Do Home Buyers Want Energy Upgrade Packages?

Are builders missing the mark by not offering upgrade options for HERS-scored homes.

Home buyers like choices. Builders, ever eager to meet the desires of their buyers, typically offer a dizzying array of choices in products, finishes, and designs to suit a wide variety of styles. Yet seemingly few builders offer consumers a choice in homes at varying energy-efficiency targets. Is this a missed opportunity for builders in meeting the growing energy-efficiency desires of buyers–an increasing number of whom self-identify as sustainable consumers? Perhaps.

Research from McGraw Hill Construction shows that 73 percent of home buyers are willing to pay more upfront for green home features, like energy efficiency. How much more? According to the Green Building Advisor, the most common estimates are 1 to 3 percent.  In that HERS scores are the equivalent of a miles-per-gallon ranking for home performance–the lower the score the better–a lower HERS score means reduced home energy costs for homeowners.

Home buyers might be willing to pay more if they thought they’d get more, in terms of energy savings. Take this as an example:

  • HERS score of 65. This is often about level offered by builders as energy efficient. This could be the baseline or “good” efficiency package.
  • HERS score of 40. A home at this level would likely be net zero energy ready, meaning it is super-efficient and can become net zero by integrating solar or other onsite renewables. This would be the “better” efficiency package.
  • HERS score of 0. This is a net zero home. This would clearly be the “best” package a home buyer could opt for.

Home buyers are familiar with the package approach, though it remains to be seen how much they’d be willing to pay for HERS scores at different levels. What is indisputable is that the integration of good design and construction plays a major role in determining energy performance, something architects are increasingly advocating.

Good, Better, Best

Emily Mottram is the owner of Mottram Architecture, a full service architecture firm specializing in energy-efficient design and Net Zero construction in New York, Pennsylvania, and Maine. Her seven-year-old company also offers energy consulting, energy audits, HERS ratings and consultation on building envelope design.

Mottram’s clients are typically driven by the dual desire for sustainability and energy efficiency but the option of offering a “good, better or best” performing home–reaching a specific performance target or HERS score at an incremental price increase that the buyer would be willing to bear is, in her opinion, a largely untested concept.

“I’ve recently been discussing the idea of a ‘pretty good home’ with some building industry colleagues, and there’s a definite awareness that a HERS 60 home, for example, could be an acceptable target for one buyer, while only a Net Zero home would work for another,” Mottram says.

Offering homes in specific HERS target ranges could hold appeal for a certain segment of home buyers willing to pay more upfront for more comfortable homes with lower utility costs.  This could be a win-win for customers and builders who can offer more targeted options to meet customer needs. Regardless of the target, Mottram says that architects and builders can do a number of things that will increase home efficiency and help lower overall HERS scores and many are inexpensive or have relatively low incremental costs.

Concepts That Work

“One trick that literally costs nothing is the orientation of the house,” she says. “Using the sun for its heating potential and reducing north-facing windows will ultimately save consumers money on energy costs.” Mottram notes that increasing the focus on the thermal envelope–particularly installing good air barriers, taping and sealing in the right locations, can dramatically improve the energy performance of a home. In addition, increased insulation–R21-40 walls–offers significantly higher energy performance. ”

Also, reducing the framing and having a tightly sealed envelope allows for more insulation and pays for itself in no time.  “Simply maximizing the placement of windows–these are all things that can boost energy efficiency,” Mottram adds.

“By focusing on good design and construction practices, you can get a better performing home for reasonable incremental cost, but the design has to focus on proper construction and air sealing, which is why building science education, is so important,” she says, adding that regardless of the energy performance target, builders must increase their knowledge of building science and its impact on energy performance. “It does require a little more thought from the builder to use less framing and increase insulation values. It takes more skill to follow through with contractors on the air sealing, air barriers, and doing it all in the right locations, but this is ultimately how you maximize home energy performance, regardless of what the HERS score target might be.”

Energy-Efficiency Baseline

Builders will need to determine consumer willingness to pay for energy efficiency at various cost levels to determine if an “energy upgrade” approach makes sense. However, from a practical standpoint, builders would need some commonality, across upgrade options, to make the building process for homes of different efficiency levels feasible.

The best way to do that is to have some energy-efficient best practices that are undertaken on all builds; for example, advanced framing, raised heel trusses, approaches to air barriers and sealing, things that impact the overall design and build process. Other items, like water heating and lighting efficiency, are more easily adjusted with less impact on the build process or other building systems. This would also help drive down the incremental costs for efficient building, improving the consumer return on investment.

It is hard to say if energy upgrade packages are part of the future of housing, but if they are, they will be enabled by a broader, baseline level of energy efficient building practices.

Stacy Fitzgerald-Redd is the Director of Communications for North American Insulation Manufacturers Association (NAIMA).