By Kelli Galippo • Feb 3rd, 2011
This article correlates the real estate market with the energy consumption demands of property in an explanation about why energy will increasingly affect the pricing of a home and the activity of an agent when selecting which properties to list and which to show.
The future is green
As California’s energy supply struggles to adjust to unrelenting population growth and ever-advancing technology, the search is on for renewable local energy sources and innovative ways to further increase a home’s energy efficiency. Buyers and sellers of real estate are becoming progressively aware that a household is a heavy consumer of electricity, gas and other fuel sources, the use of which must be monitored and rationed wisely.
Utility bills have always been an important cost factor when considering homeownership. However, most individuals do not realize that the actual structure of the home they live in can have a positive or negative impact on the monthly cost of their energy consumption. More than just turning off unused lights or running the sprinklers fewer times a week, the way a home is built has a drastic impact on how much energy it needs and expends to lower or raise the temperature, heat water and power appliances.
Having an energy-efficient home is becoming increasingly important to discerning, budget-wary homebuyers. Utility costs are extremely volatile. A necessary change in the behavior of homeowners is at hand: one that will accommodate more “enlightened” energy consumption. Public policy encouraging collective sustainable energy use is shaping the real estate market — builders, brokers, lenders and buyers — into a loose contingent acting as a strong proponent of eco-friendly homeownership.
Fear of an energy shortage is driving the search for ways to use sustainable fuel sources. The technology industry has necessarily shifted its gaze toward the future availability of fossil fuels, electricity and other sources of power used minute-by-minute in the lives of every human being. In the nucleus of everyday life — the home — changes must be made to increase sustainability and efficiency to stave off a day in the distant future when the modern world runs out of energy.
Energy efficiency is a trending topic
Living a “green” lifestyle is a concept that has permeated the American psyche through more than just their current utility bills. Public policy, social media and general culture all encourage individuals to make eco-friendly lifestyle choices. The intensity with which the general public supports energy efficiency is a new occurrence in the 21st century (a product of technological advancement), and the personal ramifications of environmentally conscious choices by individuals are only now coming to fruition.
Historically, the decisions people make with the most impact on their life involve where they work, live and raise their families. The cars they drive and the homes they buy are secondary commitments made to accommodate the primary ideals. Recently, however, American culture has placed greater emphasis on how individuals want to accomplish these goals more so than where. As a result, and with increasing frequency, people are choosing their cars and homes first, and then molding their lifestyles around their assets.
As a sustainable lifestyle has gained popularity as a symbol of affluence and social concern, energy efficiency in the home has gained momentum. The need for renewable resources creates demand for efficient homes and plays a more significant role in the education of homebuyers and the qualifications of a real estate agent. The visionaries advocating environmental sustainability — brokers and bidders — are looking at this shift in decision making as a nod toward the future of new and used home sales.
California energy consumption
The greatest road block for widespread energy efficiency is not the talk of change but the lack of follow-through. In 2009, approximately 33% of electricity use and 54% of gas use in California came from residential properties. Even in the midst of the economic downturn and more costly utility bills, the use of these resources in the home continues to increase with no sign of slowing down. That’s because unplugging electronics and taking shorter showers does little to decrease the cost of running a home compared to what energy-efficient renovations can do, and those renovations don’t come cheap.
In today’s post-Millennium Boom culture, homeowners are receptive to living more efficiently, but are not aware of the government programs sponsoring and subsidizing smarter consumption. It is up to agents and brokers to do their homework — learn — and keep their buyers and sellers well-informed about the subsidies and grants available for those who renovate their homes.
Building frugal habits is important, but the real game-changers in household efficiency come in the form of construction improvements. The federal government is developing a series of programs to encourage homeowners to make their homes more energy-conscious and motivate homebuyers to look for homes in locations and with improvements that consume less energy (or, better yet, produce more energy than they consume).
The federal Home Energy Score is being developed as a rating assigned to each home by an energy specialist. Using this rating system, buyers can determine how much energy the home expends and causes inhabitants to expend due to its current state and location. Homes with a high score require the expenditure of a large amount of energy, while homes with low scores are more efficient and better located. For homeowners and sellers, the specialist will suggest changes to improve the score.
Once every home nationwide is scored, buyers and sellers will be looking to purchase a home with a desirable Home Energy Score — adding another layer of competition between sellers and listing agents. Homes with low scores will be more desirable and thus more valuable than homes with higher scores. Builders will be motivated to construct new homes with the Home Energy Score in mind. They will be better able to compete with multiple listing service (MLS) resale agents who must encourage sellers to spend money on renovations in order to drop their energy score.