Remember the Heinz Ketchup commercial? An-tic-i-pa-tion…
That’s a bit where we are with energy efficiency. The steps to make an existing home more efficient have evolved, the awareness is out there, the incentives are getting better. But the number of homeowners making the upgrades is still disappointing.
The missing link? Value.
When green remodeled homes start selling for more than traditional homes, other home owners will key in on that and start making improvements themselves. Just ask the granite countertop fabricators. Features that lead to successful real estate sales lead to lots and lots of follow-up customers.
The characteristics of today’s real estate market keep us in anticipation mode. They are keeping value at bay.
Challenge 1 – Price Pressures. It’s a buyer’s market and a sensitive economic climate. Price is everything. Right now, buyers look at price first. Any upgrades (including green remodeling) are considered along the lines of a free bonus. They might help market time, but buyers are not ponying up a lot more for them.
Challenge 2 – Volume. Fewer home sales mean less success stories in the market, and not enough good examples for appraisers to compare one green remodeled home sale to another to determine value. According to the National Association of REALTORs, 2005 we saw a record number of existing home sales at over 7 million. In 2010, even with the boost of the home-buyer tax credit, that number was 4.8 million. Sales since 2006 have been flat at around 5 million, which represents only about 4% of the overall US homes inventory. Flat transaction volume translates into a slower value engine.
So what’s the alternative to anticipation? Now is the time to get the engine that can calculate value tuned up and ready for a more robust real estate market. Resources like the GreenMLS Toolkit and others are an important focus.