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YOUR BOTTOM LINE
Breaking Down the Housing Forecasts; Mom CEOs: Balancing Excellence at Work and Family; Has the Recession Shifted Women's Role in the Workplace?; Getting the Most For Your Travel Dollar
Aired January 15, 2011 - 09:30 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CHRISTINE ROMANS, HOST: It's been called the rise of wives. How women are emerging from the great recession better off than men. Why? And how come it doesn't feel like a good thing?
Plus, air travelers, you have been nickel and dimed to death, but this morning we're going to show you how to seize the upper hand.
Good morning and welcome to YOUR BOTTOM LINE, I'm Christine Romans.
We begin this morning with housing. One forecast this week said the bottom for home prices comes this spring. Another forecast completely disagrees, says home prices could fall another 11 percent this year.
Rick Sharga tracks foreclosure RealtyTrac, Ilyce Glink is the author "Buy, Close, Move In," and Mike Aubrey is a licensed realtor and host of HGTV's "Real Estate Intervention."
RealtyTrac reported a record 2.9 million American homes received foreclosure notice in 2010, a million people lost their homes, but Rick, it slowed toward the end of the year, does it get better this year or worse?
RICK SHARGA, REALTYTRAC: Unfortunately it gets worse this year.
ROMANS: More foreclosures.
SHARGA: More foreclosures, probably another record year, probably another record year in terms of bank repossessions. The slowing was an artificial delay because of the banks paperwork issues they had to clean up and that probably kept about 200,000 foreclosures actions from taking place in the last quarter, alone.
ROMANS: So, another million Americans will see a padlock on the front door and lose the American dream?
SHARGA: Probably another 1.2 to 1.3 million next year and overall activity will probably peek.
ROMANS: Top foreclosure states, 2010, Arizona, Nevada, Florida, they are not going to get better this year or they have already seen the worst of it? SHARGA: Nevada's been the No. 1 state in the nation for the better part of two years, right now. States like California, Arizona, Florida are going to take a long time to recover. Will they be marginally better? Possibly, but it's likely they'll be a little bit worse.
ROMANS: Mike Aubrey, the local market monitor found most cities in America now are fairly valued. For the first time in a very long time, Las Vegas, undervalued. If you look at the northeast, around New York City for example, a lot of those suburbs are overvalued, meaning if you are sitting there, I guess that means you could see price declines.
What do you think? I mean, is this the time to be in the real estate game or just sit tight if you can?
MIKE AUBREY, REAL ESTATE INTERVENTION: You know, I'll be honest with you, Christine. I think that, right now, it depends on where you are looking at buying. I mean you can say to me that property is undervalued in Las Vegas. Do you think I'm going to jump on a plane and run out and buy a house today? Not a chance.
I mean, I think Rick will tell you, things are going to get worse in Vegas over the next year. We have not seen the bottom of this market place and even with low mortgage interest rates where they are right now, I don't think it's time to buy in a location like that. Where, other locations like Boston, Washington, D.C., New York, maybe it is time to buy and lock in that low interest rate.
ROMANS: Proceed with caution, at least. Most housing markets, as we said, fairly valued now. Still, it is still a buyer's market. Where do you fall in on home prices, up, down, sideways if we're lucky?
ILYCE GLINK, AUTHOR: I'd like to -- I'd like everybody to know I that I really would wish to be able to say things are going to get better, they are going to go up, we're going to see prices will rise, but I'm a little bit -- I'm falling into the camp of your experts, today, like Rick and he knows the numbers better than I do, but really foreclosures look like they are going to be worse this year. I don't see a real turnaround coming and I do see with mortgage interest rates rise, expected to hit nearly six percent by the end of this year. That's going to be a big stopping point for people who used to hearing about four percent 30-year mortgages, so I'm not sure that we're seeing things in a great place for buyers or seller this year.
ROMANS: Ilyce, who should be buying, right now? I mean, what are the circumstances for someone to take care of those low mortgage rates if indeed as many forecasters think mortgage rates are only moving higher.
GLINK: Listen, the truth is, the difference between a five percent interest rate and a six percent interest rate or four percent interest rate, when you are looking at buying a house that's declined 30, 40, 50 percent in value from where it was, you're probably getting a deal. So, if you've got a stable job, you've got good credit, you've got cash in the bank, enough cash anyway to satisfy lenders today, if you can do that, if those are the things where you know where you're going to be in the next five to 10 years, go out and buy a house. There are plenty to choose from.
