Have you thought about a Green Home?

Energy-efficient homes: Cheaper to own, more expenive to buy. Why?
By Douglas Fischer
Posted Mon Jan 25, 2010 7:13am PST
Related topics: Buildings, Heating-Cooling, House, Saving energy at home More from The Daily Green News blog .
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EAST LANSING, Mich. -- Krista and Micah Fuerst were looking near here to buy their first place together, and had narrowed it down to two houses: One built 25 years ago, the other brand new and built to strict energy efficiency standards. The couple's choice was easy: They picked the Energy Star home, which the U.S. had certified because it will use about one-fifth to one-third less energy than a comparable home.

But they're in the minority. Most homebuyers don't think about the ongoing costs of home ownership beyond the mortgage and taxes; using energy costs, too. And fewer still think about the pollution that energy use creates, but home energy use accounts for 16 percent of U.S. greenhouse gas emissions. The proportion of newly built Energy Star homes is growing, but still only represents 20 percent of new homes built in 2009, according to Sam Rashkin, national director of the Home Energy Star program.

Despite the slow increase in newly built efficient homes, some 99 percent of existing houses are "sick" -- damp, drafty, dusty, noisy and expensive to heat and cool. They "could be made at least 30 percent more energy-efficient with highly cost-effective, tried-and-true energy-efficiency improvements," according to Rashkin. A 30% reduction in energy use is a 30% reduction in home energy costs; newly built Energy Star homes have, since 1995, saved homeowners an estimated $1.2 billion.

The Energy Star program won't fix those old houses. Energy Star designations go to the cream of the housing stock; if just one in five new homes meets these standards, far fewer renovations do. So if energy efficient homes cost homeowners less and pollute less, why aren't they more commonplace? Experts say economics and regulations are the root of the problem: Mortgages are structured in ways that fail to recognize the benefits of energy efficiency, while a patchwork of inconsistent and ill-enforced energy codes provides conflicting signals to industry.

Meanwhile consumers remain largely unaware of efficiency's advantages, advocates say, thereby bypassing an easy target for considerable cuts in national carbon emissions -- and home energy bills.

In this sense the Fuersts are typical of many homebuyers. Both in their late twenties, the Fuersts were aware of Energy Star-rated appliances, but didn't know the label also applied to homes, said Krista Fuerst, a childcare director. Their home, which wouldn't stand out in any new subdivision, and they mostly just wanted a place big enough to raise a family. They traded slightly longer commutes for smaller energy bills and freedom from costly renovations.

"We're certainly conscious of the environment," she explained, "but we're not hyper-conscious. We're not extreme green."

Of course, the ultra-efficient heating and cooling systems, high-performance windows and other features that make the homes exceptionally comfortable also make them a bit pricier. The added cost for a new Energy Star home may only be about the price of a night at the movies on each month's mortgage payment, but it's enough to scare off many potential buyers.

"It's an incredibly smart choice," Rashkin said, since smaller utility bills more than offset the higher price. "But consumers are overwhelmed by first cost."

Energy-efficient mortgages
To get buyers over that hump, a handful of specialized mortgage options have for decades given buyers more cash up front, since they'll save on energy costs. But nobody's buying. Before the mortgage crisis, when loans were easier to come by and energy was relatively cheap, energy-efficient mortgages weren't very enticing, experts say, and lenders didn't bother with them. Now the specialized options are more valuable, but lenders have grown accustomed to ignoring them.

"It's really unfortunate," said Jennifer Amann, buildings program director for the American Council for an Energy-Efficient Economy. "Energy-efficient mortgages have been available now for 20 years or so, but they're a really underutilized tool."

While energy-efficient mortgages are a good idea, there's a more obvious solution, according to Cliff Majersik, executive director of the Institute for Market Transformation, which advocates for energy efficiency: Make all mortgages – not just specialized ones – account for energy use.

"The fact is that energy-efficient homes have much lower foreclosure and delinquency rates. So that's a market failure, that we're not giving homeowners credit for buying good, efficient homes," Majersik said. "The challenge is that there are processes that have been in place for a long time, and there's pretty clear evidence that they've let us down."

The House climate bill includes a handful of provisions that would reward buyers of efficient homes. For example, the Federal Housing Administration would be required to insure at least 50,000 energy-efficient mortgages over three years, and Fannie Mae and Freddie Mac would make the kind of wholesale changes to underwriting guidelines sought by Rashkin, Majersik and others. Another provision would enforce a national building code that would improve efficiency on new buildings by 30% immediately, and 70% by 2029. Currently, states can adopt any building codes they want, so requirements vary widely.

Homebuilders say they'll build more efficient homes when buyers ask for them, but demand won't grow until more people understand the benefits of efficiency. Many who have lived in energy efficient homes are convinced.

"The house is heated very evenly," Krista Fuerst explained. "There are no cold spots and no drafts." They set the thermostat at 67 degrees -- much lower than would have been comfortable in their rental -- and turn it down to 57 when they leave in the morning, but the temperature never drops that low, even after 12-hour days. So far their heating bills have been just over half what they paid last winter. "Now that we have lived in an energy-efficient house," she said, "it would be very difficult to go back."

Douglas Fischer is editor of Daily Climate, one of The Daily Green's trusted sources of information. This post is republished with permission.