those numbers are giving all homeowners a real reason to worry about the value of their home. Mark Zandi is with Moody's Economy.com in Philadelphia. Good to see you Mark.

MARK ZANDI, MOODY'S ECONOMY.COM: Good to be with you.

WILLIS: Well let's start with prices because that's the main thing everybody cares about. Where are prices going down next?

ZANDI: Well they are falling in various markets that were previously very active. Boston, Washington, D.C., Miami, Las Vegas, San Diego, all starting to see prices come down.

WILLIS: You know, it's interesting, because the first places that prices went down were, you know, the old rust belt, Detroit, Buffalo, Fort Wayne, Indiana, now some of these markets that have been go-go markets, tell me your experience of watching these numbers. Do they go down and down and down, or how much of a downside can we expect in these areas where the prices are just edging further and further?

ZANDI: Well I think we're going to see price declines at least for another year. We're a year into this correction in the housing market and we have at least a year to go. So I would expect price declines in many of these very active, previously active markets for at least another year.

WILLIS: Mark you're saying two years of downside or one?

ZANDI: Well, it's already been a year. We've seen sales come off, unsold homes surge, we've seen construction fall, now we're seeing prices weakening. We have another year to go. And in this coming year we'll see prices decline.

WILLIS: So from your point of view, we're halfway through. That's very interesting. When you look backwards though, do these prices typically fall by 10 percent, 20 percent, 40 percent? I think people out there who have so much of their money invested in their house want to know what they're on the hook for here.

ZANDI: Well I don't know that there's a typical, but I do expect that prices will decline in many of these markets five, 10 percent. In a handful of markets we'll see prices decline more than 10 percent. In certain parts of these markets, the condominium market for example, we'll see double digit price declines, peak to trough.

WILLIS: Well I have to tell you, 10 percent is nothing compared to the gains people have enjoyed over the last few years. Let's talk about the broader economy coming up this fall for just a second. Of course, one very important thing to consumers out there, interest rates. What's your outlook for interest rates?

ZANDI: Well, fortunately for home buyers and homeowners, I think interest rates have peaked. If they've not peaked we're pretty close. The economy has slowed. Inflation seems to be moderating. The Federal Reserve appears to be at the end of its tightening process. So I think rates are at a peak.

WILLIS: Well as you know, the Federal Reserve has been on a campaign here and everybody wonders, you know, what are they going to do next? What do you see in your crystal ball for this fall for the Federal Reserve, because at the end of the day, they're the people who make the decisions about interest rates?

ZANDI: Yes they do and I think they are at the end of the tightening cycle. They've been tightening monetary policy for two years, they've raised interest rates over four percentage points. I think they're at the end of that process. There might be one or two more rate hikes in our future, but that would be the most we'd see.

WILLIS: And what is it out there, is it gas prices, what one thing could change this all around?

ZANDI: Well, you put your finger on it, its energy prices. That's the most significant risk to the economy. We've done a very good job of digesting the higher energy prices so far, but I think if they were to spike higher and we started paying $3.50 or $4 for a gallon of gasoline we would have a problem.

WILLIS: People like you like to talk about GDP, all this, you know, econo lingo, but I think what consumers care about is, is the economy growing, are jobs going to be created, am I going to be able to pay my mortgage. Your outlook for the balance of the year, what is the economy going to do?

ZANDI: It's going to grow. I think we're going to continue to see job creation, unemployment will remain low. It's just that the growth is not going to be quite as strong as what we've come to enjoy over the past couple of years. In fact, the next couple of years might feel a bit uncomfortable, at least in the context of the very good economy that we've enjoyed recently.

WILLIS: Mark Zandi, thank you for your time today.

ZANDI: Thank you. WILLIS: We are just days away from the one-year anniversary of hurricane Katrina. One year since many folks across the gulf coast saw their lives devastated. One year later, the pieces are being picked up, and in some historic districts like those found in New Orleans, it's all about restoring history.

(BEGIN VIDEOTAPE)

JAMAR ALEXANDER, RESTORING HIS HOME: This is a big table at thanksgiving time.

WILLIS (voice-over): Jamar Alexander has lived in the big house on Spain Street nearly all of his life.

ALEXANDER: This was a family house. It's still a family house.

