What is the value of an energy efficient house?

Value of Innovation – A Study on Energy Efficient Features

The value of energy efficiency in houses is a difficult thing to measure, but of vital importance to the efforts of energy efficiency advocates.  If energy efficiency is a valuable feature in a home that is considered desirable by both builders and buyers, and if houses with these features are able to hold that value, energy efficiency becomes a much more marketable product or strategy.  Both hedonic regressions and willingness-to-pay studies have been conducted examining the value of energy efficient technology.  However, studies have not established the difference in appreciation rates between homes that have energy efficient features and homes built using standard building practices.

This study is Phase 1 of what is designed to be a multiphase project with this first phase investigating and establishing a methodology.  The original Phase 1 study design called for in-depth case studies to examine this question from a qualitative standpoint.  After determining that data availability and the cost-prohibitive nature of this approach made the methodology unrealistic, Newport worked with the Advisory Committee to determine an alternate approach.  After considering various approaches, the most promising was the creation of a repeat sales index that compared the appreciation rates of energy efficient homes against the appreciation rates of standard homes.  Because specific energy efficient features of a home are hard to isolate, Newport decided to focus on homes certified under an energy efficiency program.  This approach used Energy Star certified homes as the energy efficient homes and baseline homes in the same Metropolitan Statistical Area as the control group.

The Phase 1 report will be available March 2009.

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