When searching for a new home, the majority of us, well…at least 47% of us1, care very much about price. The price of a new home includes other factors that we care about that add to the listing price. You’ve probably played with at least more than one mortgage calculator to understand your monthly payments (principal + interest). You’ve looked at the expected property taxes for the neighborhood that you’re moving in to, and weigh this with the quality of schools and parks in the area. Maybe you’ve thought about necessary upgrades that would bring the house to your more than reasonable standards, starting with the kitchen and bathrooms. If it’s a condo you have to think about assessments and maybe parking fees. And if you’re REALLY thoughtful, you might even consider driving distances to frequent destinations (work, grocery stores, swimming lessons, etc.) and calculate the gas required to get to all of those places, given current gas prices, this probably SHOULD be a consideration.
There’s probably more than a few additional costs that need to be added to the listing price, but less often than not, energy costs are not among them! Why is this? Perhaps folks don’t think energy costs have that big an impact on the total cost? Perhaps folks don’t know how to consider energy costs within the total cost of a home. Whatever the reason, we are here to tell you that energy costs can have a material impact on the affordability of a home. There are two considerations you should make when determining the energy costs associated with a new home:
1) Energy rates for your area. This may be news to some of you, but we do not all pay the same for energy. In fact, energy rates can differ between homes that are next door to one another. In deregulated markets especially, you have the option to receive your electricity supply from different retail suppliers, who generally offer different rates. You can understand these rates at Power2Switch, while you’re here, or you can find rates for different suppliers or through your state’s Public Utility Commission (PUC). Even within states that are not deregulated, different homes may be serviced by different utilities. Whether it’s a utility cooperative, a municipality-owned utility, or a private utility, there are many flavors of rates one could receive (we talk about all of these concepts in different blog posts).
2) Energy efficiency of the home. This is a biggie. Folks are quick to talk about how energy efficiency helps the environment, and it does, but it also SAVES YOU MONEY. I repeat: ENERGY EFFICIENCY SAVES YOU MONEY. Think of energy efficiency as getting more energy and paying less for it. If you think about it that way, it’s a no-brainer that it should be something that you care about when buying a home. There are a wide variety of considerations that can be made when determining the energy efficiency of a home. Energy efficiency elements can be very simple like ceiling fans to circulate air in bedrooms and living areas or energy star appliances in the kitchen. They can also include more extensive elements like geothermal HVAC systems and solar panels on the roof. Multiple Listing Services (MLS), a primary resource for home shoppers, have begun adding fields to their database that describe some of these green features. This is a key step toward bringing green attributes to the forefront of shoppers’ consciousness when they’re out looking at homes. Also (little known fact), according to the Institute for Market Transformation, some states and cities have begun passing legislation over the past several years requiring homeowners and/or landlords to disclose energy audit results for their property when selling or renting. As shoppers come to expect this sort of information, owners and landlords will be incentivized to take steps to make their audit reports look as good as possible (big win for the environment!).
So, next time you’re shopping for a home, make sure you put a little energy into understanding how energy impacts your bottom line.
1Presidential candidate Mitt Romney