New Research Shows the Myriad Benefits of Energy Efficient Homes

A blue and grey two story house with warm light inside

The case for residential energy efficiency often turns on two benefits: saving on energy bills or saving the world. But a recent study by the North Carolina Building Performance Association (NCBPA) found that energy efficiency in homes has another untapped selling point: a higher market value than less efficient homes.

Efficient Homes Have Higher Resale Value

This study, published in March of this year, compared the market price of homes that went through green certification programs, including LEED for Homes, ENERGY STAR, National Green Building Standard and HERS Index Scores, to homes that did not receive a green certification. Their findings show that green certified homes sold for 9.5% more than non-certified homes. Even when accounting for the size difference between homes (high performance homes were an average of 4.3% larger), high performance homes had a higher market value, selling at a median of 3.6% more per square foot.

This study is not alone in finding higher market values for homes with greater energy efficiency. Research has found that high performance homes across the country (CA, TX and DC) sell for a premium of 3.5% to upwards of 9% more compared to average homes.

That’s Just the Tip of the Benefits Iceberg

Research by the North Carolina Energy Efficiency Alliance shows that, on average, ENERGY STAR homes sell 89 days faster than traditional homes. And in California, the premium for energy efficiency far exceeds the associated incremental costs, continuing to demonstrate that efficiency is cost-effective for builders and developers.

Market premiums are not the only hidden value in energy efficient homes. The University of North Carolina and the Institute for Market Transformation found that the odds of mortgage default are one-third less for ENERGY STAR rated homes when compared to non-rated homes. The risk of defaulting also decreased by 4% with every point decrease on the HERS Index (a lower HERS score means more efficient), suggesting that the degree of efficiency is also important.

Energy Efficiency is a Must-Have for Home Buyers

Energy efficiency is a priority for buyers on the house hunt. In a survey done by the National Association of Home Builders(NAHB), 46% of builders reported that marketing green homes was easier than marketing non-green homes, and a 2013 NAHB survey—aptly-titled “What Homebuyers Really Want”—found that energy efficient appliances, windows and home rating were three of the top 10 most-wanted home features. What’s more, buyers said they would be will to trade off home size for amenities like energy efficient features. Finally, while 71% of households think that energy efficiency is important, only 35% are satisfied with the current efficiency in their home.

Energy Efficiency: Good for Builders, Buyers and Sellers

These findings paint a broader picture of the value of energy efficiency and the continued demand in the marketplace. Not only do energy efficient homes help ensure a high performing, healthy, comfortable and resilient indoor living environment, but they also keep residents in their homes longer and sell more quickly and for a higher value than non-energy efficient homes.

Looking at the broader picture, these messages may be able to generate support for improved building energy codes and collectively move us towards a more efficient building stock.

This research is an encouraging sign for the future, and we look forward to continuing to support these efforts in the Midwest.