Energy Efficient Homes are Worth More. Do Your Prospective Customers Know This?

"Increased home value" is an oft-discussed peripheral benefit of energy efficient home improvements, but, until now, there have been no scientific studies confirming what many of us have long believed: energy efficient homes are worth more than their inefficient counterparts.

The Study:

Thankfully, a new study provides substantive evidence that energy efficient homes sell for more money than standard code-built homes, all other variables holding constant.

The study, co-authored by Nils Kok of UC Berkeley and Matthew E. Kahn of UCLA, looks at approximately 1.6 million homes sold in California between 2007 and 2012.

The Results:

• On average, homes with an energy efficient or green label fetched 9% more at the point of sale than their standard code-built counterparts.
• In dollar terms, that's $34,800 more than homes without a label, based on the average California home price of $400,000.

These figures probably won't come as a huge surprise to you. After all, many of us in the industry have been saying for years that energy efficient homes are worth more than standard homes.

But here's the thing: we now have scientific evidence that energy efficient homes are worth more. We should make it a priority to highlight this math in our marketing of the industry across the country -- it's a return on investment above and beyond energy savings, and could be an equally compelling reason to invest in home energy efficiency improvements as energy savings, comfort and health.

Other Considerations:

Of course, while these are the average figures, the actual premium for an energy efficient home does vary according to a couple factors, according to the study:

• First, homes with green labels sell for more in hotter climates. Presumably this has to do air conditioning costs.
• Second, homes with green labels sell for more in regions with strong "environmental values," as measured by the number of hybrid vehicles registered in the region.

It's no surprise that the most effective ways to market home performance vary from region to region. Homeowners in environmentally minded communities (regions with a lot of Hybrid cars, etc.) are more apt to be motivated by social and environmental concerns. Homeowners in more conservative communities are more likely to be motivated by energy savings, along with ideas like energy independence. Across the board, comfort is often a motivator regardless of socioeconomic factors. While increased home value is likely to be similar to the latter -- everyone likes a good return on investment -- using it as a marketing technique is likely to be more effective in those environmentally conscious areas where it's most accurate.

There's also another elephant in the room: what about energy efficient homes without a label? The study looked at homes that were certified by Energy Star, LEED for Homes, and GreenPoint. But would a good HERS Rating suffice? Or an energy audit report with information about the home's energy usage? Or just a detailed history of low energy bills? Hard tellin' not knowin'.

What It Means For You:

Long story short, the findings of this study should be viewed as more than just fun facts for those of us in the home performance industry. They should be viewed as a compelling reason for homeowners to invest in home performance, and as such, should be reflected on whatever marketing materials you use -- website, brochures, flyers, direct mail -- along with comfort, energy savings, health, durability, and whatever other benefits you highlight while selling your services. 

All thoughts welcome. Be sure to check out the full study here, and let us know what you think in the comments.