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CNN Sunday Morning
Interview With Mari McQueen
Aired October 13, 2002 - 10:15 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.
CAROL LIN, CNN ANCHOR: All right. Buying a home may seem like the best investment for your buck, but some say real estate may be risky business. So how can you play it safe when it comes to your home?
Next month, "Consumer Reports" takes a look at how -- well, how you can make your house pay off and the risks of real estate. Joining us from New York, though, with a preview, Mari McQueen with "Consumer Reports." Hi, Mari.
MARI McQUEEN, ASSOC. EDITOR, CONSUMER REPORTS: Good morning.
LIN: Thanks for being so patient with us. I know you waited through that briefing out of Montgomery County, but we had to get this on, because as you know, the stock market's been tanking for the last couple of years. People have seen the values of their homes rise. And they want to put some money somewhere. So there's this huge boom in remodeling.
But how do you make that decision of what to do in terms of what's going to add value to your home? What are some best bets?
McQUEEN: Well, we think that, in interviewing home appraisers, whose business it is to assess value in housing, that the home improvements that really pay off are those, generally speaking, that add usable living space to your home.
LIN: So not just remodeling the kitchen, but maybe pushing out that wall, maybe adding a great room to that kitchen?
McQUEEN: Right. The usable space, not a trivial amount like maybe a 10-foot expansion or something like that probably wouldn't be feasible. But in general, the projects like a major kitchen remodeling, major bathroom remodeling.
LIN: The attic bedroom addition, that's always a good one, especially in old homes.
McQUEEN: Right. The bedroom.
LIN: And the master suite addition, just in case, if you're using a small bedroom with an attached bath, go for it, add that master suite, give yourself something, and it increases the value too, right?
McQUEEN: Right. The principle to keep in mind, however, is that you don't want to over-improve. You want to bring things up to the standard of, you know, the better homes in your neighborhood and in your, you know, general area.
LIN: But you don't want to have the best house on the block? You don't want to have the best house on the block?
McQUEEN: Right. You don't want to have -- Or the best in the neighborhood. Like, if you're in a community of two-story homes, you know, adding a third story is not likely to pay off.
LIN: Okay.
McQUEEN: Another, you know, merely cosmetic improvements like a very large deck in a community of patios, that's also less likely to bring you the return that you hoped for.
LIN: What's the worst investment you can make in your house, do you think?
McQUEEN: The worst investment you can make in your house is any improvement that is just too personal. You know, people are not willing to pay for, say, you know, gold bathroom faucets. I mean, if you like it, fine but it's not going to, you know, improve the value of your home.
LIN: I saw one the other day that was shaped like a phoenix.
McQUEEN: Really?
LIN: It was this gold, elaborate; it was shaped like a phoenix and the wings were expanded, and I just thought, "Oh, my." All right.
McQUEEN: Well, that's the kind of thing, if you're doing that for your own personal enjoyment, fine. But it's not going to add anything.
Another thing that ...
LIN: It may scare people, actually.
McQUEEN; Exactly. And can detract from your home unless, once again, you're in a neighborhood where that's expected, is an in-ground swimming pool, because a lot of people don't want the responsibility of the swimming pool or won't use one. And it also increases, you know, your need for liability insurance.
LIN: Right, and don't you have to be careful today, with housing prices so inflated in some markets, because it's been such a great market. People looking for places to put their homes.
How can you tell if you're in a real estate market that's about to bubble, and maybe you don't want to spend $50,000 on a kitchen remodel. Maybe you only want to spend $15,000 or $20,000.
McQUEEN: Well, the thing is that one of the signs of a market that may be overheated. One is that, you know, something that you would read about, but you wouldn't know yourself is that the prices are outstripping the median incomes in the area so that the affordability is getting, you know, out of reach.
But the signs that you can see sometimes is that suddenly there are an abundance of for-sale signs and the houses are on the market much longer than they had been, because people are unwilling to settle for less of a price than they heard someone down the block got a few months ago.
And then finally, there are price cuts. And that's a sign that you're coming to the end of, you know, that period of rapid price expansion.
By the way, we're not saying, trying to say, that nationally or even, you know, in local markets that prices are going to dramatically deflate.
LIN: Right.
McQUEEN: What will happen first, you know, or maybe, you know, exclusively, is that prices will level off. Even the National Association of Realtors is predicting that in 2003, price appreciation will revert to the historical norm, which is usually the rate of inflation plus one or 2%.
LIN: Right, all right. So it's a good idea, maybe, before you spend all of that money, if you are doing it for investment purposes, maybe check around with a few real estate agents and appraisers just to see how the market's going in the neighborhood.
McQUEEN: We would recommend appraisers and also open houses. Go and get a sense of what your neighbors have done and try to, you know, keep up but not surpass it.
LIN: There you go. And, of course, then you can check out their bathroom faucets.
All right. Thanks so much, Mari McQueen. Good to see you.
McQUEEN: Thank you.
LIN: Thanks for coming on this Sunday morning.