WILLIS: And it's been around since the early 1800's. Now Alexander and his family are working to restore it after Katrina flooded the home. The house is in New Orleans' historic Saint Rock neighborhood. It's being restored with help from the non-profit groups the Preservation Resource Center of New Orleans and the National Trust for Historic Preservation.

(on camera): Restoring just one house like this one can transform a community. It encourages neighbors to fix up their properties, that makes the community look better, and that can raise property values.

PATRICIA GAY, PRESERVATION RESOURCE CENTER: When they see just one person working on a house, that's enough to get others inspired.

WILLIS (voice-over): But restoring these individual homes is a monumental task. Alexander says one of the biggest problems is finding people who know how to do the work.

ALEXANDER: In this city it's a dying art, you have to find most of the people, older people, who possessed the skills.

WILLIS: And restoration can be expensive. Just ask Stacy Rockwood, she's restoring this home in the Holy Cross historic district. One contractor told her it could cost $300,000 to finish the project. In some cases it's nearly impossible to find window frames and doors to fit the house. She spends time scouring junkyards for the right pieces.

STACY ROCKWOOD, RESTORING HER HOME: Then he just has to go find the window that big. And you won't find it at Lowe's and you won't find it at Home Depot.

GAY: I loved seeing the stable with the pegged wood.

WILLIS: Patricia Gay says all the trouble is worth it because these homes are built to last. Remember all the mold left by Katrina? In new homes built with sheetrock, the walls have to be completely torn out. But in old homes with plaster walls, homeowners can often just wipe off the mold. GAY: I love cities and the old neighborhoods define the city. So, it's bigger than just saving a house. It's saving a city.

WILLIS: A city that is making a comeback, one house at a time.

(END VIDEOTAPE)

WILLIS: It's good to see those houses come back. We have so much more ahead for you on OPEN HOUSE. Isn't it time you started living your dream and bought that vacation home? And we're going to show you, it might not cost as much as you may think. And we're taking it to the trees. It's a weekend project showing you how to take care of your trees and at the same time, save you money. But first, your tip of the day.

(BEGIN VIDEO CLIP)

WILLIS: Building a new home is exciting, but be careful about getting into business with the wrong people. Obtain bids from at least three licensed contractors. And make sure you understand the reasons for the variations in price. Ask for references or better yet ask to see some of the contractor's previous work. You can also call your local Better Business Bureau to check on any disputes or cancelled contracts.

Speaking of contracts, make sure yours has all the details, including start and end dates, material specs, and a payment schedule. Put just 10 percent down. Pay 25 percent when plumbing and electrical work are done, 25 percent after cabinets and windows, and 25 percent for flooring and painting. And don't hand over the last 15 percent on the final day.

It's called retainage and you should keep it for 30 extra days just to make sure everything is in working order. More importantly, make sure your contractor is properly insured. Otherwise, you could be held accountable. And that's your tip of the day.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

WILLIS: Just imagine, the fresh mountain air at 10,000 feet, with views in all directions, the sunset, over a serene lake. Now, imagine you're looking at all of this from your dream vacation home, one that you bought at an affordable price. Jake Ward of "Men's Journal" magazine went on a search for places just like this, and he found them. Jake that's awesome. I love that you have a fabulous list.

JACOB WARD, MEN'S JOURNAL: Yes it's been fun. You know we look at how Americans sort of think about their fantasies these days and a lot of the time they don't have to deal with the city. You just want to get out into the world.

WILLIS: Now to be fair, some of these places are way, way out.

WARD: Way out, that's right. You have to have a tolerance to go pretty far afield to get the best deals we found.

WILLIS: Exactly. But the benefit is that some of them are near national parks. There's certainly a lot to do, even though they're in rural areas.

WARD: That's right, absolutely. I think, you know people think to themselves, oh you have to be in the city to have a lot to do. But we found that there's just an endless amount of recreation you can have, especially when you're right at a national forest, you know you're right down a forest service road, it's really, there's a lot to do.

WILLIS: Like in Asheville, North Carolina, which is one of your picks and my entire family is from that area, so that was one of my favorites. Tell me why you were drawn to that area?

WARD: We found that with a median home price around $195,000, it's an incredibly affordable place, considering everything you get. It's a little more than some of the other places we looked at, but you have the UNC Asheville is there, which draws in all kinds of cultural events.

