19 May 2017
Category: Buyers
19 May 2017,
 0

Although we know how to build energy efficient, healthy, comfortable, durable homes, mostly we don’t …but not because it’s too expensive.  So why is that?

A lot of work has been done in the past 20 years to improve the way we build houses. Thanks to the EPA’s Energy Star program and the U.S. Department of Energy’s Building America program, many of the country’s building scientists have developed better roof and wall assemblies, moisture-control strategies, and insulation approaches that greatly improve the efficiency of a house.
We know how to build houses that go beyond the code requirements for airtightness and insulation; houses that have a good supply of fresh air; houses that are detailed to not get wet, but are designed to dry out if they do; houses with triple-pane windows; houses that are oriented to take advantage of sunshine and breezes; houses with energy requirements so low they can be supplied with photovoltaic panels on the roof.  The knowledge is there to build energy efficient houses.
So what are the reasons?  There are 3 groups involved in the issue–the construction industry, financial institutions and you the people.

Housing is a big industry and Change is Scary

There are 50,000 to 70,000 of them (the exact number is hard to know). Apart from the building code, there is no formal way of communicating with builders. How can they be told that there’s a better way to build a energy efficient house, let alone be compelled to do it?  Government programs, such as Energy Star for Homes, are good, but voluntary. In 2015, Energy Star’s share of the housing market was less than 10%, and it took 20 years to get that far. Only eight states have continuing education requirements for contractor licenses. There’s no single magazine, website, tradeshow, or conference that reaches all home builders.  Builders resist change for good reason. When you build a house, you take responsibility for what will likely be the single most expensive purchase of a person’s lifetime.

A better house is too risky

In an article on the DOE’s website, Eric Werling, program coordinator for Building America, explains the problem this way: “If done wrong, extra insulation and vapor barriers in the wrong place can cause all sorts of nasty moisture problems. This is why it’s so hard for builders to try innovative envelope solutions. This fear of doing it wrong.”  Rather than accept the challenge of getting the critical details right, it’s easier for many builders to dismiss high-performance building with the familiar assertion that we’re “building them too tight” and “houses need to breathe.” But this is just another way of saying that ventilation is important. And if ventilation is important, then we ought to control it carefully, rather than rely on random leaks in unknown areas.

A better house is too expensive

“No one will pay for it.” That’s what building-science educator Mark LaLiberte hears all the time. LaLiberte preaches the gospel of high performance to builders all over the country, and says, “The greatest misconception our industry faces is the perception that to build a higher-performance house, or to net zero, is off-the-charts expensive.” Some builders are selling high- performance and even net-zero homes for little additional cost.  The additional cost of the Energy Star homes ranged from $1,463 to $2,117. (The corresponding monthly energy savings ranged from $23 to $86.)  “Some of the production builders are going to fight tooth and nail to build the cheapest square footage they can,” I was told by C.R. Herro. “Those builders are going to tell you the buyer doesn’t care.”

First costs versus operating costs

Building an energy efficient house is more expensive but it is less expensive in its future utility usage.   What are the cost trade offs….that depends on where you live.  Denver builder Thrive Home Builders is a great example.This builder has three-bedroom, 2,000-sq.-ft. homes for sale in the Stapleton redevelopment area outside of Denver. They’re highly efficient, with HERS scores in the low 40s. Myers calls them his standard houses, but most experts would consider these to be better houses. At $480,000, they’re priced competitively for Denver. In the same development, Thrive offers similarly sized homes, arrayed with photovoltaic panels to achieve net-zero energy. For Myers, better means net zero, and those houses cost $35,000 more than his standard house.  But Myers explains to his customers that a better house is only more expensive when you look at the initial cost. Considering operating costs changes the equation dramatically. “That $35,000 costs our customers another $100 a month on their mortgage payment. Our HERS analysis shows that we’ll save them $300 a month in energy bills. So the conversation goes like this: If you give me $100 and I give you $300 back, how does that feel? That feels pretty good, right?

Banks and appraisers don’t value high performance

Appraisals

Perhaps the most confounding roadblock to building better houses is that most banks, lending institutions, and real-estate appraisers assign no value to extra insulation or photovoltaic panels on the roof. Zero. None.

Myers is lucky to work with some forward-thinking banks in Denver, but in most of the country, anyone considering an extra $35,000
for a net-zero home would have to come up ith that money as part of a down payment.  That’s because the appraised value of the house won’t reflect the additional $35,000.
Appraisers depend on a sales comparison approach to value a property. A house is assigned value based on the sales price of comparable
houses (comps) in the same area. Today, it’s pretty hard in most places to find a comp for a high-performance or net-zero house.
Even if an appraiser assigns a higher value to a house based on a low HERS score or PV panels on the roof, the appraisal may still be rejected or the loan amount reduced. “We have underwriters reviewing our appraisals,” Adomatis says, “and they have no clue what a high performance house is and really don’t want to be bothered.” As the number of high-performance and net-zero houses slowly increases, this
situation will improve. In the meantime, Adomatis offers two bits of advice. The first is to make sure that banks and appraisers know in advance when they’re dealing with a high-performance house. Provide documentation whenever possible, especially if there’s a HERS rating. The other tipis to insist on an appraiser who understands high-performance building.
 Qualifying for a loan amount

 But even with an accurate appraisal, mortgage loan calculations have to show that a buyer can afford the monthly cost of owning a home. Those calculations are based on four factors, known in the industry as PITI—principal, interest, taxes, and insurance. According to Steve Baden, executive director of RESNET, “There’s a factor that’s more expensive than insurance, more expensive than taxes, and that’s energy costs. And that’s just totally missed in the whole transac-

tion process, which means it’s not rational.”  When I asked C.R. Herro what he would change to make the way easier for better houses, he said the answer was “so damn easyit’s scary … the mortgage needs to recognize total operating costs and the differences in operating costs when they underwrite the loan. … There’s no benefit given [to] a home that consumes less energy. … That one thing changes the world.”
In 2013, Senators Isakson (R-Ga.) and Bennet (D-Colo.) introduced legislation to correct this problem. It’s called the Sensible Accounting to Value Energy (SAVE) Act. It still has not passed.

Buyers care more about location, size, and granite counters

The simplest answer to why we don’t build better houses comes from Herro: “Because consumers haven’t asked us to,” he says.
“Buyers are currently unsophisticated, and they make decisions that hurt them…. Efficient homes, with solar, that achieve

zero energy are actually the best, most cost-effective homes that any buyer can buy. And the only thing preventing us moving there is buyer awareness. If consumers demanded it, the whole industry would flip overnight.”  People quickly default to the familiar: location, square foot-

age, design.
Selling houses evolved in the last century when developers, builders, and realtors were first trying to convince buyers to move to the suburbs. “The most effective path toward this goal was to ratchet up the emotion-driven process so buyers would accept longer commutes and the growing pains of newly developed communities. The easy emotion to tap was to increase house size and feature new design trends.” Today he
says, “The housing industry is ill-prepared to sell quality and performance benefits that you cannot see.”

Summing up

Three things determine what kinds of houses get built. The first two are regulations (mostly building codes, but also banking) and the market (we build what sells). The third is the builder.
“American homeowners have come to accept poor performance as the norm,” Rashkin says. “But this will change once a critical mass of new home buyers experience the substantial advantages of high-performance homes and realize they come at lower own-ership costs.”
Will thing change?   We may be near a tipping point. I’m not sure you can tell about such things until they actually tip.
If you want to read the original article this is based on go HERE
But we do kn0w what needs to change.

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