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What’s the MPG on your house?

By Jeffrey Gephart

If you’re under 54, every new car you’ve ever bought has had a miles-per-gallon (MPG) rating on it. Maybe the vehicle purchased didn’t get great mileage, but at least you knew what you were getting into.

If you are building, buying, or even refinancing, what about your “MPG” for the house? For most, energy costs are the second highest cost of home ownership, second only to the mortgage. Having an estimate of a home’s energy costs is crucial for informed decision making when purchasing a home. High energy costs are also indicators of comfort, indoor air quality, and building durability problems. If a home were tested, rated, scored, or certified by accredited third parties, you would know, just as in the case of your car, what you were getting into.

For new home construction, “MPG” ratings do exist and they are provided by NHSaves and Efficiency Vermont. Home energy raters review building plans to identify cost-effective improvements, and provide a Home Energy Rating Score showing the home’s performance. Other certifications like ENERGY STAR® Homes, Efficiency Vermont Certified, Efficiency Vermont Certified High Performance Home (a net- zero-ready home), LEED for Homes, National Green Building Standard, and Passive House, describe building performance and sustainable construction features.

These third-party ratings and certifications provide valuable documentation the real estate market needs for sales, search, and appraisal purposes. The New England Real Estate Network (NEREN), our regional multiple listing service (MLS), was an early adopter – adding “green” information fields to listings in 2010. NEREN is revising their green fields to meet new industry standards. NEREN’s efforts are moving us toward a future where accurate energy efficiency and renewable energy information will be available through the MLS. Just as tax data is uploaded electronically into the MLS, third party verified ratings, scores, and certifications could be as well.

So what about existing houses? What’s its MPG? Efficiency Vermont will soon pilot the Vermont Home Energy Profile (the “Profile”), an asset rating for existing homes. With the Profile, like the MPG, actual mileage may vary depending on how you drive.

The Profile estimates annual energy use for all fuels, estimated energy cost per year, and the U.S. Department of Energy (DOE) Home Energy Score are included. The Profile’s pilot starts this summer with some of Vermont’s Home Performance with ENERGY STAR certified contractors and by property inspectors trained and certified as “Assessors”. It tests whether the Profile fits into the contractors’ and inspectors’ business models and proves valuable to their customers. A similar pilot will be rolled out shortly in New Hampshire using the DOE’s Home Energy Score platform.

An energy audit can provide the estimated energy costs for an existing home, the investment needed to reduce those costs, and the likely energy savings from that investment. Using data from Efficiency Vermont Home Performance with ENERGY STAR participants, the chart below demonstrates how the total cost of ownership over time can be less for a more expensive but more energy efficient home. Home Performance with ENERGY STAR participants were broken into three savings ranges, and those ranges were averaged for both cost of improvements and energy savings achieved. The chart shows how audit-driven improvements to the home are cost-effective when financed over a sufficient term, as with a new mortgage, refinance, or financing upgrades. The better, more comfortable and affordable home is less expensive to own the day you move in.

Business_Financial_MPG_Chart_VN

 

So if you are building a new home, buying or refinancing an existing home, or simply know that you need a break from cold drafts and high bills, improving your home and comfort can pay for itself. By using the services of Efficiency Vermont, NHSaves and NH’s DOE Home Energy Score, you can get help in making efficiency improvements and in documenting your home’s “MPG” (using consistent, standardized, industry-recognized methods). The economics above don’t even take into account the financial incentives available through these efficiency services.

For current or future sellers of improved homes, documenting energy performance enables you to accurately disclose advantages that your energy efficient home has over other homes. There is no contributory value for energy efficiency if no one knows about it. Documentation is valuable. With enough data (“MPG”) in the market, more informed decisions, such as getting a better home for lower total cost of ownership, become easier.

Jeffrey Gephart works with Efficiency Vermont and supports the VGHA.

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