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Part 2: What do today's homebuyers really know about high performance homes?

6/24/2016 | by Matt Power

Will Open Book Energy Scores Change the Game?

A major shift in the way homes are listed may boost home buyer interest in home performance. I say could, because it's too soon to tell. As of February 2016, about nine states have added Home Energy Ratings to real estate MLS listings. This means that homebuyers can now make an "apples-to-apples" comparison of a home's energy performance, as it relates to future energy use.

In addition, several states have now added a HERS Index Score Target (details) to their residential energy codes. For builders, this is actually good news, because it provides a clear benchmark that can be discussed with clients. It's also a way to compare a new home's energy performance with that of an existing home owned by a neighbor, an important strategy, as we'll see below.

The new MLS HERS info is likely to affect home resale (and initial value for new homes). According to Resnet, "the Appraisal Journal documented that the market value of a home increases $20 for every $1 decrease in the annual energy costs. According to a recent analysis by the Pacific Northwest National Laboratory, building a home to exceed the Model Energy Code would result in an annual savings of $170 to $425. Applying these findings to the analysis published in the Appraisal Journal would equate to an increased home market value of between $4,250 to $10,625."

If better energy efficiency raises home values, poor energy scores are likely to have the opposite effect. Will these new pressures drive buyer interest in high-performance housing? Possibly, but just how much is still anybody's guess.

An Industry-Wide Challenge

Selling complex ideas such as building systems, and high-performance housing is tough. The psychology of energy conservation, and the factors that influence it, are often confusing and unpredictable. In other words, don't blame yourself if your sustainable message isn't getting through. It's a human nature thing. Here's what ScienceDirect says on the topic:

"Unnecessary complexity and sensory overload should be avoided by framing messages in a clear, concise and comprehensible format. In terms of relaying information to consumers, keeping things short and simple is essential for effective communication" (Source)

One successful approach to increasing consumer engagement in sustainability is the so called "normative" effect. That's a nice way to say comparing them with their neighbors. Few factors have proven more effective at getting people to change their energy- or water-wasting behavior than letting them know their neighbor is more frugal, more clever.

Put all the research and trends together, and you can see that the most direct path to high-performance homebuyers proceeds directly through their trusted homebuilder and/or architect, who has to tell a good story, a story that invokes the client's neighbors and peers, with a good solid push from new regulations and mandatory energy ratings.

Related Tags: Performance | Sustainability | Comfort/Livability | Trends | Energy/HERS Rating