ROMANS: Rick, about half of as you, as adults, have admitted they would like to buy a foreclosed property. That's up from six months ago. What do people need to be careful about?
SHARGA: The two most common mistakes people make is they fall in love with the deal and don't really check the price. So, they'll actually overvalue a discount property. The other is that they tend not to fully anticipate how much it's going to cost them to fix the property up to the state they would like it to be when they live in it. So, those are two gotchas that people need to watch for when they're buying a foreclosure.
ROMANS: Hey Mike, finally when you say you want to sell a house, you say two things, it's got to be priced right and it's got to look good, right? I mean, if you're a seller, you're trying to move for a new job, you're trying to move because you're downsizing, those are your two most important things to take home.
AUBREY: No doubt about it, I mean, the marketplace is competitive, right now, Christine, and I think that if you don't have those two things, your chances of success are as low as they can be. With the amount of inventory that's in the marketplace, right now, you have to look for ways to make yourself different than your competition and those are the two mitigating factors that will do that for you.
ROMANS: All right, I think these are three pessimists on home prices, realists, maybe, on home prices and I think a little realism is something important for people to know about. Rick Sharga, Ilyce Glink, Mike Aubrey, thanks everybody.
Ilyce, stick with me because I want to talk with you a little bit more about this old saying, "all real estate is local," well, so is the jobs market. When it makes sense to leave your neighborhood behind and find a job in a new state.
ROMANS: Need a job? Does it make sense if you live in say, Michigan with double digit unemployment rate, to move to say, Nebraska with a jobless rate of 4.6 percent? Both have pretty brutal winters, but a recent study by the Bookings Institute found that people who take the risk and move after losing a job have significantly higher reemployment rates than do nonmovers.
Back with us, Ilyce Glink.
Ilyce, there's a big disparity between the states in the country with the highest rates of unemployment and the states with the lowest unemployment. If you've been out of work for a couple of years and you live in Michigan or Nevada, is this the time to start thinking about moving to Nebraska or North Dakota? GLINK: I think so. I mean, it's really cold, but just get a warm coat, because, you know, if you can -- it's crazy, but really, if you're in a place like Florida or Michigan where unemployment is very, very high, the official rate, but look at the U-6, the even broader picture of unemployment. In Michigan you're topping 20, 25 percent, true unemployment, underemployment, people who have just given up, thrown up their hands and left, that's really hard to fight those odds. And so, moving to a place like Nebraska or some of the other states in the middle part of the country that have lower unemployment can only boost your chances of getting hired.
ROMANS: I mention that Brookings Institute study, you know, reemployment rates 12 percent higher among displacement workers who move compared with those who don't move. But before you think of going anywhere, you need to consider some things. Some people can't do this. Some people have custody agreements and they can't just pick up and move with their children to another state. Some people have elderly relatives or other people who rely on them. I mean it's not just as simple as moving to a low unemployment rate state, but it's something that people need to consider.
GLINK: You know, you're exactly right. There are all kinds of things keeping people tethered to where they're living, right now. If you look at the census data, over the last decade, the rate at which Americans are actually moving, physically moving, has dropped to a decade's low number and people are really tethered. And one of the biggest ways they're tethered is with a home mortgage that's underwater.
So, I've written a lot about these underwater mortgages. People can't get out, they can't get the short sales done, banks are dragging out the short sales six months, nine months, a year. The foreclosure process, we just talked about, continuing to be a problem, so when you've got, you know, you're tied to a house, it's not even plausible, in some cases, for you to move as quickly as you would like to. But, planning this out, planning how you are going to get out of these huge problems or making arrangements with custody, very important.
ROMANS: And that's why so many economists say, it's almost the chicken and the egg, well when the housing market gets a little bit better, people can start to move for their jobs or when the jobs market gets to get better, people can start to move and get rid of their house and find somebody who will buy their house, just moving in. you know, I mean, it's this big circle that we just haven't been able to fix yet. What about resources to help you figure out if relocating is right for you and to make that a smooth process?
