1. Energy Efficiency in the Housing Market
NAR Research
Arun Barman

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. Residential Energy Consumption in
Perspective
Residential
22%
Commercial
19%
Industrial
30%
Transportation
29%
Source: Energy Information Administration / Annual Energy Review 2009

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. 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. 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. 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. Annual Energy Costs Per Year
Source: 2005 Residential Energy Consumption Survey

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. 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. Payback period
Added cost of upgrade = Payback period in years
Estimated savings per year

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. 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. 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. 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. 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/)