Energy Efficiency Will Help Drive Future Property Value

Homes that don’t meet consumers’ green expectations are likely to be left behind, sustainability expert says.

Energy efficiency has long been a marginalized player in real estate valuation, but soon it’ll take centerstage, Ken Levenson, executive director of The Passive House Network, a nonprofit that helps build high-performance buildings nationwide, said Thursday at NAR NXT, The REALTOR® Experience, in Anaheim, Calif.

“Energy efficiency that’s integrated and predictable will drive value of the property,” Levenson said at a session called “A Shifting Proposition: Energy Efficiency Driving Property Value.” On the other hand, properties that don’t perform well in energy efficiency will need to be renovated or eventually get left behind, Levenson said.

“Efficiency underlies what we value most—health, comfort, resilience. It also can be cost-effective and sustainable,” he added. It can help improve indoor air quality and lead to a dramatic reduction in heating and cooling costs so that in the middle of winter, if the power goes out, the homeowner can stay warm and comfortable.

Levenson pointed to several examples where energy efficiency has paid off. In Philadelphia, an energy efficient home used 57% less energy per square foot than a median home in the area. In California, an energy efficient home was built using half the energy of similar homes during the state’s highest carbon-dioxide months of August and September.

“Baking in efficiency will pay off again and again in the future,” he said, citing other benefits like lower maintenance, less exposure to utility rate volatility and being able to shelter in place, even in the event of power loss.

The key ingredients behind improved efficiency in buildings is greater insulation, airtightness, solar protection and hygienic ventilation, Levenson said. After those basic elements, smart controls and renewables can be added in to enhance energy performance. “But they should not be used to compensate for poor performance,” Levenson said.

Levenson said he believes higher adoption of energy efficiency features will come through a number of efforts, including:

  • An increase in energy efficiency financing to fund retrofits.
  • More universities and public schools taking an interest and spending on energy efficient buildings.
  • Affordable housing projects that look more toward how to create sustainable, higher-density buildings.
  • Government and utilities looking at how to make market rates more affordable.
  • Developers’ rise in interest in “eco districts,” where multiple buildings in an area meet high efficiency performance.

“We’re getting more extreme weather, and it’s just going to grow and get worse and worse,” Levenson said. “We need to future-proof our buildings. There are two kinds of buildings out there: Those that are prepared for climate change and those that are not. Efficiency is really going to drive if that building is prepared or not. Comfort, health, safety and resilience are not political terms. We can speak to what the family cares about. These benefits are growing in value every day.”