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Open House

Experts Share Money Saving Tips For Home and Car; Is Bubble Bursting Talk Just Hot Air?; Picking The Perfect Paint Color

Aired May 06, 2006 - 09:30   ET

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

MELISSA LONG, CNN ANCHOR: Good morning. Still waiting to hear more this morning about a fatal helicopter crash in Basra. Military officials, British military officials did confirm the casualties. No word on how many, however. Officials say the chopper crashed in a residential neighborhood. CNN is working to confirm reports by local officials that the chopper was hit by a missile. We will keep you posted on this developing story.
Just a few moments ago our cameras caught up with Porter Goss outside of his home in Washington. Very tight-lipped about the resignation, saying he had already said all he was going to at yesterday's press conference.

In Australia, rescue workers say they're within 10 feet of reaching those trapped gold miners. The mission is in its most delicate and dangerous phase. Rescuers first drilled through solid rock, and now they're chipping away with hand tools to avoid a cave- in. The miners have been trapped 11 days.

Good morning once again. I'm Melissa Long live from the CNN headquarters in Atlanta. OPEN HOUSE coming up. Gerri Willis has priceless tips for homeowners. We'll see you back here at the top of the hour.

GERRI WILLIS, HOST: It's only May 6, and gas prices are already at historic levels. You'll find our how to save money on at home so you'll have more money to fill up the tank.

Plus, how to pick up the perfect paint color for your home.

And bubble? What bubble? You'll see why real estate bubble bursting theories, well, they could be full of hot air.

Good morning, everyone, I'm Gerri Willis, and this is OPEN HOUSE.

You can't go anywhere these days without hearing about the rising cost of gas. In some places the high end tops $3.50 a gallon. But how you control the energy use in your home could give you extra cash for the pump.

Time now to save you some money. Michael Gordon is the founder and president of Consumer Power Line.

Michael, good to see you.

MICHAEL GORDON, FOUNDER/PRESIDENT, CONSUMER POWER LINE: You, too, Gerri. Thank you.

WILLIS: Let's start with the short-term strategies. I know you talk about occupancy sensors? What are those?

GORDON: When you are in a room, the light goes on. When you then leave the room after a certain amount of time, the light goes off. It's an energy efficiency initiative which is quite cost effective.

WILLIS: And it sounds like back to the '70s.

Let's talk about a little bit about dehumidifiers. I know you think they're very important for cutting your costs. How do they work?

GORDON: Well, a lot of what makes you feel comfortable in a space is the humidity, not the heat. And so you'll find that your air conditioner works a lot more efficiently if you dehumidify.

WILLIS: Well, that makes a lot of sense, because humidity rising does make you uncomfortable. You can also just cut back on the amount of AC you use, right?

GORDON: And you can -- the traditional measures, which are turn the temperature just slightly up, but there are other measures like, for instance isolating the AC, closing a room, having a room or two that's comfortable.

WILLIS: We do that with that with our heat. Zone heating uses that principle.

GORDON: Yes, and you can almost create your own zone, particularly if you have window AC.

WILLIS: OK. Let's talk about the medium term solutions. I know people out there are looking for all kinds of ways to save money. There are tax credits available to people who want to save.

GORDON: Yes, and they're new in the Energy Policy Act and it's basically, as of January 1, '06. Now currently, a homeowner is eligible for up to $500 of tax credits, credit.

WILLIS: Very different from a deduction. Right.

GORDON: And kind of back of the envelope. If you can buy it and install it, go out to the hardware store, buy it and install it, installation costs are not eligible, but the costs of the hard stuff is.

WILLIS: Life of the goods itself.

GORDON: Yes.

WILLIS: The insulation itself is available for the tax credit.

GORDON: Yes. But if it is something much more complex, like a 95 percent efficient boiler unit, then you can actually include installation costs in the tax credit, as well.

WILLIS: I want to talk about solar power. This is the big Kahuna, really. But you know, can you really save money when you're spending thousands of dollars to install solar panels?

GORDON: We're getting to the point where the paybacks on solar are, in some states, approaching four years, five years. And then what you've got is you've got -- ultimately, if it is -- if it's got water heating components to it, you can get $4,000 of tax credits connected with it. Two for the solar, two for the water. So you've got instantaneous hot water heaters, as well.

