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The Appraisal Journal: Evidence of Rational Market Valuations for Home Energy Efficiency

by on Jan 24, 2011

  • 1,579 views

According to this study, residential real estate markets assign to energy-effi-cient homes an incremental value that reflects the discounted value of annualfuel savings. The capitalization rate used ...

According to this study, residential real estate markets assign to energy-effi-cient homes an incremental value that reflects the discounted value of annualfuel savings. The capitalization rate used by homeowners was expected to be4%–10%, reflecting the range of after-tax mortgage interest rates during the1990s and resulting in an incremental home value of $10 to around $25 for every$1 reduction in annual fuel bills. Regression analysis of American Housing Sur-vey data confirms this hypothesis for national and metropolitan area samples,attached and detached housing, and detached housing subsamples using aspecific fuel type as the main heating fuel.

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The Appraisal Journal: Evidence of Rational Market Valuations for Home Energy Efficiency The Appraisal Journal: Evidence of Rational Market Valuations for Home Energy Efficiency Document Transcript