GLINK: Well, one of the things that I think everybody talks about but it's hard to kind of put into place is networking. So, you want to look at the circle that you have and the area that you're looking at now, your friends, your neighbors, you colleagues at your old job, maybe you've gone to Score.org, you're a small business owner, you're trying to get some help there, those people know people in different kinds of, parts of the country, they know different people who have different kinds of jobs in different parts of the country. Network with them and start to get together a long list of names and contact information and then start to reach out in these areas that you think you might be interested in going in.
That's what my brother-in-law did a bunch of years ago. He identified Austin, Texas as being the place that he wanted to move for a whole variety of reasons, with his family and he started making his long contact list, who he knew and it really kind of paved the way for him when he got there. I think it's possible for everybody to do that.
ROMANS: An you mention Texas is someplace that's seeing that migration in the Census Bureau show that people are moving to Texas. And people are moving to Texas from the northeast and the Midwest, places that are cold, the places that have seen an industrial belt that has declined moving to find new jobs in other parts of the country, so we've seen that in some of the census data.
Ilyce Glink, thank you so much, really appreciate you dropping by. The book is called "Buy, Close, Move In." Thanks, Ilyce.
ROMANS: After a generation now on the job, women hold roughly 40 percent of management positions. No question women have come a long way from the 1950s when June Cleaver was the female ideal, but they still have a long way to go. Only 12 women are CEOs of Fortune 500 companies, but a surprising majority of those women, 11 of the 12, are also moms, proof that women don't have to choose between a career and a family.
Kiran Chetry reports on one mommy CEO who hopes to inspire other women to strive for both.
STEPHANIE SONNABEND, SONESTA INTERNATIONAL HOTELS: I think women need to be more strategic about how they plan their careers. Where do they want to get to and what is it going to take to get there.
KIRAN CHETRY, CNN CORRESPONDENT (voice-over): And she should know. As CEO of Sonesta Hotels, Stephanie Sonnabend heads a $60 million a year business with 3,000 employees, worldwide. But she's also a wife and a mother of two kids, a rarity in the boardroom.
(on camera): Did you ever think that your leadership skills were in doubt because of your gender?
SONNABEND: Early on for some people in the company, yes because they did not have -- had seen a woman in that position.
CHETRY: So that was something that took some getting used to?
SONNABEND: Yes, yes. It did. And gain when I started there, there were very few women. There was one other senior woman in an executive position and everyone else was men.
CHETRY (voice-over): Even her own father who was president of family-owned business couldn't picture his own daughter sitting at his desk one day.
SONNABEND: I told him I was ambitious and did want to rise to the top of leadership.
CHETRY (on camera): Did he say to you, one day, I hope you're the CEO or you will be or was it just you come in and work your way up like everybody else and we'll see what happens?
SONNABEND: He said, what do you want to do and how do you want to carve your career in the business? And, again, he was of a generation that didn't really think of necessarily women having a career and becoming a CEO.
CHETRY (voice-over): Only 14 percent of top executives are women. A number Sonnabend says needs to change, because women bring something missing on executive row.
SONNABEND: It's really about diversity of thought. Men and women think differently. Women tend to think about how will that decision impact the employees, the community, the environment, not just the bottom line.
Good morning, Stephanie Sonnabend.
CHETRY: But Sonnabend admits that she couldn't have it all, career and children, without help. Her husband Greg gave up his career as an opera singer.
GREG CICCOLO, HUSBAND OF STEPHANIE SONNABEND: Are there's some regrets? Maybe a little, every once in a while, would I have loved to continue on singing throughout Europe and having what was an exciting life? Sure. But I had it.
CHETRY: Still says Sonnabend even with struggles between family life and life as a CEO, she never hesitated in reaching for both.
SONNABEND: I really felt that that was never a problem for me. Now, again, part of that may be being in a family business, but it's easily -- well, I shouldn't say that. It's not easily done but it is very doable.
CHETRY (on camera): You know, Sonnabend also founded an organization last year called 2020 Women on Boards and the goal of this, which is really interesting, is to try to boost the percentage of woman who serve on corporate boards.
And she says right now, it's only 11 percent. She wants to see that up to 20 by 2020 and she has her daughter, Antonia, who's now a young professional, herself, sort of heading up this operation.
ROMANS: Coming up in a family business, as well, with a role model like that. We're going to talk more about this, Kiran. Great piece, we're going to talk about women and the rise of wives, because we're going to examine this stark new trend, because, the country, as it shakes off the great recession, it is women who are recovering first. We'll explain, next.