WILLIS: That's important too.

GORDON: Yes.

WILLIS: You should mention that. About how much do those cost, though, if I'm buying one?

GORDON: I've seen the incremental price can be $400 or $500 more. So it's not cheap. It depends on your -- the way -- how many people you've got in your home.

WILLIS: Now, the federal government isn't the only source of money in the form of tax credits. If you're installing solar panels or some of these other cost -- energy savings devices, you can get other money from other sources. Like what?

GORDON: There are state dollars available in many states, so that New York, New Jersey, California, Connecticut, Rhode Island, pretty much across the board there are, quote unquote, systems benefit charges. But the solar also, the additional benefit of solar is that it improves the value of your home, because your home is less subject to volatility in fossil fuel prices. So it's got a double whammy with it.

WILLIS: Thank you for coming in today and sharing with us.

GORDON: Pleasure. Thank you, Gerri.

WILLIS: Having an energy-efficient home is one way to save money, but how fuel efficient is your car? It makes a big difference for your bottom line. Peter Viles brings us up to speed on some innovative ways to get more mileage for your dollar.

(BEGIN VIDEOTAPE)

PETER VILES, CNN CORRESPONDENT (voice-over): Three dollar gas makes people do some strange things, like pouring vegetable oil into the gas tank of a classic Mercedes.

BRIAN FRIEDMAN, LOVECRAFT BIO-FUELS: It's 100 percent vegetable oil, Wesson, Mazola. You put it straight in the tank.

VILES: Lovecraft Bio-fuel sells old diesel sedans that have been converted to run on vegetable oil, which sells for about $2.25 a gallon.

FRIEDMAN: The money stays in the U.S. economy, and it's a cleaner-burning car. So there's just winners all of the way around.

VILES: This woman like the retro look of the cars, but...

CLEO BAUDENBACHER, CAR SHOPPER: I am still visualizing myself putting gallons of vegetable oil in the tank.

VILES: The drawback is you need a diesel engine, which rules out 96 percent of the cars sold in America. Ethanol blends, like E-85 -- that's 85 percent ethanol -- can be cheaper than gas in some places, but E-85 is not widely available.

You see electric vehicles on the road, but no major car maker is marketing them to consumers, who complain about having to charge them so often. And politicians talk a lot about hydrogen and fuel cells.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: What you're witnessing here is the beginning of a major change in the driving habits of the American people.

VILES: But the fact is you cannot buy a fuel cell vehicle today, and no one knows for sure when or if Detroit will produce them. That leaves the old-fashioned option: shop for a mass producer car that gets better gas mileage. A good rule of thumb, fewer cylinders means more miles per gallon.

JOE CARACCIOLO, COLONIAL HONDA: The four-cylinder car is a very, very popular right now.

VILES: Hybrids, which run on gas and electricity, offer the best mileage. This Honda Civic hybrid gets an estimated 51 miles per gallon on the highway and 49 in the city. It's roughly $4,000 more than the conventional Civic, and there's often a waiting list, but you do get a federal tax credit of up to $2,000 if you by one.

(on camera) One more thing to consider if you're shopping for a new car, and you're very concerned about gas mileage, and that is that you cannot rely on the accuracy of those EPA gas mileage estimates that are on that sticker in the window of a new car. In almost every case your actual mileage when you drive the car is not going to be as good as those EPA numbers.

Peter Viles for CNN, Glendale, California.

(END VIDEOTAPE)

WILLIS: Coming up on OPEN HOUSE, bubble? What bubble? Why worrying about a real estate bubble bursting could be a waste of time.

And everything you need to know about picking the perfect paint color. I'll get my hands dirty right here on OPEN HOUSE, but first your tip of the day.

(BEGIN VIDEOTAPE) WILLIS (voice-over): You can save on your home energy bills with a home energy audit. Contact your local utility company for a free or low-cost audit. Or you can hire an independent energy auditor, for a more comprehensive check-up. Look for one in the yellow pages or online.