McQUEEN: All right. You're welcome.
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 October 13, 2002 - 10:15 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL LIN, CNN ANCHOR: All right. Buying a home may seem like the best investment for your buck, but some say real estate may be risky business. So how can you play it safe when it comes to your home?
Next month, "Consumer Reports" takes a look at how -- well, how you can make your house pay off and the risks of real estate. Joining us from New York, though, with a preview, Mari McQueen with "Consumer Reports." Hi, Mari.
MARI McQUEEN, ASSOC. EDITOR, CONSUMER REPORTS: Good morning.
LIN: Thanks for being so patient with us. I know you waited through that briefing out of Montgomery County, but we had to get this on, because as you know, the stock market's been tanking for the last couple of years. People have seen the values of their homes rise. And they want to put some money somewhere. So there's this huge boom in remodeling.
But how do you make that decision of what to do in terms of what's going to add value to your home? What are some best bets?
McQUEEN: Well, we think that, in interviewing home appraisers, whose business it is to assess value in housing, that the home improvements that really pay off are those, generally speaking, that add usable living space to your home.
LIN: So not just remodeling the kitchen, but maybe pushing out that wall, maybe adding a great room to that kitchen?
McQUEEN: Right. The usable space, not a trivial amount like maybe a 10-foot expansion or something like that probably wouldn't be feasible. But in general, the projects like a major kitchen remodeling, major bathroom remodeling.
LIN: The attic bedroom addition, that's always a good one, especially in old homes.
McQUEEN: Right. The bedroom.
LIN: And the master suite addition, just in case, if you're using a small bedroom with an attached bath, go for it, add that master suite, give yourself something, and it increases the value too, right?
McQUEEN: Right. The principle to keep in mind, however, is that you don't want to over-improve. You want to bring things up to the standard of, you know, the better homes in your neighborhood and in your, you know, general area.
LIN: But you don't want to have the best house on the block? You don't want to have the best house on the block?
McQUEEN: Right. You don't want to have -- Or the best in the neighborhood. Like, if you're in a community of two-story homes, you know, adding a third story is not likely to pay off.
LIN: Okay.
McQUEEN: Another, you know, merely cosmetic improvements like a very large deck in a community of patios, that's also less likely to bring you the return that you hoped for.
LIN: What's the worst investment you can make in your house, do you think?
McQUEEN: The worst investment you can make in your house is any improvement that is just too personal. You know, people are not willing to pay for, say, you know, gold bathroom faucets. I mean, if you like it, fine but it's not going to, you know, improve the value of your home.
LIN: I saw one the other day that was shaped like a phoenix.
McQUEEN: Really?
LIN: It was this gold, elaborate; it was shaped like a phoenix and the wings were expanded, and I just thought, "Oh, my." All right.
McQUEEN: Well, that's the kind of thing, if you're doing that for your own personal enjoyment, fine. But it's not going to add anything.
Another thing that ...
LIN: It may scare people, actually.
McQUEEN; Exactly. And can detract from your home unless, once again, you're in a neighborhood where that's expected, is an in-ground swimming pool, because a lot of people don't want the responsibility of the swimming pool or won't use one. And it also increases, you know, your need for liability insurance.
LIN: Right, and don't you have to be careful today, with housing prices so inflated in some markets, because it's been such a great market. People looking for places to put their homes.
How can you tell if you're in a real estate market that's about to bubble, and maybe you don't want to spend $50,000 on a kitchen remodel. Maybe you only want to spend $15,000 or $20,000.
McQUEEN: Well, the thing is that one of the signs of a market that may be overheated. One is that, you know, something that you would read about, but you wouldn't know yourself is that the prices are outstripping the median incomes in the area so that the affordability is getting, you know, out of reach.
But the signs that you can see sometimes is that suddenly there are an abundance of for-sale signs and the houses are on the market much longer than they had been, because people are unwilling to settle for less of a price than they heard someone down the block got a few months ago.
And then finally, there are price cuts. And that's a sign that you're coming to the end of, you know, that period of rapid price expansion.
By the way, we're not saying, trying to say, that nationally or even, you know, in local markets that prices are going to dramatically deflate.
LIN: Right.
McQUEEN: What will happen first, you know, or maybe, you know, exclusively, is that prices will level off. Even the National Association of Realtors is predicting that in 2003, price appreciation will revert to the historical norm, which is usually the rate of inflation plus one or 2%.
LIN: Right, all right. So it's a good idea, maybe, before you spend all of that money, if you are doing it for investment purposes, maybe check around with a few real estate agents and appraisers just to see how the market's going in the neighborhood.
McQUEEN: We would recommend appraisers and also open houses. Go and get a sense of what your neighbors have done and try to, you know, keep up but not surpass it.
LIN: There you go. And, of course, then you can check out their bathroom faucets.
All right. Thanks so much, Mari McQueen. Good to see you.
McQUEEN: Thank you.
LIN: Thanks for coming on this Sunday morning.
McQUEEN: All right. You're welcome.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com
