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An energy mortgage for all homes

More than property taxes or interest on a loan, energy costs are where most homeowners will spend their money each year. The average American family spends more than $2,000 on home energy each year.

Go green and save some green. Energy mortgages are coming!

Surprised? Think of all the electrical appliances; the heating, cooling, and ventilation (HVAC) system; the gizmos we leave plugged into power strips day and night. It all adds up, and that’s before we even think about air leakage around windows and doors, attics and crawl spaces. But what if we had an idea of home energy costs? How would that change our home buying and selling decisions?

An energy mortgage for all homes

Energy efficient mortgages have been around since the early 1990s. The US government’s FHA Insured Energy Efficient Mortgage Program launched in 1992 and was widely available by 1995. This program, and others like it, use an energy efficient home’s projected annual utility costs to allow homeowners to pay more for a mortgage. That means homeowners can afford a better home, or they can complete energy efficient home improvement projects that are included in the mortgage payment.

The 2013 study “Home Energy Efficiency and Mortgage Risks”, by the University of North Carolina’s Center for Community Capital and the Institute for Market Transformation found that:

The risk of mortgage default is one-third lower for energy-efficient, ENERGY STAR-rated homes… American households spend around $230 billion each year on energy, not including transportation, and the residential sector accounts for 20 percent of the total energy consumed in the United States. Energy efficiency in the residential sector has a potential to save $41 billion annually, according to research by McKinsey & Company.

Energy efficient homes don’t just save homeowners money, they build stronger neighborhoods and communities.

Energy efficient mortgages, or energy mortgages, have been getting a lot of attention lately, and not just from homeowners. The Sensible Accounting to Value Energy Act, or SAVE Act, is co-sponsored by Senators Michael Bennet and Johnny Isakson. The proposed bill would require federal mortgage underwriters to include annual home energy costs when calculating the value and affordability of any home, not only energy efficient homes.

The SAVE Act will help all home buyers understand the total cost of home ownership, the PITI+E payment: Principal, Interest, Taxes, Insurance, and Energy. Home sellers will benefit from knowing their home’s energy consumption and cost as well. They can make energy efficient home improvements, replace inefficient appliances and HVAC equipment, or offer buyers a credit for that work. It’s an energy mortgage for all homes.

Green creates green

Smart mortgages, mortgages that account for a home’s annual energy cost, are popular with homeowners. When buyers understand a home’s annual energy cost they can make a better, more informed decision about where to buy. Home sellers can use annual energy consumption and cost information to make their homes more attractive to buyers. Energy efficient homes sell faster, and for higher prices, than unimproved houses.

No matter where you live, a greener home means more green in your wallet.

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Home energy efficiency is more affordable than ever

Home energy efficiency is getting a lot of attention lately, and for good reason. Thanks to tax credits and government investment, advances in technology, and lower costs, home energy efficiency projects are more affordable, for more people, than ever before. And the benefits aren’t only for single family homeowners, either.

Do you know your home’s energy efficiency grade?

Connecticut just announced $11 million for retrofit and upgrade projects on multi-family buildings. This money will help building owners hire local contractors to conduct energy assessments and perform air sealing, insulation, and HVAC work. When the work is complete, tenants will have more comfortable, healthier, and less expensive apartments. California approved an additional $10 million for low-cost, long-term financing of energy efficiency property improvements. Helping renters and homeowners save money on their home energy costs is always popular. These programs, and others like them, often have more demand than they are able to satisfy.

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Home energy efficiency program success and challenges

Home energy efficiency program success and challenges

“City’s energy efficiency program falls short of goals.” A recent article in the Greensboro, NC News & Record by Amanda Lehmert observed the performance of Greensboro’s “Better Buildings” home energy efficiency program. Lehmert found that 1,280 homes owned by low income homeowners received benefits of $4.7 million: a energy audit and $2,000 to $3,000 worth of improvements to their home. That sounds like a pretty good success, but what happens when you look behind the numbers?

Greensboro’s Better Buildings home energy efficiency retrofit and upgrade work focused on the high impact, high return on investment areas of the home: air sealing, insulation, HVAC improvements. One homeowner saw an immediate savings of $50 on his heating fuel bill. He told all of his program-eligible family members. They applied to the program, and received the home energy audit and retrofit work. These families are saving money this heating season, and will for years to come, because of the program. What works?

