Despite attempts by the Federal Reserve, and billions of dollars in stimulus money that have been brought to the market, the cornerstone of American growth – consumer spending on homes and new construction – lingers in a diminished state. In uncertain economic times, the value proposition of home ownership is changing as a new generation of home owners reach the buying age and as traditional families change the way they think about their real estate investments. Perhaps it’s time for the housing market to reflect those dynamics.
For many decades the value of energy efficiency in residential properties has been relegated to an afterthought. Obscured by low energy prices and ever-expanding notions of universal home ownership, residential energy consumption now makes up roughly 20% of the U.S.’s energy consumption, according to the EIA. But the market for energy-efficient homes has struggled along with the housing market as a whole, but because lenders don’t acknowledge the value of energy-efficient designs or retrofits.
Senators Michael Bennet (D-CO) and Johnny Isakson (R-GA) have sponsored legislation that aims to change the lending industry, taking particular aim at attaching value to energy efficiency measures. The SAVE Act would change the way lenders assess a home’s value and a buyer’s eligibility for a loan. The potential impacts are significant and wide ranging. Not only would mortgage practices change – the full costs of homeownership over time will be reviewed under the act’s provisions, presumably reducing lending outside a buyer’s range of affordability – but the bill would also grant consumers access to more detailed information about how the home operates. This adjustment to appraisal practices would also reflect the value of energy-efficiency improvements made to existing homes, boosting the value of investments made by homeowners.
If the housing market can find a way to assign a monetary value to energy efficiency – an area where utilities are increasingly investing as well – consumers might be more inclined to make purchasing decisions that favor energy efficient products and services. Changing one aspect of the housing market dynamics, as the SAVE Act would if passed, could unlock untapped value in the housing sector. More energy efficient homes would be good for both the economy and for the planet.
Tags: Building Systems, Policy & Regulation, Residential Solar, Smart Energy Home, Smart Energy Practice
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