In today’s WP, Ken Harney reports HUD Secretary Shawn Donovan’s interest in mandating energy efficiency ratings on homes and and providing financing incentives for loans on more energy-efficient properties. Here’s the pith:
A Harvard-trained architect who ran New York City’s Department of Housing Preservation and Development for four years before coming to HUD, Donovan said his agency is in the early stages of discussions with federal energy officials to develop “a relatively simple scoring system for housing that would allow you to understand what you’re buying and at the same time allow lenders to underwrite that into their mortgage. Ultimately, if your energy bills are going to be lower, there ought to be some [mortgage] benefits to that.”
The system might also factor in transportation costs to employment centers in some way, he said, because “most people don’t realize that the average American family spends over 50 percent of their income on a combination of housing and transportation.” Even with lower prices for houses in the far-flung suburbs, “their transportation costs are huge,” he said, and metropolitan sprawl itself represents a massive energy-consumption inefficiency.
Mortgage terms — higher loan amounts for buyers to make energy-conserving improvements, lower mortgage rates for energy-efficient homes — “can be a very powerful tool” in residential energy conservation, he said, and the booming Federal Housing Administration insurance program would be a good place to start.
“If in the long run there’s a cost of $5,000 to upgrade a house that will produce $10,000 in savings over time for utilities, the perfect tool to realize those savings is a mortgage,” he said. Although Fannie Mae, Freddie Mac and the FHA all have had versions of “energy-efficient mortgages” on the books for years, their programs have been poorly marketed and little used. Donovan wants to revive and improve the whole concept.
This past week, I learned that a provision to mandate precisely that kind of disclosure is included in Congressman Henry Waxman’s (D-CA) energy bill, backed by the Obama Administration and currently under consideration in Congress. I suspect NAR is following this issues closely and will weigh-in at the right time.
At any rate, I see a dubious new industry — energy efficiency inspections — in the making.
Question is, who’ll be responsible for those energy-efficiency disclosures, and what will an energy-efficiency assessment add to the price of the home (not to mention the almost-certain retrofitting that will have to be done to raise the energy efficiency of a property)?