Going Green : How The Green Premium can help you

Going Green : How The Green Premium can help you


Back in the 1970’s “Green” as it pertained to housing was a Color choice.  By the 80’s, the term meant something else.   As the 90’s became the 21st century, “green” as it pertained to housing was a concept.  It started with the idea of using Solar power and then soon after we added better insulation.  As we hit the 2000’s we have added many features that fall into the “Green genre”.  Construction materials, paint ingredients, windows and window systems, HVAC systems, and even sealed crawl/attic space.


As we enter the second decade of the 21st century we have seen an entire industry begin to embrace the concept of energy efficiency in addition to reduced “footprints”.


Now all of these added efficiency and reduced carbon footprint goals cost money.  And a term that has been around since 2001 aptly describes the phenomena:  THE GREEN PREMIUM. The National Home performance Council (NHPC) prepared an article for publication in 2001 that stated… “The green premium  is realized when Homebuyers pay a premium (pay more, buy sooner, buy quicker) for “Green labeled” homes and/or homes that have energy and environmental features that are preferential over traditional homes without the features.


A typical American homeowner will spend approximately $2300 per year on home energy costs.  A home rated by the EPA as an ENERGY STAR home will reduce that cost by approximately 30% per year, or $690.  That is real money.  But what is an ENERGY STAR home?


ENERGY STAR is a program created jointly between the EPA (Environmental Protection Agency) and the DOE (Department of Energy).  The concept arose in 1992 as a voluntary label that was intended to identify products that were more efficient in an effort to lower Green House Gas emissions.  In 1996 a new label called ENERGY STAR came out to cover homes, buildings, lighting and home electronics and appliances.    With so much overlap with Energy Star and housing, it was no surprise that a designation for Super efficient homes would come.  And it has.


An ENERGY STAR home is defined as a home that is AT LEAST 15% more efficient than a comparable home built according to the 2004 International residential Code (IRC).


So what does all this mean to you the consumer?  Great question….  There are several points to note:


1 ) An energy efficient home will have lower utility expenses, in  most cases 20-30% lower.


2) An energy efficient home will be more comfortable.  No more drafty windows or rooms.  No more areas of the house that you avoid because it is either too cold or too warm.


3) Energy efficient homes simply burn less fossil fuels which create a much smaller carbon footprint.  In fact the EPA suggests that 16% of all Greenhouse Gas emissions are generated from HOME ENERGY USE!!!   So if you can cut your use by 30%, that’s a big chunk.


This last point needs its own topic.  Along with the concept of the Green Premium, Homes that have the energy efficient tags do two things…  One, They sell for an average of 4.8% MORE than a comparable home that is not energy efficient.  And two, they SELL on average 24% faster than a comparable home.   We are still recovering from some tough times based upon home values and their decline so this may hit home.  On average, homes throughout the U.S. lost 5.7% of their value.  But did you know that energy efficient and eco-friendly homes held their value better and in many cases saw values climb as much as 10-15% over a standard home.





The HOME ENERGY RATING SYSTEM, or HERS Index was established in 2006 and is just now seeing wholesale recognition in the home buying process.  The HERS index uses the International energy Conservation code (IECC) and creates a starting point to compare efficiency.  Like Golf has “par”, the IECC has a base line of 100 and it refers to the amount of energy used by a home built with standard construction.  For every 1% change in energy consumption between the target home and the reference home, a value goes up (bad) or down (good).


A home that is ENERGY STAR RATED would be somewhere between 65 and 75 on the HERS index (30% more efficient than a reference home).  And it would be 15% more efficient than a standard home built upon the 2004 IRC measurements.    SO how does this impact you?


That is another great question.  Besides the faster sale time and the higher sales price, the home costs less to operate.  Think about it this way:  Would you buy a car without knowing what gas mileage it gets.  Of course NOT.   So why not factor into your purchase of a home what its energy costs are… Or to put it differently… ITS HERS Index rating.


The HERS rating system is more popular in some regions of the country than others but it is quickly becoming relevant to all real estate markets.  According to the National Association of Home Builders (NAHB), 90% of homebuyers consider energy efficiency an important consideration.  NINETY PERCENT.  9 out of every 10 homebuyers.


The GREEN PREMIUM is real and its value to you is undeniable.  So before you buy your next home, you should at least consider the options.   Not every house will be ENERGY STAR, but EVERY HOUSE CAN BE more efficient with some minimal tasks.





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