The audit should cover everything from insulation to heating and cooling systems to appliances. Once it's done you'll know exactly what your home is losing dollars and what you need to do to save.

Learn more at the Energy's Department's Web site, EERE.Energy.gov/Consumer and click on energy audits.

And that's your tip of the day.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

WILLIS: New home sales surged in March, the highest rise in 13 years. Home sales were up slightly, as well. So what's with all this bubble bursting talk?

Dean Baker is with the Center for Economic and Policy Research. Frank Nothaft is with Freddie Mac.

Frank, let's start with you. You're saying we shouldn't be worried?

FRANK NOTHAFT, VP, FREDDIE MAC: I wouldn't be worried.

Now, we have seen mortgage rates move higher over the last six weeks, and that will have a dampening effect on the housing market. We do expect home sales and housing construction and house price appreciation to be weaker this year than it was in 2005.

But to put it in perspective, 2005 was a record year for single- family home sales and single-family construction.

WILLIS: Right. So Frank, you've been saying not even a local bubble, right?

NOTHAFT: Not a local bubble, but those markets across the country where the unemployment rate is high and we haven't seen much job growth, or where there's an elevated level of investor activity, those are the markets to be cautious about.

WILLIS: Right. All right. Well, let's turn to Dean for just a second.

Dean, you're a little more circumspect. In fact, you sold your house in the Washington area so that you wouldn't be hit with the value of your house actually going down. What do you think's going on with the market? Is the bubble bursting?

DEAN BAKER, CENTER FOR ECONOMIC AND POLICY RESEARCH: Well, I think we've hit the peak and it's starting to trail off. I mean, there's a lot of data. Existing home sales, new home sales, some of the price data suggests that prices have already hit their peak in many areas and are probably headed downward.

You're also seeing in many areas you have builders offering large discounts, $50,000, $100,000 in some areas. This didn't happen a year ago. The inventories of unsold homes is building. There's a record, nationwide vacancy rate in owner-occupied housing.

So there's a lot of factors you can point to that indicate the market has already passed its peak and likely headed downward.

WILLIS: Right.

BAKER: And I'd just like to point out, you know, when you look at job growth, that's good to see. But the stock market plummeted back in 2000 at a time when we were creating over 200,000 jobs a month. So there's not that close a link there.

WILLIS: Well, and a good point to make is just this week we had job market numbers that were not good. In fact, economists were not happy with the number of jobs created in March.

Frank, I know that's an important thing that you look at when you're analyzing the housing market. Hey, you know, the economy, at least in terms of people who are out there trying to get jobs, not looking that great. Does that affect what you say about the housing market?

NOTHAFT: Well, it absolutely does. Those markets where the local economy is weak, unemployment rate is high, also translates into a weak housing market. And in those markets we see stagnant house prices or perhaps house prices coming town.

But if you look at it nationwide, we've actually had very strong job growth. The unemployment rate nationwide is 4.7 percent. The first quarter of this year, the economy created 600,000 new jobs. So while the March reading -- while the April data on employment growth was weaker than people had been expecting, it's still been a pretty strong economy the first four months of this year.

WILLIS: Well, Dave, I've got to ask you. Isn't it possible that the market just slows down, that sales decline and that prices don't fall off a cliff?

BAKER: Well, of course, anything in the world is possible. But again, the point I focused on through this whole discussion over the years has been that we've seen an unprecedented run-up in home prices over the last eight years. If we look back over the post-war period, home prices grew at just the rate of inflation. Suddenly, in the last eight years, they increased by 50 percent above the rate of inflation. This is unprecedented.

Just as in the stock market bubble in the late '90s. That's why in '98, '99 and 2000, I can tell people we never saw this before.

WILLIS: Right.

BAKER: And some people tell me, whole new world. But it's not very often you get a whole new world, either in stocks or real estate.

WILLIS: All right. Frank, let me -- Frank, I want you to weigh in on this idea of prices just can't keep going up at this rate.

NOTHAFT: Well, they can't keep going up in the rate we saw this past year. Last year, the -- on average across the country, the typical home was up 13 percent in value. That's phenomenal.

