This document really started life in 2009 as a brochure prepared on behalf of the Green House Effects Committee of the San Luis Obispo Association of REALTORS® for an Earth Day event (BTW, I was at the first Earth Day while at Arizona State University). I updated the content while serving on the 2012 Green House Effects Committee and did further editing for this post. As the years pass little traction is apparent, but AB 32 compliance signals a change is coming, even if the real estate industry doesn't like change. It's a long post, but with a little patience, your home search may take a new path. There is a version for tenants too. I'll post that soon.
It’s Your Home!
The Green Reality of 2012
Logically, the real estate market should function to allow Sellers to receive full value for all the favorable attributes of their property, including energy efficiency. Buyers who place a high value on energy efficiency, and are willing to compensate Sellers for that characteristic, want to identify properties best meeting their green goals to better make informed decisions concerning which house is really the RIGHT HOUSE. When it comes to energy efficiency, the green reality of 2012 includes a U.S. real estate market that falls short of serving the best interests of most Sellers, all Buyers and, ultimately, the Earth.
How Does Green Feel?
Could purchase decisions, listing procedures and the overall real estate sales process better represent the interests of most Buyers and Sellers where energy efficiency is concerned? What additional information is needed, how can it be delivered and where might it fit in the decision process?
Despite today’s technology, the search for a new house still focuses on traditional attributes including living area, bedrooms/baths, age, style, yard size, views and other obvious features. Those basics are covered in detail by MLS data and, in recent years, on many public websites. The intuitive “feel” arising from assorted cues beyond the conventional data also plays a major part in the final decision. What about energy efficiency? Many MLS systems include "green features" in the optional fields, but translating features into the costs of home ownership and future appreciation remains problematical.
Thoughtful Buyers must seek to break free of the existing data and current industry practices to make wise decisions that incorporate energy efficiency into valuation and their final decision on the RIGHT HOUSE. The challenge centers on the fact that energy efficiency is not apparent from looking at the house, reading a home inspection, reviewing an appraisal or even knowing what green features the Seller added.
Smart Green Start
Jumping in the car (high MPG, we hope) to drive around town looking at addresses pulled from a real estate website may not be the ideal first step in finding your next house. Preliminary research can save time and produce an outcome offering sustained satisfaction on multiple levels.
How Green Is Your Location, Location, Location?
Before even looking at specific houses there are geographic considerations that strongly influence energy use and overall housing expense. Check distance from work, shopping, recreation, family, friends, school and entertainment when comparing neighborhoods. The monthly cost of living in a house also carries a cost in time, money and carbon emissions expended getting to and from it. Cheaper housing in a location that adds transportation mileage may not mean cheaper overall monthly costs. Use web based mapping to measure distances, asses traffic, then check out bike paths and pubic transit routes. Take a drive during commuting time to get a real world view of what that trip is like. Doing this up front helps avoid compromising your green commitment and budget for an appealing house that has significant energy costs built into it’s location.
Size Does Matter, Lifestyle Too!
All else being equal, the larger the home, the larger the energy costs and the greater the embodied energy contained in the home. So how much space do you really need? Surveys show Buyers of all ages are downsizing (now called RIGHT SIZING). Mini mansions in which a couple occupies a 3500+ sqft house, but uses only 800 sqft of it are falling from favor. Parcel size is also a factor. Larger yards typically use more water, plus they require more maintenance and chemicals. Does your gardener drive a hybrid and how far does she travel to do you yard? Energy efficient landscaping is a solution, but the cost of installation depends on parcel size. Lifestyle matters too. Having a modestly sized, energy efficient house doesn’t always mean low energy use. Electrical appliances, hot tubs, lighting, etc. can cause an energy efficient house to morph into a hungry energy hog.
Here Comes the Sun (and Wind)!
The orientation of the house to the annual solar path has a great deal of influence on energy use and how the house “feels”. Windows, landscaping and interior design should compliment that solar path over the course of the day and year. Solar path analysis is often associated with new construction using passive solar design or in the evaluation of solar panel feasibility, but ALL houses posses passive solar characteristics. Buyers often overlook solar path in choosing the best house among top candidates, even though it’s a factor often impractical to correct after the purchase. Beyond energy, there are aesthetics to consider. If your dreams include morning coffee as dawn unfolds or savoring sunny afternoon BBQs, your ideal house should play its role with ample style. There are now nifty web applications that allow you to see the solar path over any house any day of the year (see links below).
