If We Build It, Will They Come?
A builder wonders why home buyers don’t seem to be embracing super-efficient designs when the benefits are so obvious
This Q&A Spotlight starts with a simple question from Anders Lewendal, a builder in Bozeman, Montana. If building to the Passivhaus standard is so cost-effective, Lewendal wants to know, why are only a handful of these houses getting built in the U.S. every year?
"Either the cost of fuel is too low or the cost of a Passive HouseA residential building construction standard requiring very low levels of air leakage, very high levels of insulation, and windows with a very low U-factor. Developed in the early 1990s by Bo Adamson and Wolfgang Feist, the standard is now promoted by the Passivhaus Institut in Darmstadt, Germany. To meet the standard, a home must have an infiltration rate no greater than 0.60 AC/H @ 50 pascals, a maximum annual heating energy use of 15 kWh per square meter (4,755 Btu per square foot), a maximum annual cooling energy use of 15 kWh per square meter (1.39 kWh per square foot), and maximum source energy use for all purposes of 120 kWh per square meter (11.1 kWh per square foot). The standard recommends, but does not require, a maximum design heating load of 10 W per square meter and windows with a maximum U-factor of 0.14. The Passivhaus standard was developed for buildings in central and northern Europe; efforts are underway to clarify the best techniques to achieve the standard for buildings in hot climates. is too high," Lewendal writes in a post at Green Building Advisor's Q&A forum.
The simple answer suggested by GBAGreenBuildingAdvisor.com senior editor Martin Holladay is there are plenty of things Americans could do to save money, such as buying compact fluorescent lamps instead of cheaper but less efficient incandescent light bulbs.
But, Holladay adds, most people don't think long-term. "Remember that the average American moves every seven years," Holladay writes. "It's hard to make a long-term investment if you know you're going to move soon."
In the end, he says, it's not so much about the Passivhaus standard as it about spending as little money up front as possible.
OK, Lewendal replies, but how do we change that thought process?
"If we can show a reasonable return on investment on efficiency measures, we should be able to convince [home buyers] to agree," he says. "I have nothing against the Passive House Planning Package except that no one wants to use it. I can't make the numbers work either."
Buyers are focused on the short term
It takes only 30 seconds of very basic math to see the benefits of investing in LEDLight-emitting diode. Illumination technology that produces light by running electrical current through a semiconductor diode. LED lamps are much longer lasting and much more energy efficient than incandescent lamps; unlike fluorescent lamps, LED lamps do not contain mercury and can be readily dimmed. lights, says Jin Kazama, but he's been unable to convince anyone he knows to buy Cree LED fixtures. "As Martin pointed out, it is very hard to convince regular folks of anything more than the near future economics," Kazama writes. "So, if an investment has a 10+ year payback period, most will chill out.
"Right now," he adds, "we are at a position where building costs need to get down first, then Passivhaus or some similar efficiency/performance standards will be much easier to push."
Dana Dorsett says he'd be thrilled if most new homes met code minimums, let alone the stringent Passivhaus standard. And while the average American may move every seven years, there are still plenty of people who stay in their houses far longer than that and would benefit mightily from higher energy efficiency.
"Most home buyers are ignorant or apathetic (or both) about energy use, until there is a big round of energy price inflation, as happens from time to time," Dorsett says. "Only a very small percentage (the accounting math-nerds and the energy nerds) run the net-present-value (NPV) analysis even on custom homes, let alone trying out the numbers on already built shoulda-been-code-minimum-but-probably-aren't-really tract homes or 'starter' homes."
(For more information on payback calculations and net present value, see Payback Calculations for Energy-Efficiency Improvements.)
"Short-termers are all about resale value," Dorsett adds, "which given the purchaser behavior, puts a near-zero premium on efficiency."
Is it a case of overblown expectations?
To Malcolm Taylor, the cause of this inability to see long-term benefits "owes a bit more to the wider culture.
"There is surely a bit of cognitive dissonance," he writes, "when you are confronted by a city like Las Vegas or a weekend NASCAR event or the traffic streaming from any major city to far-flung suburbs and then your builder suggests you think about spending a bit more on low-eLow-emissivity coating. Very thin metallic coating on glass or plastic window glazing that permits most of the sun’s short-wave (light) radiation to enter, while blocking up to 90% of the long-wave (heat) radiation. Low-e coatings boost a window’s R-value and reduce its U-factor. windows. It may be the right thing to do but it is at odds with so much else that we see around us."
