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Low Impact Living: The Bottom Line — Green Home Upgrades & Home Values

From green building elements.com

With many cities experiencing a real estate “slump”, homeowners around the country are looking for ways to stand out from the slew of homes on the market, while improving their home’s resale value. Other homeowners are planning for the future: a future of ever-rising energy prices. Regardless of your situation, you may be asking yourself if green home improvements increase the home’s value. The answer isn’t as straight-forward as some might hope.

According to a post at building elements.com the first thing to remember about real estate value is “location, location, location.” Like any home improvement, the return on your investment will depend on the value of your house and others in the neighborhood, as well as the local market. Other factors like the quality of the workmanship, and how soon you move after making the improvements weigh in as well. Here are some points to consider:

· Green amenities and features may not appeal to everyone, but energy- and money-saving green features will.

· If you’re building a new house, or diving into a significant remodel, you might want to consider getting it certified as green. At resale, certification can provide buyers interested in all kinds of green benefits assurance that they are getting what they paid for.

Nationally, the US Green Building Council, developers of the LEED rating system, have put forth a new residential certification called LEED for Homes. LEED certified homes use less energy, water and natural resources, and their construction creates less waste, among other benefits. LEED is probably the most well-know certification standard in the US, mainly due to its widespread commercial acceptance. Other nationwide programs include the Environments for Living certification, which includes an energy usage guarantee, and the EnergyStar program, which focuses on home energy efficiency.

· Many green homeowners dream of living “off the grid”, meaning that they can supply all of the energy needed to power their home. Solar can be all or part of this equation. Technologies are improving with promises of more affordable solar on the horizon. But for now, residential solar installations are still expensive. State and federal tax incentives can help. For the past three years the US government has offered homeowners a 30% tax credit on solar projects (including photovoltaic systems and solar hot water heaters) up to a maximum of $2,000 per project. However, this incentive is set to expire at the end of the year and may not be extended. Some states provide tax breaks and rebates for solar installations, so take a look at the Database of State Incentives for Renewables and Efficiency (DSIRE) to find out what you may qualify for. Thirty-five states, including Virginia, offer net metering.

With the evolution of solar’s efficiencies, cost reductions, and net metering, payback periods for the original homeowner can now be in the single digits. But what about when you sell your home? Can you recoup that investment? Since residential solar installations are still relatively rare, it’s difficult to say. To answer the question, appraisers are using this rule of thumb: half of the cost of a solar installation can be recouped at selling time. Or you can look at it from the energy savings perspective: according to The Appraisal Journal, every $1 decrease in energy costs results in a $10 to $25 increase in home values. If this holds true, eliminating a $1200 annual electricity bill translates into at least a $12,000 increase in home price.

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