One of the hurdles of making energy efficient features cost effective for builders is that they are rarely are incorporated accurately into the sales prices of homes, at least not consistently across a market. One of the key players in this equation is the appraisers, who use available one year comps in the immediate locality to determine if a sales price is “fair market value,” or justified for a bank to make a loan. If a buyer values paying more for an energy efficient home with the expectation that their long term operating costs will be lower than a comparably built home (in size and location, without such efficiency features), but the appraiser cannot show why that additional value is justified, then the buyer may not get the appraisal they need. If builders cannot find buyers with cash to pay for the the additional features, they may have difficulty selling, and then less likely to incorporate said efficiency features in future homes. This is not the fault of the appraisers individually, but more of the whole multiple listing system and appraisal standards, which have not developed simple ways to compare homes based on energy efficiency.

Various parties have been at work nationally to bring the appraisal process up to speed with the growth in the number of energy efficient features that can significantly change the value of a home more than just its age, square footage and location. Just this week the Appraisal Institute entered into an agreement with Resnet, which developed the HERS index, one of the leading green building rating system, to produce their Residential Green and Energy Efficient Addendum. This is a good step towards making energy efficient features more of an integral part of any appraisal. We are still pretty far from that uniformity, but each step is appreciated. Here is more info if you are interested:

Appraisal Institute Residential Green and Energy Efficient Addendum

RESNET News about partnership

In practice, we have not chosen to cut back on energy efficiency features, although we are not sure if we are getting the appropriate value they deserve when looked at life cycle value. We have always had appraisals come within about $3000 of the sales price (always over), which leads me to question how the appraisal process works, as I have trouble believing that our pricing is so exactly in line with other new construction. However, I would say that we do keep fairly close to the general market, as we do not want to overbuild for a particular neighborhood, which is very possible building on infill lots in older neighborhoods.