We hear a lot these days about “going green” but what does this have to do with real estate? And why should I care? In our next few blog segments we’ll be demystifying some of the concepts and why they should be important to agents and buyers. But let’s start with the basics…
Broadly speaking, green real estate falls into three categories:
- Efficient Use of Energy and Water
- Environmental Quality
- Eco-friendly Building Materials and Construction
When buyers consider cost of ownership, they’re typically thinking about principal, interest, taxes, insurance, and perhaps HOA fees. Rarely does the cost of utilities enter the equation. That can come as a nasty surprise to buyers in states like Arizona, where the AC may be running six months out of the year.
Even a modest 1500’ home built in the 60’s or 70’s – with minimal insulation, single pane windows, and inefficient HVAC and appliances – could easily see utility bills of $400 or more in the hottest months. That’s nearly as much as the entire monthly payment on a $75,000 house!
Homes built in the last 10 years tend to be more energy efficient. They have better insulation, a tighter envelope to keep conditioned air in, more efficient HVAC and appliances, and often double-pane low-E windows that minimize solar and heat gain.
Some even come with a Home Energy Rating System (HERS) score, which is like miles per gallon for your house. A home built to 2006 standards gets a rating of 100, and the lower the number, the less energy a home uses in comparison, resulting in lower utility bills. Typical homes in the US score 130, meaning they use 30% more energy than the current standard.
This can be an important consideration for buyers comparing existing homes versus new builds. When you factor in the cost of utilities, the savings you realize from an energy efficient new home may very well offset its higher initial cost.
This doesn’t mean buyers of older homes are out of luck. Many utility companies (including APS and SRP) sponsor $99 energy assessments through local contractors. They’ll run tests on the house such as thermographic imaging to find hotspots in walls and ceilings where there’s inadequate insulation, a blower door test to measures air leakage through doors, windows, and ceiling lights, and a check of your ductwork for leaks. Remember your dad yelling “We’re not air conditioning the neighborhood!” when you left the door open? These tests will tell you if you actually are…
The energy assessment report will then recommended fixes along with costs and expected payback periods. Even the simplest improvements like adding insulation, weather-stripping doors and windows, and sealing ducts can have a dramatic impact on your utility bill. This is a great service to add to your home inspection when looking at older homes!
Buyers even have the ability to build some of these improvements into their initial loan. Energy Efficient Mortgages can be used to add up to 5% of the purchase price in improvements such as insulation, new windows, Energy Star appliances, and perhaps even a new HVAC or solar panels, as long as the energy savings can be quantified. This is a great solution for buyers that want to save money on utilities, but can’t afford a newly-built home.
As we go into more depth in future segments, we’ll talk about ways to minimize the use of energy and water, ways to create energy through wind and solar, and some of the rebates and financing options available to reduce the cost.
As realtors and buyers, we not only want our homes to be energy efficient, we want them to be healthy and comfortable. The second aspect of green real estate addresses environmental quality. Most often our role in this will be understanding how to identify and mitigate potentially unhealthy issues – always through the help of trained specialists – such as:
- Air Quality
- Water Quality (especially with wells)
- Lead Based Paint
We’ll talk more about risks and where to find resources in upcoming segments.
Eco-Friendly Building Materials and Construction
This is third aspect of green real estate, and addresses the use of building materials that are sustainable, easily replenished, and are not toxic to the environment. It also addresses building techniques that are efficient, use local resources whenever possible, and minimize waste. Some examples include:
- Bamboo flooring and cabinets
- Low/No VOC paints
- Quartz, concrete, and recycled glass countertops
- Decking made from recycled materials
- Carpet made from corn
- Formaldehyde-free siding made from wood chips
That wraps up our introduction to green real estate. Stay tuned for more in upcoming segments, or get in touch with your local NAR Green or EcoBroker-certified Realtor to get started today!