|
Home Energy Ratings: A Primer
Market Barriers to Residential Energy Efficiency
The tools for cost-effective, energy efficient housing exist now.
Recent progress toward a comprehensive understanding of building science
has been dramatic. Cost-effective, energy efficient, building techniques
and technologies are available. Yet, America’s housing stock is far less
energy efficient than is economically justified. Consumer surveys show
owning an energy efficient home is important to the majority of home
buyers. However, this demand is, for the most part, latent. Why is this?
Currently, specific market barriers hinder the adoption of proven and
cost-effective practices and materials. These barriers include:
- NO CREDIBLE INFORMATION SOURCE ON A HOME’S
ENERGY EFFICIENCY
- Most of the
energy efficient features of a home are hidden once the sheet rock is in
place. Consumers are very hesitant to pay for things they cannot see.
Home buyers are also wary of accepting the builder’s claims regarding
the homes they are trying to sell. Unlike cars or major appliances,
there is no national system to test the efficiency of a new home and
label it in understandable terms for prospective home buyers.
LACK OF INCENTIVES -
Home
builders find it difficult to recoup the added costs of energy efficient
features. For the most part, these upgrades are not recognized or credited
in either the appraisal or mortgage loan. The home builders stressing
energy efficiency are at a disadvantage when competing with builders
offering similar-looking, less efficient homes at lower prices. Generally,
when upgrading a home, a builder invests in features a prospective buyer
can easily see, such as landscaping or expensive cabinets.
FIRST COST BIAS - In
the U.S., both builders and buyers tend to minimize the
"up-front" costs of a home, even at the expense of long-term
economic savings. This tendency is reinforced by current mortgage loan
practices. The lower costs of owning an efficient home, figured when
energy expenses are added to the mortgage, insurance and tax payments,
are rarely considered. A number of initiatives, sponsored by government
agencies and utilities, have attempted to address this first-cost bias
through subsidies in the form of grants, rebates and interest rate
reductions. However, the sheer size of the nation’s housing market and
economic realities have limited the effectiveness of these efforts and
led to their reduction.
LACK OF A COMMON LANGUAGE -
The
housing industry’s job is to build, sell, appraise and finance homes.
Many of the terms associated with residential efficiency are technical and
difficult for a buyer or lender to understand. Evaluating the home as a
whole, in terms of its relative energy efficiency, is not usually done.
Across the nation, there is a growing realization that the states, in
partnership with housing agencies and the housing industry, can be an
effective force for eliminating these market barriers. State energy
offices have traditionally taken the lead in addressing these issues
through residential energy codes. In the current political climate, such
efforts, seen as "unfunded mandates," are resisted. There is,
however, a growing movement to use market-driven approaches to circumvent
or eliminate the barriers.
 Table of Contents
 |
|
|
|
