The highest-priority green feature for most clients is energy efficiency, Spence said, followed by indoor air quality, water efficiency, and materials. She provided advice on marketing each of these green features.

ENERGY EFFICIENCY. For most customers, the most pivotal benefit of a green, efficient home is reduced cost of ownership. “People want to be insulated from future expenses,” Spence said. “No one knows what energy will cost. We provide information on what might happen [to energy costs] in the future.”

(read full article at EchoHomeMagazine.com)

U.S. Senators Michael Bennet (D-Colo.) and Johnny Isakson (R-Ga.) introduced a bipartisan bill that would enable better mortgage underwriting, reflect the value of energy performance in the appraisal, encourage investments in energy efficient homebuilding and create more than 80,000 construction jobs.

Under the Sensible Accounting to Value Energy (SAVE) Act, federal mortgage loan agencies would consider a homeowner’s expected energy costs when determining the homeowner’s ability to make monthly mortgage payments.

There are two main elements of the proposed legislation. The first is the recognition of the energy as an housing cost. This would change the current PITI (Principal, Interest, Taxes and Insurance) into PIETI (Principal, Interest, Taxes, Insurance plus Energy). This means that with every dollar the home saves in energy it would increase the buyer’s ability to afford the efficient home by the same amount. This has been a structural reform advocated by RESNET since 2006 (see RESNET Policy on Energy Efficient Mortgages)

The second main element of the SAVE Act is the Loan to Value Adjustment, which incorporates the Net Present Value (NPV) of expected energy savings into the home’s appraisal.

Both elements will allow homeowners to invest in improved energy performance and finance it through the traditional mortgage.

The proposed legislation would recognize RESNET home energy ratings for calculating the energy savings for the mortgage loan.

According to the legislation’s sponsors, the average homeowner spends more than $2,000 each year on energy costs – more than on either real estate taxes or homeowners insurance, both of which are regularly accounted for in mortgage underwriting. On average, these energy costs amount to more than $60,000 over the life of a 30-year mortgage. The SAVE Act would address this blind spot, giving a more complete picture of the costs of homeownership and borrowers’ capacity to service debt.

Under the SAVE Act, lenders would account for expected energy costs along with other recurring payments in the debt-to-income qualifying ratios, which test the borrower’s ability to afford regular monthly mortgage payments. According to a new study from The American Council for an Energy-Efficient Economy, the SAVE act is predicted to create 83,000 new jobs in construction, renovation and manufacturing by 2020.

“It is rare to have such diverse interests come together, and that’s because this is a common-sense bill,” said Bennet. “The Save Act would help provide access to useful information about energy usage that home owners, buyers, appraisers and underwriters want and need. It would lead to more complete and accurate mortgage underwriting, would encourage investments in home energy improvements, create more than 80,000 jobs and lighten the load for Colorado families’ budgets.”

“As someone who has 30 years of experience in the resident real estate industry and who has lived through multiple recessions, I understand that recovery in the housing market and job creation in the construction sector is pivotal to getting our economy back on track,” said Isakson. “I place my support behind this bill because it has the potential to create jobs without any cost to taxpayers, and it will also improve mortgage underwriting in this country by including energy as a factor in the process.”

The bill has support from a broad coalition of real estate, business, building trade and conservation groups, including RESNET, Leading Builders of America, Appraisal Institute, U.S. Green Building Council, National Association of Manufacturers, International Code Council, U.S. Chamber of Commerce, ASHRAE, Efficiency First, Alliance to Save Energy, American Council for an Energy-Efficient Economy, American Gas Association, American Public Gas Association, Natural Resources Defense Council, and National Association of State Energy Officials.

“The SAVE Act creates private sector jobs while making our homes more energy efficient,” said Ross Eisenberg, Environment and Energy Counsel at the U.S. Chamber of Commerce. “And by accomplishing these goals without the need for major federal spending, the SAVE Act will spur job growth in the private sector without adding to the federal deficit. That is a ‘win-win’ for the business community, and is the kind of realistic, commonsense policy everyone should want to get behind.”

“This bill is a win for homeowners, the economy, and a cleaner environment. The legislation would empower homeowners and lenders with better information about energy bills so they can make more informed decisions. This proposal would enable increased investment in the energy efficiency of homes, leading to lower energy bills. At the same time, it also would help create jobs and reduce toxic pollution from wasted energy,” said Philip Henderson, senior financial policy specialist, Natural Resources Defense Council.

“We strongly support this legislation because it will improve mortgage underwriting performed by federal mortgage agencies by ensuring that energy costs are included in the process,” said Appraisal Institute President Joseph C. Magdziarz, MAI, SRA. “It would require use of qualified, competent appraisers and would help ensure that appraisers have access to data needed to analyze the effects of energy-efficient home improvements in the marketplace. Consumers would benefit from the bill’s efforts to help ensure they receive a reliable, credible opinion of value.”

“With this act in place, we believe it is possible to substantially increase the energy efficiency of new homes over the next decade while retaining affordability for our customers. This truly is a win-win opportunity for our customers, the economy and our environment,” said Ken Gear, executive director of Leading Builders of America, Inc.

The SAVE Act is one of RESNET congressional priorities. The RESNET network is urged to contact their Senators, educate them on the need for such legislation and urge them to co-sponsor the legislation.

The first of its kind, the three-page Residential Green and Energy Efficient Appraisal Addendum is intended to be used by appraisers and is designed to be attached as an optional addendum to Fannie Mae Form 1004, the appraisal industry’s most widely used form for lending purposes.

“This addendum is another example of how the Appraisal Institute is at the forefront of real estate valuation,” said Appraisal Institute President Joseph C. Magdziarz. “It will help the industry standardize the way residential energy-efficient features are analyzed and reported.”