  • Qualifying homeowners through an initial screening process
  • Hiring local home performance contractors to conduct whole house energy audits
  • Hiring those contractors to make effective repairs and upgrades to the building envelope
  • Using the homeowner’s heating fuel bill as quality assurance verification

These steps are replicable in home energy efficiency programs everywhere, and the homeowner’s immediate savings and word of mouth advertising prove that this approach works.

Residential energy efficiency programs create the market

Greensboro officials estimated that the average homeowner would see a 17 percent reduction in home energy consumption and a corresponding savings in home heating fuel costs. That’s a good deal for any homeowner. Demand was high. At the end of the program 400 low-income families were on a waiting list for 70 remaining contracts. That tells us that a market exists for “bundling” home energy audits and retrofit work.

But that market may be unsustainable. City officials reported that higher-income homeowners who were eligible for rebates and low-interest loans did not participate at the expected rate. 950 fewer households applied for the rebates. 600 homeowners qualified for program incentives but did not hire contractors to do the work. These homeowners were to subsidize part of the program. Their low participation put the program’s overall goals at risk.

Lehmert concludes that:

The lack of interest from homeowners who could pay their own way gets to the crux of Better Buildings’ shortfall in private investment and job creation.

Greensboro-area home performance contractors, on the other hand, suggested that a lack of awareness about the program among higher-income homeowners also played a role.

How a home energy efficiency program succeeds

Greensboro’s Better Buildings program did succeed in connecting home performance contractors and low-income homeowners. These homeowners received a energy audit, typically a $300-$800 expense, and up to $3,000 in home energy efficiency retrofit and upgrade work. These homeowners will receive long term heating energy cost savings. Additionally, they will find their homes are more comfortable and their families are healthier, thanks to air sealing and HVAC system improvements. All of these are quantifiable measures of the Greensboro Better Buildings program’s success.

Future programs should do a better job of marketing available incentives to higher-income homeowners. These homeowners may not know how to start a home energy efficiency project, but they have the means to undertake larger projects, and create local jobs.

Programs can use performance based home energy assessment tools to quickly qualify existing homes and prioritize projects based on the estimated return on investment. This also helps home performance contractors schedule their teams and equipment to work more efficiently.

Programs should devote resources to business development for home performance contractors. Public-private partnerships help create sustainable markets after program funds are exhausted.

It’s well known that once homeowners pick the low-hanging fruit of home energy efficiency they are likely to take additional steps, including major retrofit and upgrade work. Home performance contractors should look at program participants as future customers.

Home energy efficiency program success and challenges are a major part of our larger energy efficiency debate. We know there is strong demand for home energy efficiency, and that there are steps everyone can take to make their homes cheaper, healthier, and more comfortable. Greensboro’s program is a good case study for future programs and for industry professionals looking to grow their businesses.

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3 home heating tips to get ready for heating season

Heating season is coming up fast in many parts of the United States. Is your home ready?

The US Energy Information Administration released their Short-Term Energy and Winter Fuels Outlook, and home heating costs are expected to rise for homeowners using natural gas, propane, and electricity. Many experts predict a winter as cold or colder than last year. Here are 3 tips to get your home ready for heating season. You can take them one at a time, or make a weekend project out of them. We’ve also included Next Steps to help you save even more money during this heating season.

Here are 3 quick and easy tips to help make your home less expensive this heating season. We’ve also included 3 Next Steps for when you’re ready for a Do It Yourself project:

  • Turn your thermostat down. Why pay to heat your home if you’re not in it? When you leave the house in the morning, turn your thermostat down 10 degrees and you could save up to 10 percent on your heating bill this winter.
  • Next step: Consider a programmable thermostat. A basic model can adjust your home’s temperature automatically, so you can set it and forget it! An advanced model programs itself and can be controlled from your smartphone.
  • Seal drafty window frames. Air leaks through window frames let cold air in, making your home drafty and uncomfortable. They also make your heating system work harder, leading to higher operating costs and increased stress on system components. The quick and easy solution? Tape the inside of the window frame with clear, heavy acrylic tape to stop the worst leaks.
  • Next step: Cover leaky windows with a window insulation kit. Window insulation kits include puncture resistant film and heavy duty tape. Cover your windows, tape the plastic in place, and use a hair dryer to shrink and seal the plastic to fit your frames.
  • Seal gaps around pipes, chimneys, cupboards, and closets. Air also leaks through these tiny gaps. It’s especially important to keep your home airtight between the insulated and uninsulated spaces, where cold air comes in and warm air – and your hard-earned dollars – escape. Use caulk or weather stripping to seal air leaks.
  • Next step: Contact a local air sealing contractor or HVAC contractor to evaluate your home and make recommendations for sealing gaps in your home’s envelope and cleaning your ducts and air filters.