According to Robert Swinburne, home buyers usually have a long list of features they hope to include in their dream home, but the cost of these features often exceeds the amount that they've been prequalified to borrow. That can lead to all sorts of problems. But in addition, the professional building community may not be much of a help, either.
"If they still decide to try to build a high-quality home, their builder will tell them that double-stud construction will add $30,000 to the price of the (1,200 s.f.) home," Swinburne says. "He will tell them that rainscreenConstruction detail appropriate for all but the driest climates to prevent moisture entry and to extend the life of siding and sheathing materials; most commonly produced by installing thin strapping to hold the siding away from the sheathing by a quarter-inch to three-quarters of an inch. siding details are too complicated and will add $12,000 to the cost of the home (after you explain to him what rainscreen siding details are). He will also tell them that you can't build a home without a boiler. He won't build a house with 'that new-fangled cellulose.' He will have never heard of Passive House or Pretty Good House or anything like that. He may not even be aware that his state has an energy code."
Make it about comfort and low fuel bills now
Maybe the number of Passivhaus designs adds up to a handful, says Bob Irving, but so what? It's a start. "Actually, it's a pretty good record for something that was completely unknown to the public only a few years ago," he writes. "Lots of people are interested in 'net zeroProducing as much energy on an annual basis as one consumes on site, usually with renewable energy sources such as photovoltaics or small-scale wind turbines. Calculating net-zero energy can be difficult, particularly in grid-tied renewable energy systems, because of transmission losses in power lines and other considerations.,' superinsulation and the like."
What the industry really needs now, he adds, is more high-efficiency houses that people can experience, as well as more builders and architects who understand the benefits. "We're trying to change a very staid, very conservative industry," Irving says, "and, yes, it is difficult and hard and takes some time. And it can't be about NPV or 'returns' which will put most buyers to sleep. We have to be selling comfort, ease of living, low maintenance, low fuel bills — advantages they can see now, not 7 or 12 years from now."
The adoption of more stringent building codes will help, but Ron Keagle suggests that home buyers are really the ones holding the cards.
"If you promote higher performance homes to the public, they will demand it," Keagle says. "If they demand it, builders will compete with each other to provide ways to meet a variety of possible options at the lowest possible cost.
"However, if you force higher performance through broad-bush mandates in the codes, there will be no competition between builders to keep the cost down because they all have to provide the same thing. It will be a uniform passed through cost at the highest possible price."
Our expert's opinion
We asked Peter Yost, GBA's technical director, to wade into this not-so-technical discussion, and here's what he had to say:
In August 2008, a barrel of crude oil on the international market went for about $149. It sure seemed as though we had just about everyone’s attention for high-performance retrofits and new home construction… that month. But how long did it take for the price to drop to a mere $35 a barrel? Just another five months. This sort of price volatility is absolutely crazy; and with that much volatility, there is simply no way to build a market for the performance of long-term investments like retrofits and new homes.
But it’s not just fuel price volatility that undermines high performance remodeling and new construction. It’s our fascination with, and I would argue, our inappropriate use of any type of payback analysis on long-term durable goods like homes. If the investment in performance does not evaporate with the sale of a home, and the value of your investments in the home transferred with the sale, you would make the investment in performance based on both operational cost savings and the added value of the home.
Our problem is with the financial institutions, which do not know how to evaluate high performance attributes when properties are bought and sold. That includes real estate agents, appraisers, and lenders. If I install high performance windows in a home, it's almost never worth it from a payback analysis point of view, but those windows stay with the home if and when it is sold, then the remaining value of that investment transfers to the new owner.
Ideally, the buyers should be willing to pay for the added value of the home because the real estate agent lets them know the value of the high performance windows, the appraisers recognize the value in their assessment of the home’s value, and the bank originating the loan trusts the appraiser’s numbers.
I have written on this topic before. The good news is that all three financial sectors — agents, appraisers, and lenders — now have the tools they need to make this happen. We just need to tease the early adopters out of the general population of agents, appraisers, and lenders and give them all the business they can handle to pull their industries into 21st century market realities.
And by the way, if you think our construction industry may be stodgy and conservative, we are like adventurous pioneers compared to the financial institutions we need to drag kicking and screaming to make the high performance value proposition work in our industry.
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