Energy Efficiency: HUD Calls for Full Disclosure.

Housing and Urban Development Secretary Shaun Donovan is pressing for disclosure of home energy efficiency in home sales. Noting that such disclosures have long been a staple of car sales, Donovan points out that many potential home owners have no idea what their new home is going to cost, or how savings resulting from energy retrofits could provide a return on investment. Donovan is urging mortgage and tax incentives for those homeowners willing to make investments in increasing the energy efficiency of their home. "Ultimately, if your energy bills are going to be lower, there ought to be some [mortgage] benefits to that," Donovan pointed out.

Donovan may be an interesting person to watch in the energy efficiency arena.  He ran New York City's Department of Housing Preservation and Development for four years and is trained as an architect. He appears bent on enabling home owners to benefit in very direct ways from their energy efficient retrofits.  Donovan advocates setting up "a relatively simple scoring system for housing that would allow you to understand what you're buying and at the same time allow lenders to factor that into their mortgage."

We appreciated this approach when it was first launched by Architecture 2030 in The Architecture 2030 Challenge Stimulus Plan. As we noted in a post at the time, the Architecture 2030 approach is particularly clever because it uses the investment to lower mortgage rates according to the efficiency of the building.  A house that is 80% better than code, for example, would have its mortgage interest reduced to 3%. The reduction in monthly mortgage expense makes up for the cost of a deep retrofit required to achieve this level of energy reduction.

Not long ago, we wrote about Toronto's move to make home energy audits a mandatory precursor to selling a house.  The logic behind the move was somewhat similar. As our collective understanding of energy efficiency increases, we have a right to demand information about the largest investment many of us will make in our lifetimes, and energy efficiency is a central part of that analysis.

It is our hope and expectation that Google Energy Analytics (our term) will come into play before too long, and with the advent of Google Power Meter, will enable all homeowners to have a firm grip on their energy usage, waste, and efficiencies. Until then, it makes sense to take efficiency into account when evaluating the cost of a home.

Utility bills are inevitable, and can be staggering or reasonable, depending upon the state of the house. Just as most of us would never consider buying a car without knowing its MPG, Donovan suggests that we should not consider buying a house without knowing at least a little bit about its r-value.  Seems to us, he's onto something.