Picture this, adding “energy” to the long-standing formula of key expenses—principal, interest, taxes, and insurance—to calculate how much money someone could potentially borrow from a bank to buy a home.
Imagine, a home’s ability to capture savings in heating and cooling and electricity costs factoring into that house’s relative value—including location, square footage, and other comps—in an appraisal for resale.
These two principles are driving Congress to consider changing laws around housing finance that could cause people, home builders, remodelers, and the real estate industry to change the way they think about “green” and “sustainable” home building.
On October 19, the conversation around the economics of affordable, green residential real estate construction changed:
The bill, S. 1737 [112th Congress], was introduced on October 19th, 2011 by Senators Bennet (D-Co.) and Isakson (R-Ga.) and referred to the Committee on Banking, Housing, and Urban Affiars. Comparable legislation has not yet been introduced in the House of Representatives. The proposal is supported by a diverse coalition of organizations, including the U.S. Chamber of Commerce, the Appraisal Institute, the U.S. Green Building Council, and the Natural Resources Defense Council.
The SAVE Act would help revitalize the hardest hit sectors of the economy by providing lower rate mortgage financing for cost effective energy improvements; allowing homebuilders and homeowners to recover the cost of efficiency investments; and enabling better federal mortgage underwriting while lowering utility bills for American households. Benefits include:
- Enable federal mortgage programs to improve the quality of mortgage underwriting and provide an accurate picture of repayment risk and the expected costs of homeownership
- Greatly accelerate the supply of and demand for energy-efficient new homes
- Quickly return any incremental cost for homebuyers due to home efficiency improvements
- Encourage the purchase of energy-efficient homes that reduce utility bills for American homeowners and reduce the vast amount of energy consumed in homes
- Consistently and accurately account for energy efficiency in appraisals, enabling builders and homeowners to invest in energy-saving features
- Put people in the construction and manufacturing sectors back to work renovating and building energy-efficient homes and products
The SAVE Act would create 83,000 jobs and $1.1 billion in annual energy bill savings
A recent joint analysis from the American Council for an Energy Efficient-Economy (ACEEE) and the Institute for Market Transformation (IMT) estimates that the SAVE Act would create 83,000 jobs and $1.1 billion in consumer energy bill savings in 2020, helping revitalize the hardest hit sectors of the economy. The SAVE Act would provide lower rate mortgage financing for cost effective energy improvements; allow homebuilders and homeowners to recover the cost of efficiency investments; and enable better federal mortgage underwriting while lowering utility bills for American households. Download the Analysis.
The Leading Builders of America, which has backed this initiative for more than 18 months, has started up a site called ProtectHousing.com, aimed at “defending policies that encourage responsible homeownership.”
Sources: BuilderOnline.com – IMT.org
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