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Energy Efficiency in the New Home Building Industry

By Star Report 5 min read

By Nicholas Czar, Sales Leader - New Home Star

Energy efficiency is now one of the top rated items that buyers are looking for in their next new home. According to the most recent survey of ‘What Home Buyers Want,’ conducted by the National Association of Homebuilders, two of the top six energy-related features made it on the ‘most wanted’ list of participants. The reasoning for this dire need amongst respondents is attributed to the want for ENERGY STAR® rated appliances and an overall ENERGY STAR® rating for the entirety of a home. This stark need provides the new homebuilding industry with an advantage over resale homes and also benefits higher quality builders over lower quality builders.

Due to the exponential interest in energy efficient amenities, it is essential for the new homebuilding industry to understand how to effectively leverage its availability into more sales.

This can be done by focusing on these three areas:

1. ) Reduced Operational Costs

The first step is to monetize the energy savings. The Residential Energy Services Network (RESNET) has done a great job of providing a scale to help understand the overall efficiency of a home with their Home Energy Rating System (HERS) score. This allows effective sales counselors to not only project current utility bills, but also to extrapolate those numbers over the life of the home and to project the difference in total cost of ownership.

The next opportunity is to calculate the maintenance cost reduction associated with a new home. As the age of the home goes up, so do the maintenance costs. This is due to the life cycle of parts in older homes and the absence of a warranty. There are a number of resources available online to calculate the cost of ownership of an older home vs. a newer home. When doing this, it is important to understand the costs associated with labor, time and materials for the needed maintenance.

The Appraisal Institute has released the “Commercial & Residential Green & Energy Efficient Addenda” (from 820.04) to make sure builders get credit in appraisals for the additional efficiency they are providing. This can be quantified to new homebuyers by helping them to understand that they may get more value for the home on the resale market because of the energy efficient features they will receive.

Furthermore, there are consumer protection agencies that are pushing for legislation to include energy costs in debt to income (DTI) ratios for lenders. This makes logical sense, considering lenders currently include the taxes and insurance in their DTI calculations. The average cost of energy is larger than both of these individual costs. If the change is made, not only will consumers be able to afford more home when buying an energy efficient home, but also they will be able to sell to more buyers and for a higher price on the resale market.

2.) Increased Comfort

An energy efficient home will lead to many comforts for years to come. Having a home with such amenities provides increased temperature consistency throughout the home. This increases the ‘livability’ by allowing clients to utilize their entire home. If an inefficient 3,000 square foot two-level home has a 10-15 degree temperature variance between the first and second level, the owners will understandably gravitate to one level of the home. This effectively limits them to using only half their home. An efficiently built home will allow the owners to experience the entire square footage of the home, regardless of the season.

If an energy efficient sealed building envelope is installed with a material-like spray foam insulation, the home will provide a higher level of security and privacy for the buyer. Not only will it eliminate the opportunity for bugs/pests/critters to enter the attic space above them, but it will also increase the privacy of the home by decreasing sound intrusion by over 4,000 times.

When building with an energy efficient, sealed building envelope, it is essential to have a fresh air management system. This feature will increase the indoor air quality and result in less time dusting the home. This allows buyers to live more comfortably knowing they are living in a cleaner environment.

3.) Building a Healthier Home

An energy efficient home is a healthier home. The use of a fresh air management system will provide increased indoor air quality. With 85% of the families in America having at least one family member that suffers from allergies or asthma, this allows the customer to breathe cleaner air and live healthier in their new home.

Energy efficient homes also provide higher rated Minimum Efficiency Rating Valued (MERV) air filters along with HVAC systems that are engineered to pull air through thicker filters. While most of the homes on the resale market offer a MERV 2 or 3 rated air filter, new homes that utilize energy efficiency provide MERV 8-10 air filters. At high ratings such as these, the air filters are blocking 70% or more of common particles in the home such as pollen, dust mites, standing dust, and carpet fiber along with mold spores, hair spray, fabric protector, and cement dust. The end result is increased air quality and an overall healthier home for the buyers.

Effectively leveraging the energy efficiency of a new home is essential to the success of the homebuilding industry. While quality and energy efficient offerings will vary from builder to builder, there is an enormous opportunity to differentiate the product in these terms. The market has identified energy efficiency as a necessary component, and it is vital to effectively communicate the advantage.

Originally published Apr 27, 2017 under Explore the latest topics, updated March 11, 2024

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