Energy Efficiency in the Housing Market

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Energy Efficiency in the Housing Market

  1. 1. Energy Efficiency in the Housing Market NAR Research Arun Barman
  2. 2. Overview • Putting residential energy consumption in perspective • Review of home buyers preferences in terms of energy efficiency • Differences in energy usage – Age and size of homes – Regional variation • Factors affecting implementation of upgrades – Home values and expected tenure – Payback period – Government tax incentives
  3. 3. Residential Energy Consumption in Perspective Residential 22% Commercial 19% Industrial 30% Transportation 29% Source: Energy Information Administration / Annual Energy Review 2009
  4. 4. Home Buyer Preferences Source: NAR 2010 Profile of Home Buyers and Sellers 0% 20% 40% 60% 80% 100% Heating and cooling costs Energy efficient appliances Energy efficient lighting Landscaping for energy conservation Environmentally friendly community features 39% 24% 24% 10% 10% 49% 47% 45% 39% 41% 12% 29% 31% 51% 49% Importance of Home's Environmentally Friendly Features Very Important Somewhat Important Not Important
  5. 5. Energy efficiency per square foot better for newer homes, but homes are getting bigger Source: 2005 Residential Energy Consumption Survey $0.50 $0.55 $0.60 $0.65 $0.70 $0.75 $0.80 $0.85 $0.90 $0.95 1,500 1,700 1,900 2,100 2,300 2,500 2,700 2,900 Before 1940 1940 to 1940 1950 to 1959 1960 to 1969 1970 to 1979 1980 to 1989 1990 to 1999 2000 to 2005 YearlyEnergyCostPerSquareFoot AverageSizeofHomeinSquareFeet Size of Home vs. Energy Cost Per Sq. Ft Square Feet per Home Energy Expenditures per sq ft
  6. 6. Regional Variations in Energy Consumption 0 20 40 60 80 100 120 140 New England Middle Atlantic East North Central West North Central South Atlantic East South Central West South Central Mountain Pacific MillionsBtuofconsumptionper household All End Uses Source: 2005 Residential Energy Consumption Survey
  7. 7. Share of annual energy expenditures spent on heating and air-conditioning by region 0 5 10 15 20 25 30 35 40 45 Space Heating (Major Fuels) Air-Conditioning 41% 7% 37% 8% 19% 23% 21% 14% Percentage Northeast Midwest South West Source: 2005 Residential Energy Consumption Survey
  8. 8. Annual Energy Costs Per Year Source: 2005 Residential Energy Consumption Survey
  9. 9. Annual Energy Spending: Top Four States Source: 2005 Residential Energy Consumption Survey $0 $500 $1,000 $1,500 $2,000 $2,500 All End Uses Space Heating (Major Fuels) Air-Conditioning $2,409 $995 $197 $2,051 $213 $636 $1,806 $609 $216 $1,681 $87 $597 $1,396 $208 $177 Four Most Populous States New York Texas All Other States Florida California
  10. 10. Does it make sense to retrofit homes? • According to the Profile of Home Buyers and Sellers (2010), the median tenure of sellers was 8 years. • The decision to upgrade has several components – Piece of mind (satisfaction people have from being environmentally friendly) – Savings while occupying the home (if the payback period for the upgrade is less than the anticipated tenure in the home) – Resale value (some upgrades may have a higher resale premium than others, though more research is needed in this area)
  11. 11. Payback period Added cost of upgrade = Payback period in years Estimated savings per year
  12. 12. Sample payback periods Northeast Added Cost Savings ($/yr) Payback in years Northeast Programmable Thermostat $115 $183 0.6 Heating System Tune-up $96 $122 0.8 Seal Duct Leaks $443 $311 1.4 Windows and Skylights $744 $341 2.2 Insulate Ceilings $643 $268 2.4 Insulate Ducts $443 $183 2.4 Insulate Walls $731 $305 2.4 Seal Air Leaks $554 $213 2.6 Water Heater Replacement $132 $37 3.6 Furnace Replacement $1,145 $293 3.9 Source: Energy Efficient Rehab Advisor
  13. 13. Compare that to the West region Added Cost Savings ($/yr) Payback in years West Heating and Cooling System Tune-up $96 $125 0.8 Programmable Thermostat $115 $109 1.1 Electric Heat Pump $773 $152 5.1 Seal Duct Leaks $443 $67 6.6 Seal Air Leaks $554 $59 9.5 Windows and Skylights $1,546 $126 12.3 Insulate Ceilings $975 $50 19.4 Source: Energy Efficient Rehab Advisor
  14. 14. Sample Payback periods for retrofits 0 1 2 3 4 5 6 7 8 9 10 Northeast Central North Central Southwest Southeast West 0.6 0.6 0.6 0.5 0.8 0.8 2.6 1.3 2.4 2.3 8.4 9.5 Paybackinyears Programmable Thermostat Seal Air Leaks Source: Energy Efficient Rehab Advisor
  15. 15. Choice of “green” retrofits are not only made by consumers • Geography and age of home matter • Government incentives – Government rebates and tax credits for certain types of upgrades • “Cash for appliances” – Energy Star program • Feasibility of projects – DIY Projects vs. Larger Projects (i.e. programmable thermostat vs. window replacement) – Contractors who do green remodeling may or may not be available at reasonable cost in your market area
  16. 16. Links and Contact Information • For more information: – NAR Research (http://www.realtor.org/research) • My email: abarman@realtors.org – Department of Energy (http://www.eia.doe.gov/) – American Housing Survey (http://www.census.gov/hhes/www/housing/ahs/ahs.h tml) – Energy Efficient Rehab Advisor (http://www.rehabadvisor.pathnet.org/)

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