ROMANS: The recession has hit men harder than women and it seems women are recovering faster. The unemployment rate for women last year averaged 8.6 percent compared with 10.6 percent for men. With more educated women in than ever before and a female workforce on the rise, are we seeing a shift in tradition?
Still with us, Kiran Chetry. Manisha Tucker is the founder of the Women's Financial Literacy Initiative and author of the blog, love this one, called the "Sugar Momma Chronicles." Silvia Ann Hewlett is president of Center for Work Life Policy.
You guys, this is fascinating to me, because we are told that women are emerging better and more solid financially than men, but it doesn't feel like it, Manisha, it still feels like we are working harder to keep our families moving ahead.
MANISHA TUCKER, WOMEN'S FINANCIAL LITERACY INITIATIVE: Well, it's true, I mean, as more and more women become the primary and co- bread winners, it takes an issue that historically has been a woman's issue, which is, pay in equality and makes it a family issue because suddenly when she's making 77 cents on the dollar and she's supporting the whole family, everyone feels it.
ROMANS: And Silvia, this goes across, sort of, incoming demographics, you have found professional women, too, a greater percentage of professional women are the primary breadwinners in their home, now.
SILVIA ANN HEWLETT, CENTER FOR WORK LIFE POLICY: Absolutely, about 30 percent. And I think that there are two stories going on, Christine, on the one hand, women have become enormously important as breadwinners, as they are over 50 percent of earners now in this economy, but they're not doing well. They have jobs, but often not well paid jobs. We find that 25-year-old women are doing almost as well as men in the earning charts, you know, like 90 percent of the male wage.
HEWLETT: But, take that 40-year-old women, who's a very accomplished professional, all of a sudden, she's earning 60 percent.
ROMANS: And that's because?
HEWLETT: Because women are not rising up through the rank, they're not getting the promotions. They don't have the sponsors, the senior kind of backers that enable them to get the promotions, to get the stretch assignments. And we're convinced that it's not about performance, our women really are performing as well, they're delivering the goods, but they're not getting the rewards, in the rising up the ranks sphere.
CHETRY: You know, we talk about that a lot as well, on how do you sort of market yourself, how do you strategically look at your career, oftentimes it's just the nature of women sometimes to say, you know what, I'm just going to do the best job I can do and people will see that and they'll reward me for it. and that's really, unfortunately, not how the business world works, you have to position yourself, you have to sell yourself and have to not be afraid to speak up.
ROMANS: Right, and you have to know how to ask for a raise and negotiate the right entry salary, because when you do make these right choices when you're young, it really means everything longer down the road.
TUCKER: They have such a huge economic impact, I mean, the numbers are striking. Carnegie Mellon Research spearheaded by Professor Linda Babcock shows that women who do not negotiate their first salary earn $500,000 less over the course of their career and men negotiate that first salary four times more and those of us women who don't consistently negotiate our salaries over the course of our career are leaving a million dollar on the table.
ROMANS: Well, here's the fine line, I mean, you can be the squeaky wheel gets the grease or the squeaky wheel is aggressive and bitchy in the office place. I mean, how do you make -- it's different the way women...
HEWLETT: We had a study come up yesterday with Harvard, right? We find that men are twice as likely to have a sponsor, i.e., the senior guy, who is arguing on your behalf, you know, trying to get you that raise when you're not sitting around the table, you know, discussing what the raises should be this year. So, you need to have this proxy.
CHETRY: It's the mentoring gap. The CEO that I talked to, Stephanie Sonnabend is trying to fill, as well, and she volunteers her time, it's that women need other mentors, that rather than view each other as competition they're trying to build up other women and they're trying to help them. And you're right, you can say that you're the greatest person in the world, but unless there's a senior person above you saying she's vital to our success, it's not happen.
ROMANS: Because women are holding on for dare life. You talk about on-ramps and off-ramps in your career. You take time off-ramp to have a baby, you come back and just trying to figure out where you are in the animal structure of your corporation and then you're going to go off again and then you're going to come back and is it that you're just fighting for survival, women sometimes, are just fighting for survival and at that time men have moved past them.
TUCKER: But I think part of that is for sure, but part of it I think is we're not encouraged as women to speak up and when we do speak up and asked for those raises, we're judged very differently, viewed as the "B" word and we're encouraged to...