I mean it's a place where you can get away from everything without really having to separate yourself completely. You can, you know, have a great meal, you can see a live band on a Friday. It's -- you know you get the best of the city and the country.

WILLIS: Appalachian trails are there, obviously it's beautiful, just a gorgeous place to hike, to bike, lots to do, right?

WARD: That's right, the Pisgah National Forest is right there, so you can go for miles on mountain biking trails. There's some really beautiful rivers that run through there. It's a really, just a lush place. That's what we found.

WILLIS: Smoky Mountain National Park. But I'm going to interrupt myself and move on to another city. That's just one of my favorites. Leadville, Colorado, why did you pick that?

WARD: Well Leadville is really the -- it has the edge of the world kind of appeal. I mean you're on a 10,000 foot plateau in the mountains. But you're really only 90 minutes from Denver, I mean it's an incredible thing. And when you consider that, you know less than an hour away, Vail has a $3 million per acre kind of cost, I mean that's an amazing kind of place, you know, we found plots of land with 38 acres for $60,000.

WILLIS: Wow, now that is really amazing, with no house on it or with a house?

WARD: With no house. The median home price that we found was somewhere around $170,000.

WILLIS: That's very affordable.

WARD: Really good. WILLIS: And it could be the next Baylor right?

WARD: That's right, exactly, you're within an hour of movie stars and you have this incredible place. But, you know, the challenge is, you're very, very far away. And so you have to look closely at your construction costs, how far away are you from the highway, who's going to maintain your road when it snows, who's going to plow it, that kind of thing comes up in a way that you would never think of you know buying in the city.

WILLIS: When you are rural it cost a lot more to build, absolutely. Let's talk about Silver City, New Mexico.

WARD: Silver City, New Mexico is right near the Gila National Forest. It's 6,000 feet, but it's still very temperate. For some reason it's 80 degrees, 50 degrees in the winter, you know it's really -- it hovers and that's a nice range. It's really a gorgeous place.

The median home price there is a lot lower, its $150,000. But again, you're at the edge of the world. Here, you know your primary concern in looking, investigating your place, you have to make sure that your water rights are really, are solid. I mean that's obvious in the desert ...

WILLIS: I'm going to get you to Eureka, California because I've been there and it is fabulous.

WARD: It is beautiful. I mean you have -- the California coast is this magical thing, the quality of the light is so beautiful.

WILLIS: Look at that picture. Oh, my gosh.

WARD: Fabulous.

WILLIS: The fog, the trees.

WARD: That's right, I mean -- and this is the kind of place that people flock to, the California coastline, but Eureka has managed to remain a little more affordable. I mean considering the coastline, $300,000 median home price, you know that's high in the country, but along that coastline that's a bargain. And we found $8,000 for an acre of open land. You know there's some really amazing land deals to be had there.

WILLIS: All right, ok, Marquette, can we talk about that in just a few seconds?

WARD: Sure, yes. You know Marquette, it's lush, beautiful, it has -- you're right up against the national forest, it's in a very affordable spot.

WILLIS: Well, fabulous. Fabulous pictures, it all gives us something to think about. Jake thanks so much for being with us today.

WARD: Thank you. WILLIS: Still ahead, we're talking trees, more specifically how to save your trees. It's a weekend project that could end up saving you money down the road.

(COMMERCIAL BREAK)

WILLIS: Take it from me taking care of your trees can really pay off. Did you know that the trees that surround your home can help you save $250 a year on your energy bill? It's true. And further proof that it's time to put some effort into making sure your trees are in good health.

(BEGIN VIDEOTAPE)

WILLIS (voice-over): Your house is an investment, the kitchen, the bathroom, the outdoor deck. You take good care of them to protect your investment. But now it's time to treat trees with the same respect. Being your own tree care expert can help protect you from problems like this down the road. Tree specialist Wayne Dubin says it's all about a steady stream of prevention and care to keep those trees healthy and safe.

WAYNE DUBIN, BARLETT TREE EXPERTS: Well the best thing that homeowners can do to keep their trees healthy are to water them during dry periods, make sure that they periodically prune them, make sure that soil has enough nutrients, regular fertilization, and if any insects or diseases start to take over, to address them and suppress them in some way.

WILLIS: Disease prevention is key. And the best way to make sure your trees are healthy, keep your eyes and ears open.