And I think the thing to keep in mind is that we had a 45-year low in mortgage rates in 2003, and mortgage rates have hardly gone up since then. So in that context, I'm not surprised that we've had this record level of home sales, new construction and very strong house price growth.

And I want to just point out that over the last 40 years, house prices have, on average grown more rapidly than general price inflation. Over the last 40-year period, and that's not even factoring in the last couple of years, a phenomenal house price growth. House prices have outpaced general price inflation by 1 1/2 percentage points per year.

WILLIS: I want to thank both of my guests here. Frank, Dean, thanks for being with us today.

BAKER: Thanks for bringing me on.

NOTHAFT: Thank you, Gerri.

WILLIS: Still ahead, we'll bring you a Weekend Project right here to our studio. Everything you need to know about picking the perfect paint when we come right back.

(COMMERCIAL BREAK)

WILLIS: Picking the right color for your decorating project can be intimidating and confusing. So we decided to show you firsthand what should go into your selection process.

Lou Manfredini from Ace Hardware is here to help us make sense of the paint palette.

LOU MANFREDINI, AUTHOR, "ROOM SMARTS": How are you?

WILLIS: The paint palette? You've got to be kidding me.

MANFREDINI: Yes.

WILLIS: Lou, you've got to help me out here.

MANFREDINI: OK.

WILLIS: You know I just got a house not too long ago, right?

MANFREDINI: Right, right.

WILLIS: And we've been painting the rooms, and I have done a terrible job in picking colors. I look at these. I spend hours, days. I wake up in the middle of the night and go through these things.

MANFREDINI: Right.

WILLIS: This is not what it looks like on your wall.

MANFREDINI: No, and that's the problem. I see people all the time. You go to the paint store, the hardware store. There will be the big huge color thing, and you will see predominantly women, because men, you know, when it comes to -- I hate to say this for the guys, but, hey, it's white, that's fine. It's fine with me.

WILLIS: Yes.

MANFREDINI: The thing is...

WILLIS: That's because they can't tell colors anyway.

MANFREDINI: Exactly. Fifty percent of the paint still sold today is white.

WILLIS: Now, one of the wild things you're suggesting is that you can match your paint color to your mood?

MANFREDINI: Oh, yes, sure.

WILLIS: How crazy is that?

MANFREDINI: Well, what's happened is they developed this. Ace in particular, they've got these samples now that says what kind of person are you? They actually have an I.Q. test to find out what colors you like. And so these things here, you'll see...

WILLIS: I need an I.Q. test.

MANFREDINI: ... seniority (ph), romantic, playful. And then what they do, if I can open that up while you guys are looking at that, is they take the groupings of colors to help you.

Now, keep in mind, this is just a guide.

WILLIS: OK.

MANFREDINI: Gerri, you've got to decide what you want. But you might say that blue looks nice or that green looks nice and if I put that lighter blue in that combination together it can look really sharp.

WILLIS: And so let's consider moods here. How about tranquil? Tranquil? What kind of colors that would be?

MANFREDINI: Softer colors, some rich -- that avocado that I talk about, it's guacamole, some rich greens. That's very common now that you see that they're going in there and then blends of that.

Don't be afraid of the color. I think a lot of times people make the mistake when they think darker colors that it gets the wall closer.

WILLIS: Smaller.

MANFREDINI: OK. I mean, take a look at the set behind us. Look at the beautiful gold color. Terra cotta...

WILLIS: This isn't a set. This is my -- this is my kitchen.

MANFREDINI: Your house here, your kitchen, right. I'm sorry. We're in your kitchen. And so those colors warm things up and they look really nice. So you to -- I always tell people when it comes to decorating if they have little experience and don't have a budget to hire a decorator.

WILLIS: Like most of us out there.

MANFREDINI: Right. Think of nature.

WILLIS: Well, that's great advice. I've got to ask you, too, about sporty. That makes me laugh. What is a sporty color?

MANFREDINI: Bright, vibrant colors that are energetic, something that really kind of gets you in the mood and kind of inspires you.

WILLIS: All right.

MANFREDINI: So it's great for like a game room or rec room with the kids.

