Back to the Future – Retrofitting America’s Building Stock for Existing Homes, Part 1:

gas-shortage-1979The 1973 and 1979 Oil and Energy Crisis caused major havoc and brought national attention to how fragile and energy dependent we had become.   Gas prices skyrocketed, lines at gas stations caused rioting, and winter was harsh for many families with no oil to heat their homes.

In light of the emergency situation, the Housing and Urban Development (HUD) and the Department of Energy (DOE) launched the very first energy efficiency financing, the Weather Assistance Program (WAP).  WAP provided small loans to low-income homeowners to cover costs for weatherizing their homes. The prescriptive solutions included duct tape, caulking and plastic to cover the windows.  That was the extent of building science and high-tech back then.

On April 20, 1977 the Carter administration launched the first national energy proposal to include a solar tax incentive program.  The Carter administration even installed 32 solar panels on the White House roof.  Unfortunately, the solar program was a market failure due to price, operability, lack of a qualified workforce to maintain the equipment, and other factors.  Under the Reagan administration, the energy programs and tax credits were abolished.  Some of these homes still have inoperable solar systems on their roofs!   This era gave energy conservation and solar systems a black eye and turned off many Americans for decades.

We’ve come a long way since then and building science innovators have developed many advanced technology solutions.  And we need them, considering that over 30 percent of our buildings were built during the post-World War era and weren’t durable or meant to last.  HUD’s 2011 Annual Housing Survey found that 41% of the owner-occupied housing stock in the U.S. was built prior to 1969. Homes built from 2000 to 2009 account for only 15% of the owner-occupied housing stock. / Antiquated building stock is problematic, as much of our existing home inventory is in dire need of retrofits and upgrades.  (Stay tuned for Green Premium Value verses Brown Discounts next issue.)

For the first time in our history we can now live sustainably without sacrificing modern convenience; and of equal importance, it doesn’t have to cost more.  We are reaching a tipping point of cost verses energy savings and building efficiency, prices have come down; as an example, solar panels now cost 50 percent less than several years ago.  Federal, State and municipal tax credits are also abundant and help to dramatically reduce the costs. And the best news, the technological advancement has improved in leaps and bounds-energy efficiency and net-zero building has never been easier to accomplish.

The web is a powerful tool, but when it comes to energy retrofits and budgeting costs for green building, it can be challenging to obtain reliable information to analyze whether a retrofit project is cost effective.  Traditionally, the first step is to schedule a professional contractor or energy auditor to inspect the property.

The bidding process can take days and even weeks to attain. It’s usually a good idea to get bids with at least two contractors, but the bids can be substantially different in cost.  This can be due to contractors underbidding the job. However, the worst experience many homeowners encounter is spending enormous time and upfront costs, budgeting, analyzing and designing a home upgrade to find out they can’t obtain financing or the appraisal value won’t work.

Green Energy Money’s Free Report for home retrofits is a great tool to estimate baseline costs and you can even get pre-qualified for financing before you schedule your contractor appointments.  It takes about 3-5 minutes to complete and is easy to navigate. Once you have an estimated budget and maximum loan qualified, your contractor can then back into the best cost and energy performance plan for your home.  Keep in mind that the Free Report does not replace a contractor bid, and is simply a quick tool to gage estimated costs so you can budget and be able to obtain financing commitments.

The average deep energy retrofit costs depend on the property square footage, regional climate and labor costs, type of equipment and building upgrades and other factors.  Average prices for deep retrofits in the US range from $2 – $20 per square foot, depending on the level of efficiency, and factors mentioned above.  The biggest bang for the buck appears to be a hybrid approach of adding more conditioned space (especially if your property is smaller than neighboring ones) and retrofitting the building envelope at the same time.

If costs and qualifying for financing is an issue, it might make sense to create a plan to stage your property upgrades.  The downside to this strategy is:

  • it can be a hassle to go through the construction process multiple times;
  • building, utility costs and interest rates are going up;
  • closing costs on multiple transactions;
  • if installing solar, Federal Tax Credits are set to expire and might not be available after 2016

The chart below reflects the various stages to greening up your property.

Green Pyramid revised no E Rating 20150708.pptx

 

Bottom line, financing retrofits for an existing home can be tricky. Many factors need to be considered and the upgrade should be noticeable; more comfortable, less drafty, along with significant improvement of energy savings – at least 30 percent.  A good green contractor and lender should be able to provide financial and performance measure guidance and cost comparisons to help make the best economic decisions.

 

 

 

 

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