Wind patterns affect ventilation, landscaping, indoor air quality and HVAC use. With new rooftop turbine technology wind can also produce reasonable ROI, if wind velocities are sufficient. Coastal regions have extremely variable wind patterns. Visit specific neighborhoods at different times of the day, ask bicyclists, runners, hang gliders and neighbors for their personal observations. A mile one way or another can make a big difference.
Water and Electricity Do Mix
Aside from occasional help from gravity, water is moved where it’s needed by electricity. So is waste water. When you limit water use, you’re saving water, but you’re also saving electricity--twice if the water reaches the community waste water system. Low flow toilets, xeriscape and good sense save you money, shrink carbon emissions and conserve precious water.
Older Can Be Wiser
Older homes can be prime candidates for an energy efficient purchase. They may lack the technology of more recent construction, but they are often located near downtown employment centers, tend to be smaller in size and are often on smaller town lots. They can also have a better solar path than those sleek newer houses on artfully curving streets. How can Buyers pay for the upgrades and retrofits needed to increase energy efficiency and enhance value in older homes?
Green Financing
Programs are available that allow the borrower to finance renovation costs, including energy retrofits and upgrades into the purchase mortgage. FHA 203K and Energy Efficient Mortgages can even be combined. It’s possible that looking beyond cosmetic deficiencies can reveal the wisest available choice for your next house. When complete, the green renovation quickly creates equity. These mortgages also require before and after energy audits providing documentation of success that can add value when you sell. Rebate programs and tax incentives are also available. Thanks to government response to AB32, SB375 and the 2020 carbon emission deadline, houses with high energy efficiency should experience appreciation that is far above average. You could be left chasing that green wave or riding it.
How Green?
Energy ratings, such as BPI or HERS II, evaluate the systems of the house that determine energy efficiency and help to assess health and safety performance. In addition to recommendations for correcting problems, these reports identify which upgrades are most cost effective in improving energy efficiency (the oft described “low hanging fruit”). This provides a road map for future owners and, thanks to our mild climate, often includes surprises. Unfortunately, energy rating reports are not widely available for houses now on the market. The cost is relatively modest (typically $300-$500) and partial rebates are available, but only apply after a particular house is under contract. The most efficient approach would be for home inspections and energy ratings to be performed at the same time by the same professionals. Occasionally homes with green certifications from LEEDS or Energy Star simplify choosing an energy efficient home. It’s wise to make sure those houses are still performing as they did when certified.
Conclusion
Energy efficiency is an attribute of all houses. Buyers can easily compare size, style, location, views and many other attributes, but the present real estate marketing environment makes it challenging to compare the energy efficiency of similar houses. The factors determining energy are complex, making a standardized rating index essential. Energy ratings exist (HERS II, BPI), but are seldom used. Comparison during the decision process is extremely rare. When ratings are preformed, it’s after the purchase decision has already been made. How would you like it if energy labels on automobiles, appliances and other consumer goods were gone with the only ratings performed at the Buyer’s expense, after the purchase?
Does the present treatment of energy efficiency by organized real estate maximize Buyer and Seller satisfaction, while decreasing carbon emissions and cutting energy costs? Does it assign value to houses based on the present and future true total costs of home ownership? The answer is obvious. The real estate industry and its trade associations have made their position clear. Change is only likely to come from the consumer side. Begin by asking questions about energy efficiency when you start considering a purchase. It's important that your bests interests are considered from the outset of the process. It is not unreasonable to express concern about the true costs of home ownership for each of the properties you consider. Similarly, it's not unreasonable for Sellers to expect the RIGHT BUYER to be aware of the full array of benefits available with their home.
Reducing energy use saves money and helps future generations that are dependent on what we do today for the quality of their lives tomorrow. Rather than depend on big programs instituted by governments, corporations and organizations, each individual should make reasonable changes to their behavior that reduce energy use. Those changes can happen quickly with no additional technology. If billions of people make small changes to lower their personal energy use, CO2 emissions will drop, improving the future of life on Earth. Most small changes involve little or no inconvenience or change in lifestyle. Just try some (links below)!
The Next Step Toward Green?
Here are a few Green Links to educate, inspire and provide opportunities to wildly exceed your expectations in the challenging quest for a your ideal next home and a more energy efficient life. Most of these sites allow you to “follow” on Twitter, “like” on Facebook to provide a stream of information to help green your future. There is room for many more links, so if YOU have a favorite, please post it in a comment and I'll add it to the list.
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