NAHB has long advocated a better system for taking into account green home features during the home appraisal process.

Historically, there has not been a consistent process in place for the lending community to differentiate between homes that feature energy- and water-saving techniques, greater durability and other green aspects from homes that do not.

These features contribute to the value of a home because they can dramatically reduce monthly utility costs, which represent a significant expense for home owners.

The new addendum was designed to enable appraisers to better identify and classify green features, with a goal of establishing the most accurate assessment of the value of the homes that have them.

Over time and as it becomes broadly used, the addendum is also expected to help establish the incremental value of specific features on a comparative basis.

“We hope this new form will be a big step toward establishing more accurate home valuations that recognize all of the key features of a home,” said Kevin Morrow, senior program manager of green building programs at NAHB.

“Green homes can offer significant cost savings to home owners over a comparable home built to code, so we are pleased that this new form will finally provide a vehicle to demonstrate some of these key differentiators,” he said.

The form allows users to report on energy-efficient items such as windows, appliances and insulation; to list any applicable energy ratings; and to note the home’s average utility costs — demonstrating any savings to the home owner.

Green features are also among the items included in the new form, most notably, in a section that allows users to indicate if the home has been certified to the National Green Building Standard.

Solar panels and site details such as house orientation and landscaping are also evaluated, in addition to the property’s walkability and proximity to public transportation.

The form also provides space to indicate if the home has qualified for any federal, state or local incentives.

“We are thrilled that certification to the National Green Building Standard is finally getting the recognition it deserves in the appraisal process,” said Michael Luzier, president of the NAHB Research Center.

“For a long time we’ve known that our third-party green certification conveys tangible, financial benefits to a home and its occupants,” Luzier said.

“Specifically referencing this type of national certification in the valuation process finally provides a way for appraisers to recognize and benchmark that value.

“We also appreciate the fact that energy efficiency upgrades and certifications are captured separately from whole-house green certifications. Energy efficiency is only one portion of the green equation, so to get the true value of a green home necessitates it being appraised beyond just its energy attributes.”

Home owners, sellers, buyers, refinancers and realty agents don’t have to wait for an appraiser to use the new form.

They can download it at no cost and ask that it be made part of the appraisal submitted to the lender. This will also help ensure that the appraiser uses the best and most accurate comps available that include similar green features.

“We hope lenders, home builders, real estate agents and home owners will take advantage of this new tool,” Magdziarz said.

“Mortgage lenders who want to see energy features analyzed should request the green addendum to be included with Form 1004.

“We also encourage lenders to provide the green addendum to home owners so they can fill it out and provide it to their appraiser.

“If a new home is being appraised, home builders can use the addendum to provide data to appraisers. Real estate agents also can use the data to help populate the MLS.”

NAHB is currently evaluating the form for improvements and fine-tuning that may increase its usefulness for association members.

For more information, email Kevin Morrow, or call him at 800-368-5242 x8375.

One of the most frustrating parts of my job as a Home Energy Rating (HERS) provider is dealing with the size of air conditioners installed in ENERGY STAR homes. My frustration has spilled over here in the Energy Vanguard blog several times, and the topic in all its manifestations (HVAC sizing, Manual J load calculations, the HVAC industry…) has been one of my favorites to write about. I’ve got an idea of how to make things better now, though.

Read the full article at energyvanguard.com

Whenever I see an older home being remodeled, especially if it’s an extensive renovation, I always wonder if the homeowners and the contractor know what a great opportunity they have to make the house tighter. Whether they’re opening up walls or adding new ones, working in the attic, the basement, or the crawl space, air-sealing should be part of the scope of work. (read the full article at energyvanguard.com)

I’m not on the board or staff of RESNET or the EPA’s ENERGY STAR new homes program, so I’m not privy to the discussions they’ve been having. It would be interesting to be a fly on the wall at the meetings where those two groups discuss what’s happening during the rollout of and transition to ENERGY STAR Version 3. I’ve noticed an interesting jockeying for position between the two organizations lately. (read the full article at energyvanguard.com)

It’s like golf — the lower the score, the better.

Anyone involved with the Energy Star Homes program has probably heard of the HERS Index, a method of scoring the energy efficiency of a new or existing home. A Web page maintained by the state of Arkansas, for example, explains that the “EPA requires a house qualifying for Energy Star to be built with best practices, tight ducts, and at least 15% more energy efficient than code as shown by a HERS Index score of 85 or less as determined by a HERS Rater.” (read full article at GreenBuildingAdvisor.com)

A similar number of builders — 35% — agreed with consumers that a green home was one that reduced the use of energy and/or water. But another 35% defined it as a home built to certification standards.

Concerning certifications and standards, 78% of consumers said that Energy Star qualification is important for residences. The National Green Building Standard (NGBS) was considered an important certification by 44% of consumers, and state certifications were considered important by 40%.

Builders also value Energy Star qualification, with 74% saying it was important, while 57% said that the NGBS was important. Fully 59% of builders polled said that they sometimes or always obtain some green certification for the homes they build.

Most consumers — 74% — rated their own homes at less than one-quarter green.

Green builders have been waging an uphill battle in recent years to convince the lending community to recognize the difference between homes that are just built to code and those that incorporate techniques, systems and products that can dramatically reduce monthly utility costs, which represent a significant expense for home owners.

Read more in this article from the National Association of Home Builders.

Ferrier Custom Homes, a Green Built Texas Member, was recently featured in a news story from local station WFAA.  Check out the online video of the story.

Are you a Green Built Texas member that has been featured in the news or recently won an award for your green practices or design, let us know by contacting Phil Crone at phil.crone@dallasbuilders.com.