Increasing Home Value Through Energy Upgrades

SWEI

Good stuff from Rachael Gold at the Rocky Mountain Institute
http://homeenergy.org/show/blog/id/819/nav/blog#sthash.Z4ApflC5.dpuf

It turns out that one of the most valuable remodeling options is one you can’t see. That’s the conclusion of the recent Cost vs. Value Report by Remodeling magazine, which compares the average cost for popular remodeling projects with the value those projects retain at resale value in 100 different U.S. markets. For the first time, Remodeling included an energy efficiency measure—fiberglass attic insulation—and the results were a great indicator of the value provided by energy upgrades.

Most projects covered in the report have a higher cost than value, with homeowners only recouping an average of 64 cents on the dollar for the 30 remodeling projects examined. The highest return project in the report this year—and the only one with a greater-than-100-percent cost vs. value ratio when averaged out nationally—was an attic insulation project. The researchers found a 166 percent return, based on an estimated average cost of $1,268 and an increase in real estate value just 12 months later of $1,482.

Broad Spectrum of Values

The return on investment from recouped value at the time of sale is only one way in which energy upgrades like attic insulation can create winning propositions for homeowners. Homeowners can also enjoy savings from decreased utility bills and other lower expenses, and get further value from the joy and pride they get from living in a high performance, healthy, and comfortable home.

Beyond evidence of improved asset values from the recent Cost vs. Value Report, new research is finding strong evidence of these other reasons why energy upgrades are a “win, win, win” on expense savings, joy, comfort, and health for consumers:

• Operational Costs: One of the best reasons to complete energy upgrades is the significant savings in energy expenses. A recent Remodeling Impact Survey by the National Association of Realtors (NAR) found energy efficiency was the third most common reason consumers gave for making changes to their home.

The amount of energy saved will vary based on the cost of energy supplied in a region, the climate, and local material and labor costs, so a remote or in-person audit is one of the best tools to determine the measures that will work best for a home. Efforts to create energy cost estimates that calculate projected operational costs in total cost of homeownership calculations are a critical tool to translate operational costs into asset value.

• Joy: The NAR survey also asked consumers about the happiness they get from seeing their completed project. They created a 1–10 “joy score,” where higher scores indicated greater joy from the project. Attic insulation received a joy score of 8.7, with sixty-one percent of homeowners reporting a “major sense of accomplishment when they think of the project.” Attic insulation, like many efficiency measures, is “invisible” for homeowners, so these results are promising, especially if clever engagement campaigns can leverage this satisfaction through social norms and other behavioral tools.
  
• Comfort: Well-designed energy upgrades, including HVAC and envelope projects, can significantly improve the comfort of homes, which we know matters to consumers.Thermal comfort is made up of a number of factors, including air and surface temperature, humidity, and clothing and activity level, and upgrades to enable better control of these factors can make homes and businesses more comfortable places to live and work.
  
• Health: The Physicians for Social Responsibility and American Council for an Energy-Efficient Economy have highlighted the positive impacts of energy efficiency on the respiratory, circulatory, and nervous systems. This value will likely be higher for populations more at risk for complications with those systems, and in areas with higher levels of pollution and lower-quality housing. Studies of comprehensive energy, health, and safety retrofit programs found that for children with asthma, hospital admissions fell by nearly 85 percent and emergency visits by 68 percent a year after the upgrade.

Robert O'Brien

Beat me to it! Sad but true

Robert O'Brien

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Robert O'Brien

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Docfletcher

Humm, I think a well insulated house would get perceived added value consideration. In some parts of the country more so than others. I don't think it would translate to more $$$ though. New construction type windows rather than replacement windows are one tangible energy improvement that you will see bring you increased house value, but only if you sell within 5 years or so.

I've been in this house 32 years and the 1st thing I did was install fiber glass insulation in the attic to R40. Cost $750.00 for the insulation. Recently I replaced the windows with of the new construction type. The bathroom I'm remodeling from scratch has a large skylight around which I used polyisocyanurate insulation to R22ish. So I thought I had a tight house. Now I think not so much since my calculated heat loss is 39500 or so on this 1520 sq ft house.

Gordy

What people never understand is insulation is the gift that keeps on giving. All the bling factors. Wear out, come, and go while the insulation still is there doing what is its intended purpose.

I have been down this road when I built two homes to resell. The extra cost of envelope upgrades is never recouped by the seller. The bottom line is the going rates of cost per SF. Which is dictated by the bling factor.

Sadly the TV shows, and other media that reach the majority of the home buyer market never focus on energy efficiency.

Gordy

This could be some what resolved in part if realtors would advertise those efficiencies as a focus to the comp.

How many realtors comping a house ask about envelope specifics, and mechanical equipment? Let alone advertise it in a listing.

Robert O'Brien

http://www.howtogermany.com/pages/energycertificate.html

Robert O'Brien

Gordy said:

This could be some what resolved in part if realtors would advertise those efficiencies as a focus to the comp.

How many realtors comping a house ask about envelope specifics, and mechanical equipment? Let alone advertise it in a listing.

Unfortunately, no one cares! Square footage and Subzero's baby!

Rich_49

https://www.nahb.org/~/media/Sites/NAHB/SupportingFiles/8/Wha/WhatHomeBuyersWant_20130430023250.ashx?la=en

Gordy

The problem becomes when the buyer finds the majority of wants in a home, and energy efficiency is not in that package guess what wins.

When asked in a survey if energy efficiency is a want on their list of course they will say yes. However that becomes less important when the total package is lacking that item. Notice energy star appliances, and Windows make the list. That's a start........

The question becomes what are you willing to give up if energy efficiency is made a required number one priority.