DUBIN: They should make sure that the tree doesn't look differently than it has all along. If there's a tree that suddenly is leaning or a leaning tree that is leaning more, that would certainly be a sign that trouble is going on. If there's a heaving of the ground where the tree is located suddenly, there's loose soil that would indicate that tree is starting to shift in the ground.

WILLIS: But it's not just shifts and shakes that you have to watch out for. Proper mulching and pruning is also critical.

DUBIN: We don't want a big volcano of mulch up against the tree, that's not healthy for the tree. The mulching is an excellent practice. In terms of depth, we recommend two to four inches. I recommend that a homeowner go out as far as they can all the way to the drip line, if they can handle that.

It's really important to prune young trees. You get the most benefit out of pruning young trees so that you can train them structurally to be sound, to have the branches dispersed evenly throughout the crown of the tree, to have good structure. And so we recommend that people prune their trees at two years, five years and eight year interval for a brand new tree, and then periodically as needed afterwards. WILLIS: And don't just take any old kitchen scissors to that sapling in the front yard. Wayne recommends hand pruners with a curved blade to prevent crushing the branches. But there are times when the job may just be too big for you to handle. That's where the professionals come in.

DUBIN: If there's any signs of obvious decay, if there's a big cavity visible, whether it's near the ground or high up in the air, if there's mushrooms on the ground near the base of the tree, if there's mushrooms on the actually trunk of the tree, those would all be really serious problems that you should call a professional in right away and have it investigated.

WILLIS: To find an accredited arborist in your area, start with the International Society of Arbor Culture. Each state has a different certification. So be sure to check with your local government to see who meets those requirements. That way, you don't get carried away by your trees and they continue to make your yard feel just like home.

(END VIDEOTAPE)

WILLIS: As always, if you have an idea for a "Weekend Project," send us an e-mail to OpenHouse@CNN.com and you can watch past weekend projects on our web site, CNN.com/OpenHouse. Up next, why a little curb appeal could go a long way to selling your house for the right price. But first, buckle your seat belts. It's time for your local low down.

(BEGIN VIDEO CLIP)

WILLIS (voice-over): Atlanta, home to 1,000 Peachtree Streets or maybe more like 40. Some 5.3 million people already call Atlanta home, but the fast-growing 28 county Atlanta metro area is headed toward its 13th consecutive year of leading the nation in issuing residential building permits. Going somewhere? Chances are you'll at least be passing through Atlanta.

Atlanta's Hartsfield-Jackson International Airport is the busiest in the world. Where 980,000 takeoffs and landings took place last year alone, that translates into 88.4 million passengers. Once you've arrived check out the brand new Georgia Aquarium, the largest on earth. 100,000 creatures and plants live there in about 8 million gallons of water. Just don't get lost on the way.

Spaghetti junction is the nickname for the intersection of two major Atlanta interstates, I-85 and I-285 that create a mind boggling number of overpasses and exit ramps. Oh, and if you have time stop by that little network called CNN. You may have heard of it. Say hi to Tony Harris for me. And that's your local low down.

(END VIDEO CLIP)

WILLIS: If you're looking to sell your home, you don't necessarily have to do major upgrades to boost your homes curb appeal. First, troubleshoot that lawn. The high temperatures we've had this summer may be taking a toll on your greenery. Water your lawn early in the morning rather than late at night. Rake away any leaves and stow away any tools or items that may be cluttering your lawn.

Add flowers along the edge of your driveway or hang plants from the porch. Concentrate your cleaning on your home's exterior by clearing out your gutters and washing your windows. Pressure wash dirty siding and dingy decks. If you have more time add a fresh coat of paint too.

And don't forget, buyers may also drive by at dusk too. So, you may want to add a decorative lamp or light fixture to the front porch. Make sure that any lighting that's visible through your windows at night enhances your home's appearance.

If you have any questions or tips you want to share with your fellow OPEN HOUSE viewers, send us an email to OpenHouse@CNN.com. And you'll find more on today's guests and topics on our Web site, CNN.com/OpenHouse.

As always, we thank you for spending part of your day with us. OPEN HOUSE will be back next week right here on CNN. And you can also catch us on "HEADLINE NEWS" every Saturday and Sunday at 5:30 p.m. eastern time. Don't go any where, your top stories are next on "CNN SATURDAY." Have a great weekend.

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