Myth: We are in the middle of one of the worst housing slumps in the last 30 years. Adding to the cost of new homes will only make them less affordable for more potential buyers and deepen the slump.
Fact
America is also in the middle of unprecedented energy cost price spikes that are overwhelming low-income homeowners. Unfortunately for them, these price spikes are difficult or impossible to anticipate at time of sale and seldom factored into their monthly budgets.
America’s homeowners pay the price for energy inefficient homes, particularly with today’s rising energy prices for many years longer. For homeowners, energy efficiency always pays – in times of boom or bust.
Global Green reports that the 2nd leading cause of foreclosures for low income homeowners is unanticipated utility bills. It’s far better for low-income homebuyers to stabilize future utility bills by investing in energy efficiency improvements and spreading their costs over the life of their mortgage.
While builders may only be concerned about a home’s construction cost, the homeowner needs to be concerned about the rest of the story – what will their home cost to own and operate. Since homebuilders may not take these factors into consideration, the code must do so. Energy efficient homes not only pay dividends in terms of positive cash flow from utility savings that more than offset the cost of energy efficiency investments, but they can also open the door to incentives from “green mortgages” and federal and state tax credits and deductions.
Each $1,000 energy efficiency improvement incorporated into a 30-year fixed rate mortgage at 7% interest adds only $6.85/month to a mortgage before considering interest deductions and possible additional tax credits and incentives. As a result, the total monthly additional mortgage cost for an energy efficient home can be expected to be far less than energy cost differences. According to data from the National Renewable Energy Laboratories, adding $4,000 in energy efficient features to make a $150,000 home 30% more efficient would cost the homeowner $8,600 ($23/month) over the life of the loan (assuming a 30 year 6% fixed mortgage). And the energy efficiency investment will lower monthly utility bills by $60.25, generating positive cash flow for the homeowner.
Energy efficient new homes are also getting the attention of mortgage companies. The federal government’s “Energy Efficient Mortgage Home Owner Guide” provides green mortgage contact information and explains the positive cash flow home energy efficiency generates (see http://www.pueblo.gsa.gov/cic_text/housing/energy_mort/energy-mortgage.htm).
The current housing slump will not last forever. By the time the 2009 IECC is being considered for adoption by the states in 2010 and 2011, the housing market is forecasted to recover. It is in the best interest of the nation to put “The 30% Solution” in place now so that upgraded energy efficiency requirements are in place for the housing recovery.
The residential construction market segment doing best in the housing slump is “green” homebuilding. As the 3/17/2008 Newsweek reports: “Despite the free fall in housing prices nationwide, green homes are still red hot. . . . America's housing markets remain in free fall, as the foreclosure crisis continues and more homeowners discover their mortgage debt exceeds the value of their house. . . . But amid this gloom, there's buzz about consumers' shifting demand toward ‘green homes’—and how builders with this expertise remain busy despite the bust.” Clearly, “green” homebuilders are weathering the housing slump quite well, even considering their additional investments in energy efficiency.
Last fall, The Wall Street Journal reported on the advent and growth of “green mortgages”: “Lenders are the latest group to jump on the environmental-marketing bandwagon by pitching mortgage products that offer homebuyers bigger loans or discounts if they are making energy-efficient improvements – or if their new home meets certain efficiency standards.” Some examples:
“Green and energy efficient” are attributes of a new home that can make it stand out from others and can boost a builder’s sales in the slow housing market. If anything, the National Association of Homebuilders should follow the lead of its more progressive members who are profitably embracing these opportunities to improve energy efficiency.
America’s homeowners pay the price for energy inefficient homes, particularly with today’s rising energy prices for many years longer. For homeowners, energy efficiency always pays – in times of boom or bust.
Global Green reports that the 2nd leading cause of foreclosures for low income homeowners is unanticipated utility bills. It’s far better for low-income homebuyers to stabilize future utility bills by investing in energy efficiency improvements and spreading their costs over the life of their mortgage.
While builders may only be concerned about a home’s construction cost, the homeowner needs to be concerned about the rest of the story – what will their home cost to own and operate. Since homebuilders may not take these factors into consideration, the code must do so. Energy efficient homes not only pay dividends in terms of positive cash flow from utility savings that more than offset the cost of energy efficiency investments, but they can also open the door to incentives from “green mortgages” and federal and state tax credits and deductions.
Each $1,000 energy efficiency improvement incorporated into a 30-year fixed rate mortgage at 7% interest adds only $6.85/month to a mortgage before considering interest deductions and possible additional tax credits and incentives. As a result, the total monthly additional mortgage cost for an energy efficient home can be expected to be far less than energy cost differences. According to data from the National Renewable Energy Laboratories, adding $4,000 in energy efficient features to make a $150,000 home 30% more efficient would cost the homeowner $8,600 ($23/month) over the life of the loan (assuming a 30 year 6% fixed mortgage). And the energy efficiency investment will lower monthly utility bills by $60.25, generating positive cash flow for the homeowner.
Energy efficient new homes are also getting the attention of mortgage companies. The federal government’s “Energy Efficient Mortgage Home Owner Guide” provides green mortgage contact information and explains the positive cash flow home energy efficiency generates (see http://www.pueblo.gsa.gov/cic_text/housing/energy_mort/energy-mortgage.htm).
The current housing slump will not last forever. By the time the 2009 IECC is being considered for adoption by the states in 2010 and 2011, the housing market is forecasted to recover. It is in the best interest of the nation to put “The 30% Solution” in place now so that upgraded energy efficiency requirements are in place for the housing recovery.
The residential construction market segment doing best in the housing slump is “green” homebuilding. As the 3/17/2008 Newsweek reports: “Despite the free fall in housing prices nationwide, green homes are still red hot. . . . America's housing markets remain in free fall, as the foreclosure crisis continues and more homeowners discover their mortgage debt exceeds the value of their house. . . . But amid this gloom, there's buzz about consumers' shifting demand toward ‘green homes’—and how builders with this expertise remain busy despite the bust.” Clearly, “green” homebuilders are weathering the housing slump quite well, even considering their additional investments in energy efficiency.
Last fall, The Wall Street Journal reported on the advent and growth of “green mortgages”: “Lenders are the latest group to jump on the environmental-marketing bandwagon by pitching mortgage products that offer homebuyers bigger loans or discounts if they are making energy-efficient improvements – or if their new home meets certain efficiency standards.” Some examples:
“Green and energy efficient” are attributes of a new home that can make it stand out from others and can boost a builder’s sales in the slow housing market. If anything, the National Association of Homebuilders should follow the lead of its more progressive members who are profitably embracing these opportunities to improve energy efficiency.
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