Getting your home ready for heating season doesn’t have to be expensive or time consuming. A few simple changes in your daily routine, or an afternoon of do it yourself projects is all you need to make your home more comfortable and less expansive this winter.

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Is the U.S. “hitting snooze on energy efficiency?”

Energy scientist Amory Lovins argues that the 1973 oil embargo was a watershed moment for energy efficiency in the United States. In the past 40 years, however, cheap energy has made U.S. energy policy a bit soporific. A comprehensive energy efficiency policy could have a significant effect:

$5 trillion saved, 158% economic expansion, and be led by business for profit.

The question is: are we ready to take action?

Lovins, of the Rocky Mountain Institute identifies transportation fuel efficiency, building energy efficiency, and expanded domestic oil and gas production as three key steps. The argument is compelling. Advanced materials in cars and trucks can make them lighter and more fuel efficiency without sacrificing safety. Using our own oil and gas instead of imports would drop the price, freeing money for research and development of alternative energy sources. And taking basic steps to make buildings more energy efficient “offers $1.4 trillion net savings with a juicy 33 percent internal rate of return.” If that sounds good to you, we have even better news.

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3 tips for home HVAC efficiency

Heating season is projected to be longer for many regions of the United States. A longer heating season means higher heating costs, so it’s important to make sure that your HVAC system is cleaned, fine tuned, and ready to deliver the highest level of comfort as affordably as possible.

If you read our “3 tips for a more comfortable, less expensive home heating season” you’re all ready to go with this latest article in our “3 Tips” series:

Here are 3 quick and easy tips to help make your home more comfortable and less expensive this heating season. We’ve also included 3 Next Steps for when you’re ready for a Do It Yourself project:

  • Check your filters. Your air filters on your heating system or furnace work hard to keep the air your family breathes healthy. Check your furnace and air filters now, and check them again each month. Are they dirty or clogged? Time to replace them!
  • Next step: Are HVAC filters new to you? Check out this great article from our fried Bob Vila on How To Choose the Right Furnace Filter.
  • Open the shades on your southern facing windows and close your second floor air vents to 50% of the first floor. Take advantage of the sun to keep your southern facing rooms warm, and use heat from your first floor to help control second floor temperatures.
  • Next step: Reverse your ceiling fans. Many people forget that their ceiling fans have a switch that controls the direction of the blades. In the winter you can use your ceiling fans to keep your rooms warm: spin the blades clockwise and your fan will force warm air down and throughout the room.
  • Get money for a new, Energy Star rated furnace. If you haven’t already taken advantage of your Federal Tax Credit for Consumer Energy Efficiency you may be eligible for tax credits on everything from heat pumps to water boilers to furnaces.
  • Next step: Check out the Energy Star website [Federal Tax Credits for Consumer Energy Efficiency] to find eligible HVAC system components. Then find your local HVAC contractor at the Air Conditioning Contractors of America to help you with the installation and tax credit process.

    • Getting your HVAC system ready for heating season doesn’t have to be expensive or time consuming. A few simple changes in your daily routine, or an afternoon of do it yourself projects is all you need to make your system ready to go this winter.

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Why do energy efficient homes sell at premiums?

Home energy performance rating creates value for consumers by helping them understand the energy costs of home ownership. Homeowners can use their home energy performance rating to immediately cut costs and increase comfort and health with do it yourself weatherization projects. Their baseline of home energy performance can be the start of a long-term plan for professional maintenance and retrofit work.

Homeowners can track their dollar and energy savings at each step of the plan by checking their performance rating. This record of work performed and savings achieved creates additional value for the homeowner by allowing them to recoup the cost of energy efficiency investment at the time of sale. Homes with energy efficiency improvements sell faster and at a price premium compared to unimproved homes.