ROMANS: I think I just said it. Maybe you can say it. I mean, it's a Saturday morning, sorry. I think I said it. TUCKER: But I think one the most important things is for us as women encourage each other to ask, we may be awkward in the beginning and we may sound harsh and a little screechy, but we can't be beating each other down as we start practicing that skill set.
HEWLETT: One thing we're finding in the recession is that there's something tribal going on and very senior men go with their comfort zone, so they're tapping on the shoulder and promoting someone exactly like them. so, women are less likely, over these last two years, to have this senior advocate, so we've got to have our sights set on that, because it is the next way to get to the next one. You have to have someone arguing for you.
Silva Ann Hewlett, thank you so much. Manisha Tucker and of course, Kiran Chetry, my friend and colleague.
How would you like a check for say, $800 the next time you get bumped for a flight. It's not only possible, it's actually your right as a passenger. That, plus even more flight rules you need to know, next.
ROMANS: Oversold flights are the norm and delays are to be expected, but your travel experience doesn't have to be a complete bust. We're going to help you actually, we're going to help you take advantage of the airlines. How's that?
Mark Orwoll is the international editor at "Travel & Leisure."
Everyone wants to be compensated if you're bumped of a flight, of course, now, this new interesting reverse option from Delta where, you can actually, when you check in, you can tell them what's your bid, how much you'll take to be bumped off an oversold flight. Is it a good idea?
MARK ORWOLL, "TRAVEL & LEISURE": Well, for Delta, it's a great idea, because traditionally, they make the announcement, is anybody willing to give up their seat for compensation, they make that at the boarding gate, but sometimes on a boarded plane, takes a lot of time. Delta says if you make your bid as how much you're willing to take, the least amount you're willing to take to be bumped, when you check in, it makes it a lot faster for everybody, but it's not a great deal, necessarily.
ROMANS: Do you think they're assuming you will take less than it's actually costing them and they will save money. They wouldn't do it if it wasn't a way to save money.
ORWOLL: I'm absolutely positive. I mean, I know, a lot of people might say well, I wouldn't mind getting a $200 flight voucher for a future flight, because I have flexibility. But look at this, you don't have the negotiating power, can't ask for a meal voucher while you're waiting. What if the next flight that gets you on gets canceled, are they going to put you up in a hotel? And the other thing is this, if you're in involuntarily bumped, the Department of Transportation requires them to pay you $800, so a lot of people don't know that, so they're underbidding themselves.
ROMANS: So, if you're sitting at home and you're checking into your Delta flight, do you think you should put $800 into that bid?
ORWOLL: I would definitely not do less than that. If fact, you might even do more than that, because it's easier for them to take a volunteer at say, $900 than in be to involuntarily bump somebody and pay them only $800.
ROMANS: I think you just might have saved us a few pennies here, today. Talk to me a little bit about mysterious rule 240 and who that works, 240.
ORWOLL: Rule 240 is actually an obsolete term, but people still use it. It refers back to the days before the FAA, when every airline was required to have certain -- they were obligated to help their passengers in terms of cancellations or delays. If you were delayed or canceled because of the airlines fault, a mechanical problem, the airline had to put you on the next available flight, even if it was another airline, even if it was a bump up in the class of service, like the business class, if it was a force (INAUDIBLE) like a snowstorm, they didn't have that obligation.
ROMANS: But, if they're looking for a part and the flight is canceled because they're looking for a part, they have to get me on the next available flight.
ORWOLL: That's right. Now, that's rule 240. Since then, they have changed to something called the Conditions of Carriage. Every airline has its own Conditions of Carriage.
ROMANS: Small print I think, right?
ORWOLL: It is small print, very small print. Used to be on the back of paper tickets, now you can get them online or you can ask them at the airport, they have to give it to you, it spells out what the obligations are to you if canceled or delayed.
ROMANS: Love it. Mark Orwoll.
OK, don't forget, he says $900 is what you should put in for your reverse bid if you want to be bumped from -- $900. If he's going to do it, that's what I'm going to do it.
That's it for us, we're back the same time, same place next Saturday morning for YOUR BOTTOM LINE.
Time now to send it back down to Atlanta for a check on the latest headlines and more "CNN SATURDAY MORNING."