Energy-efficient home building gains momentum

July 16, 2011 

With new construction at all-time lows and so many unsold homes, creating a distinct, positive product in the mind of the consumer may be the only way some national builders will survive.

Energy-efficient construction is also a way to create a distinction between new and existing homes. When demand was high and new homes were pre-selling, the building industry balked at mandating energy-efficient features because of concerns they would cost too much. Now, once-optional energy-efficient upgrades are becoming standard features.

It sounds like something new and innovative, but it has really just taken a long time to change our national mindset. It began in the early 1980s with the goal of promoting home energy ratings and providing energy-related mortgage incentives.

By 1990, the Alaska Craftsman Home program built its first home on Diligence at the entrance to the Discovery Subdivision. Construction stopped at various points to educate contractors, lenders, appraisers, home inspectors, Realtors and the public about benefits of 5-Star-plus energy-efficient construction. Once completed, the home looked like any other in the subdivision.

With Alaska's cold climate, high winds and earthquake potential, forward-thinking individuals embraced changes in building construction energy efficiency and the effect it could have on our state.

Since 1995, new homes are built to a minimum of 4-Star-plus rating. Now, most builders automatically obtain the necessary documentation to promote their homes to potential buyers by building to the Building Energy Efficiency Standards required by the Alaska Housing Finance Corporation, even if the buyer doesn't take advantage of the many AHFC loan programs.

Since 2008, the AHFC Home Energy Rebate program has been a major incentive for homeowners to increase the energy efficiency of aging homes. Multiple groups have benefited from the surge in remodeling.

For each step of improved energy efficiency, homeowners can get back from $4,000 to $10,000 to help defray the cost of the upgrades. We completed our upgrades last year and noticed a definite difference in utility costs and overall comfort of our home during the colder months.

Fortunately, the momentum for energy awareness is continuing to grow. As a home's energy rating becomes more predominant in the public mind, a time may come when knowing your home's rating will be as common as knowing your car's mileage, or as easy to find as the Energy Star rating on appliances.

However, it may take the Sensible Accounting to Value Energy Act to boost energy awareness to new heights. Sponsored by an unusual partnership of major builders and environmentalists, this proposed legislation may help to quantify the value of energy efficiency features beyond just utility cost savings.

The SAVE Act would modify the guidelines for mortgage underwriting by allowing for a value-added adjustment based on a home's energy features. For example, a home with hardwood flooring or granite countertops has a higher anticipated resale value than a home without those features.

The addition of quantitative values during the appraisal process for a home's energy rating and energy features could help to offset the initial cost to add those features. Adding value at the initial construction will serve as an immediate reward to both builder and buyer. If not on a national level, maybe other states will follow AHFC's lead and give true credit for homes built to higher standards.

Energy efficiency could also help in the mortgage qualification process. Just as property taxes and insurance costs are taken into account to determine your mortgage qualifications, mortgage underwriters could use the anticipated reduction in monthly utility savings as an offset.

Perhaps we are finally at the tipping point where the driving force for energy efficiency in our homes and businesses will increase the consumer demand we hoped for in the 1980s -- it just took us awhile to get there.


Clair and Barbara Ramsey are local associate brokers specializing in residential real estate. Their column appears every month in the Daily News. Their email address is info@ramseyteam.com.

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