The benefits of building to EarthCraft standards can be found at www.earthcraftva.org.
“Making our buildings more energy-efficient is one of the fastest, easiest and cheapest ways for us to create jobs, save money and cut down on harmful pollution. This is an idea whose time has come.”
– President Barak Obama
What does it mean to ‘Be Green?’ Does it mean recycling when you can? Does it mean turning off your water when you brush your teeth? Does it mean low flow commodes and low VOC paints? Does it mean conditioned crawl spaces and instant hot water heaters?
The answer is yes to all of them. Being ‘Green’ can be about smarter use of utilities or it can be about the use of more responsible building materials. It can also be about better land use practices or mass transit. In other words, being ‘Green’ can mean a lot of different things….all of which are generally good things.
If Green is better, then why not be as Green as possible? The issue is this, in far too many cases, we are incentivized to do the opposite.
Do tell.
Instant hot water heaters are more efficient and will lower utility bills but are more expensive to install than the old tank-based hot water heaters. Responsible harvesting of forests for flooring and framing materials is more expensive than clear-cutting a forest and that drives the cost of lumber up. Low VOC paints are more expensive.
You get the picture.
For a home to be certified by EarthCraft (this is the dominant rating company in Richmond but there are others in other markets) to its minimum standard increases the building cost by 3-5%. On a typical 2500 SF home this translates to anywhere from $10,000 to 20,000. Building to an EarthCraft standard, which focuses primarily on energy efficiencies, means lower utility bills. If the savings are roughly $150/month (which is easily achievable), then that is the equivalent of a mortgage payment on about $25,000 worth of debt. As you can see, the savings justifies the costs. We should be good to go, correct?
The answer is no.
The appraisal process makes no mention of utility cost. A non-EarthCraft home built in 2000 (which very few homes were built to any Green standard then) in the same neighborhood as a home built in 2010 with an EarthCraft certification will be viewed the same by the appraiser. In effect, the value in the eyes of the lender is no different than a home that has 2-3x the utility costs. The appraisal affects loan-to-values and loan-to-values affect interest rates. Higher interest rates (or loan programs with mortgage insurance) drive up the cost of ownership and drive down the ability of a buyer to qualify.
While this is slowly changing as more and more builders adopt green techniques, it is still an issue, especially when GREEN homes are compared to non-GREEN homes and until all appraisers learn to recognize the benefits of GREEN and EarthCraft certifications, lending on GREEN housing is more expensive. It is another classic case of mortgage lending being directly at odds with the marketplace and policy makers.