WILLIS: OK. These are fabulous, and I have used these with moderate success to figure out what you think of the color. Right?

MANFREDINI: Yes. This is the big trend in the industry, these paint pods where what happens is it used to be your alternative as to go...

WILLIS: I'm just going.

MANFREDINI: Yes. Go right ahead. You used to go and buy a quart. They'd mix it and it would be $8 to $12, maybe $15. All of a sudden you have 10 quarts of paint to try and choose a color.

Now for $3.99 or $2.99, you can take a test drive with the color.

WILLIS: This is exactly what I did.

MANFREDINI: OK.

WILLIS: You know, the nice thing is that you can look at it at different times of day.

MANFREDINI: Right. WILLIS: In the morning what the light looks like on your blue color, in the afternoon.

MANFREDINI: Perfect example. Take a look inside this pan. Now if you get a camera up there, see that nice kind of blue shade against the black backdrop here? See how nice that looks. Now go ahead and put it on the drywall.

WILLIS: OK.

MANFREDINI: And you'll see there's a difference. Now when you're painting, as you're doing, you're doing the right thing. Put enough paint on the wall. People are always afraid.

WILLIS: It will glop.

MANFREDINI: Then you work it in. Get a little more paint, a little more paint. And you even it all out, just as you're doing. That's just a nice trim roller there.

OK, look at the mess you're making. My goodness. That's what the pan is for.

Now, what you want to do, nice and easy, and you see those ropes. I don't know if you can see closely with the camera.

WILLIS: Yes, I can. How do you get rid of those?

MANFREDINI: You keep going. And you work it in nice and lightly. A nice touch.

WILLIS: OK. We're working with some drywall here.

MANFREDINI: Right.

WILLIS: People have different kinds of surfaces they're trying to cover.

MANFREDINI: Absolutely.

WILLIS: What's the difference in how I work that paint in?

MANFREDINI: Well, with older homes you're going to have a lot of plaster.

WILLIS: That's what I have.

MANFREDINI: A lot of times you need to do the sanding. The issue is this. A lot of paint has a sheen to it. And so the problem is you have to sand that down a little bit to expose the paint film underneath there so the new paint will stick. You want to make any repairs, any spot priming that's possible.

And then when you get that color. Now here's a sample. Step back.

WILLIS: And take a look.

MANFREDINI: Live with it. See how it looks at night. See how it looks in the day. See how it looks against the trim color. You know, if it's against a white like this, how does it look?

WILLIS: Got to ask you quickly, we're running out of time here. If -- do I have to prime everything I paint?

MANFREDINI: Priming is the step that everybody forgets about. Remember this whenever you're painting: 90 percent of a good paint job is the preparation.

WILLIS: Priming is everything?

MANFREDINI: So you do that, buy good paint, priming is everything. You'll save a lot of money and you'll add value to your home.

WILLIS: All right, Lou. Thanks so much for being with us today.

MANFREDINI: She got paint on me.

WILLIS: I'm sorry.

MANFREDINI: That's OK.

WILLIS: Don't go anywhere. We're not done with paint yet. Up next, we're going to have some important tips for when it comes to actually painting your home.

(COMMERCIAL BREAK)

WILLIS: So now that you know how to go about selecting your paint color, here are some tips on how to get the job done.

OK. First off, you've got to get enough paint and not too much. As a general rule, a single gallon of paint covers about 400 square feet. And, of course, you want to protect your floors. Use a drop cloth or plastic sheeting but not newspaper or sheets. You don't want the paint to soak through.

And while it may seem tedious, make sure you use painter's tape to keep paint off the trim and the windows. You may also want to remove hinges, latches and knobs.

And if it's time to call it an evening, you don't have to scrub those brushes and rollers if you're using the same paint colors the next day. Just wrap them in plastic and put them in the freezer so they don't get hard.

As always, we want to hear from you. Send us your comments or questions to OpenHouse@CNN.com. And you'll find more on today's guests and topics on our web site, CNNMoney.com/OpenHouse.

As always, we thank you for spending part of your Saturday with us. OPEN HOUSE will be back next week. Don't go anywhere, your top stories are next on CNN SATURDAY. Have a great weekend.

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