Energy Efficiency: Real Estate’s Next Granite Counter Top?

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A lot of good economic reasons exist to pursue energy efficiency. Still the average person tends not to. This is no surprise. If I cannot see, touch, buy, sell, trade or save efficiency, if it’s invisible, how can I pay it any real attention?

Often on the vanguard, Boston-based Conservation Services Group is working on an idea to make home efficiency more tangible. It is a surprisingly simple idea. One that is likely to leave a lot of people saying, ‘Of course. Why didn’t I think of that?’

You might say CSG is making energy efficiency the next granite kitchen counter top of the real estate business.

Through a $348,000 grant from the Doris Duke Charitable Foundation, CSG is working on a metric to describe a home’s energy efficiency value. When a homeowner lists a house for sale, the metric would be included in the multiple listing service (MLS), right along with the home’s price, number of bedrooms, square-footage and location.

Suddenly, efficiency is tangible, something that can be quantified and can add or detract to home value.

It’s not yet clear what that metric will look like. It might be a numerical score or a certification like the Energy Star label. Figuring that out is part of CSG’s task, as it puts in place a program for New York over the next two years.

“You can imagine the pitfalls in establishing what this score would be,” said David Weitz, director of CSG’s Applied Building Science Division. “How do you present it in a way that is accessible to the greatest number of people.  Unfortunately, there is no right answer.”

CSG plans to hold focus groups with homeowners to get a sense of what might work. The idea is to come up with a measurement that translates into a selling point, much like the granite counter top or hard wood floors. The hope is that sellers will install efficiency to increase their grade. Presumably, the higher grade will make the home more marketable.

Weitz also must convince MLS administrators to accept the metric and include it in the listings. Fortunately, CSG is not alone in this pursuit. Similar programs are in the works in other parts of the country. In addition, the US Department of Energy is working on creating a national an ‘e-scale’ label for homes. Weitz hopes the DOE effort and various local labeling initiatives will come together to create consistency in labeling nationwide.

In winning the award, the 26-year-old CSG edged out more than 350 proposals, submitted last April, from organizations in 44 states that offered scalable approaches for spurring energy efficiency retrofits in existing buildings. Grants totaling $2.7 million went to nine winners, which were evaluated by a panel of experts in real estate, finance, construction, government policy and energy efficiency technologies.

“In the past, people would buy a house without any real understanding of its ongoing energy costs.   Establishing an energy efficiency category, within MLS listings, will help during the selection process by providing homebuyers with another essential piece of information,” Weitz said.

If it’s successful, who knows, maybe someday the real estate mantra will no longer be ‘location, location, location,’ but instead, ‘efficiency, efficiency, efficiency.’

Elisa Wood is a long-time energy writer whose work appears in many of the industry’s top magazines and newsletters. She is publisher of the Energy Efficiency Markets podcast and newsletter.

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About Author

Elisa Wood is an editor at EnergyEfficiencyMarkets.com. She has been writing about energy for more than two decades for top industry publications. Her work has been picked up by CNN, the New York Times, Reuters, the Wall Street Journal Online and the Washington Post.

4 Comments

  1. While it is true that energy efficiency is invisible and a bear to quantify, both energy waste and the cost of energy efficiency improvements can be calculated. Thus the MLS listings can show: (1) the improvements that can be made that cost less than the wasted energy that will be saved; and (2) the net cost (cost – energy savings)of upgrading the house to current standards. The message being sent is not negative, that this is an inefficient house, but positive, that all or most of the efficiency improvements can be paid for from the savings on the energy bill. And the message is being delivered to the buyer who is worried about higher energy and possible replacement costs, but has no clue as to the hidden energy savings, not to the seller who is trying to get rid of the house.

    In an Energy Efficiency Markets Newsletter, October 6,2010, an energy efficiency audit developed by the private sector was discussed which finds the “Pay from the Savings Group” in each house. It then calculates the net energy savings based on a detailed examination of the house that takes account of the interrelationships between the improvements in the group. This audit has proven to be very persuasive, since home-buyers opt for making improvements if they cost less than the money they save. Dollar savings are more tangible and more clearly understood than a score or a certificate.

  2. Whatever CSG comes up with after $384,000 in focus groups, it won’t be as effective as simply disclosing past energy bills.

    EPA learned this with appliances: Energy Star ratings are nice, but plasterig the face of an appliance with its yearly operating cost compared to other models is the best way to help consumers differentiate and choose wisely.

    Policies are emerging to require such disclosure for commercial buildings. http://tinyurl.com/epa-bmk

    Denis Du Bois

    Cleantech marketer and host of “Energy Priorities” on public radio.

  3. Energy Star for Homes already has a measure that works – it is called a HERS index. HERS stands for Home Energy Rating System. Homes are rated on a scale where 0 equals a home that uses zero energy on a net annual basis and 100 equals a home that was built to IECC 2006 building code standards. A home with a HERS index of 100 will use 100% of the energy of a home built to IECC 2006 standards. The lower your HERS index the better.

    Older homes often have HERS ratings of 150 or 170. Homes built to the newly approved IECC 2012 building code will have HERS ratings of about 70.

    One of the advantages of getting a HERS rating on an existing home is that the process will show you exactly where your energy leaks are coming from.

  4. We are working with the Portland OR MLS and Seattle WA MLS to reflect the Energy Performance Score (EPS) for audited homes. The EPS works well for both new and existing homes, is more accurate than the HERS index, and can be assessed expediently.

    With the release of US DOE’s Home Energy Score today, it will be interesting to see where this conversation goes.

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