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Lack of Home Branding Requires Energy Scoring to Capture Value

Home builders often don't have to pay to fix the home performance problems they leave behind.

Think about one industry that creates a product for sale, has no interest in branding the product, and thus no consequential accountability to the ultimate owner of their product. Imagine if the automakers churned out cars, never branded them, and had no concern over the performance issues the car suffered during service. Unthinkable and unconscionable, right? Homebuilding is one such industry.  

Jim Chapman, President and General Manager of Legend Homes stands in front of Edgewater a Legend Homes development.

There are exceptions of course…..Legend Homes, Renaissance Homes, KB, and Meritage Homes. These building companies are not only seeing the value of establishing a clear brand value but also offering up energy performance labels to transparently reflect their energy efficiency chops to the market. I have always been amazed that the homebuilding industry that caters to families and generations has not taken the opportunity to clearly brand its products so that generations of kids seek out that brand when it comes to their turn to become a homeowner. Isn't that the American way
?

If builders do not see the value of branding (I know there have been concerns in the past about liability and other issues that may have inhibited this approach), we need to allow forward-looking high performance builders the opportunity to permanently capture the value of their green and energy efficient home features. This can occur through appraisers reflecting the increased value. 

However, this is slow going -- trying to turn each appraiser into a somewhat conversant building scientist is a challenge on a national scale. A simpler way would be to establish a performance assessment methodology that determines a home's energy performance score. Homeowners who might take advantage of property-assessed clean energy (PACE) financing to retrofit their homes – meaning no upfront payment but rather amortized payments through property taxes – would have an energy performance test that results in a verified energy performance score. This score would become the public metric for use by the market. In this way the embedded value of energy efficiency through increased appraised value as a function of the score is locked into the home and stays there regardless of whether the homeowner sells and moves on. This framework would totally challenge the concept that a remodeler or builder could create a product and move on without responsibility as to how the home performed. 

I am a supporter of the SAVE act that accounts for the savings in energy when applying for a loan, but this needs to be complemented with the increased assessment model to affect the type of paradigm shift we would all love to see.

About the Author

Sean Penrith

Since 2005, Executive Director Sean Penrith and his team have successfully grown Earth Advantage, Inc. into a leading program provider and think tank that devises creative green building, market mechanism, and climate change solutions for the built environment. Penrith graduated as an electrical engineer and established a distribution business in Argentina. He then started the Green Glass Company in a garage outside of Johannesburg, which grew into an acclaimed, international sustainable glassware manufacturer with three high-speed plants worldwide. Penrith has been fortunate to work with international community leaders who are pressing to make global change in the social and environmental arenas.