Archive for the ‘Economics’ Category

Home Affordability: Total Cost of Ownership

January 23, 2011

As a green real estate agent, I think energy efficiency features are important.  But not for the obvious reasons.  I appreciate them because I think buyers who understand energy efficiency make for happier home owners – it helps you manage your home costs better.

For years, mortgage lenders have trained us to focus on PITI.  We figure out how much home you should buy based on Principal, Interest, Taxes and Insurance.  But that is only part of the picture.  For example, the Institute for Market Transformation notes that energy costs are a significantly larger aspect of a family’s monthly budget – much bigger than the taxes and insurance we base mortgage calculations on. 

So how can you make better choices and get more control over your monthly budget?  It’s time to start thinking about the Total Cost of Ownership.  Total Cost of Ownership means you factor in your mortgage, plus Transportation, Utilities and Maintenance costs. 

Today there’s no one-stop resource for evaluating Total Cost of Ownership.  But the resources are evolving fast.  Here’s a list of the best Total Cost of Ownership resources right now:


  • Abogo (as in “abode” + go) helps you see the transportation costs associated with one address vs. another
  • Look for the Walkscore badge on more and more listings for sale; or, visit the site to enter an address and see how walkable it is and what the public transit options look like


  • A home energy makeover, like the retrofits GreenHomes America is known for, is a great investment that will cut your monthly costs
  • If you are shopping for a home, ask for the utility bills over the past 13 months and background details on retrofit work done, and the results of any before and after testing


  • Condo associations have performed Reserves Studies for years.  Homeowners can use the same approach.  A reserve study considers how old the key systems in your home are, how long you can expect them to last, and helps you budget funds to proactively replace or update them as needed.
  • A good home inspection, combined with a home energy assessment is a great tool to create your own home maintenance plan. 

So start thinking about  Total Cost of Ownership for a better way to enjoy your home and manage your family budget.

Laura Reedy Stukel is an EcoBroker Certified real estate agent and nationally recognized consultant, writer and speaker on home energy efficiency.  She is a market transformation expert, focused at accelerating home retrofits at key real estate leverage points.  Her work is unique, focused on energy efficiency projects fueled by the power of consumer choiceSM.

Home Retrofit is a Great Way to Add Value to Your Home

October 4, 2010

As a green real estate agent with my EcoBroker Certification, I hear a lot of buzz about green homes. But if you are like most Americans, buying a new home, let alone a green-built new home is not in the cards for you.  That’s why I think a home retrofit – an energy efficiency makeover – is such an important real estate tool.

A retrofit is important today, at tax time and in the future when you go to sell your home

Today a retrofit is important because it will cure what ails you.  Whether you have hit GreenHome’s website because you want to save money on your energy bills, stop that annoying little draft in the baby’s room or help the planet, a home retrofit can help.  Best is the saving money part. Other home remodeling projects like an updated kitchen won’t love you back with money-savings every month the way a home retrofit will!

If you act by December 31st, your retrofit will pay off at tax time too.  You may be able to claim a 30% credit for many of the materials you have installed as part of your retrofit.  It’s a great opportunity to see a payback even sooner on your improvements! 

Studies are starting to emerge that show the value of energy-savings in a home at resaleOne early study shows that home buyers are willing to pay up to $5000 more for a home with good energy efficiency improvements.  Buyers know they will save while they live in a home like that and are willing pay a bit more for that benefit upfront.  Be sure to share before and after utility bills with your real estate agents so you can showcase your home’s utility savings when it is time for you to move.

When you look at all the figures, the numbers add up nicely!  Today, the typical retrofit saves an American family between 10-30% on their energy bills.  At tax time, the tax credit could help you with a $1,500 maximum discount on improvements completed in 2010.  That means a $5,000 project would cost you only $3,500.  In the future, trends are saying a buyer might be willing to spend up to $5,000 more for an efficient home like yours.  When is the last time you came out $1,500 ahead for something that saves you money and makes you cozier every day?

Laura Reedy Stukel is an EcoBroker Certified real estate agent and nationally recognized consultant, writer and speaker on home energy efficiency.  She is a market transformation expert, focused at accelerating home retrofits at key real estate leverage points.  Her work is unique, focused on energy efficiency projects fueled by the power of consumer choiceSM.

Retrofitting Buildings to Save

September 14, 2009

The NY Times yesterday reported on something that regular visitors to this blog should know:  retrofitting buildings is a great way to meet broader energy and climate goals (while also making good sense for homeowners!).

The article states:

“To anyone who has ever avoided a drafty window in winter, donned a sweater in midsummer while working in an overchilled office, or otherwise watched heat, light, water and other resources squandered for want of architectural forethought, the statistics should come as no surprise.

More than one-third of all global energy is consumed by, or in, buildings, which in turn account for about 15 percent of global greenhouse gas emissions….”

No need to overpay utilities or shiver in the dark.  Energy-efficiency retrofits can make you more comfortable, safer, and let you invest in your home rather than the utility.

The article was prompted by a Green Jobs/Green New York bill that just passed out of the legislature.  It probably means loans to help pay for improvements—but we’ll have to see how this gets implemented down the road.


Home Sweet Home: Still a Great Investment.

May 1, 2009

OK, I know, I’ve said it before.  But the ARRA tax credits  have been getting a pretty fair amount of press in recent weeks. This Times article, for example, does a good job of summarizing some of the incentives the Act puts forward. Based on my discussions with people, it’s clear to me that many homeowners are aware that now may be a good time to put in those high E windows, or install that solar thermal hot water system.

But, what few folks realize is that, in today’s economic climate, saving energy in your home might offer about the best combination of return and security you can get on money you’re looking to invest. The bigger picture goes beyond just taking advantage of tax credits.

Here’s the gist of what I’m thinking: Why settle for a 1 or 2% return on a CD, 0.25% on a Money Market Account, 0.5% on a T-Bill, or risk losing money in the stock market, when you can get a secure 8% or better return on money you invest in making your home energy efficient? Bonus benefits are: your home is more comfortable, safer,  ‘greener’, has higher resale value, and you can take advantage of the ARRA federal tax credits.

The confluence of these energy-efficiency tax credits, today’s improved technology and installation practices, rising energy prices, and a rotten set of investment choices, simply makes investing your home one of the best things you can do with your money.

And GreenHomes offers our customers a 25% energy savings, minimum.  Some see 50% or better.  Ben Franklin said a penny saved is a penny earned.  I sure he’d be excited about savings thousands of dollars, and you should be to!



Maybe not today, but oil prices WILL rise

January 26, 2009

Echoing an earlier AP story and my post from last week, Keith Johnson on the WSJ Blog Environmental Capital takes a look at why we might see a big jump in oil prices when the economy heats up.  Supply is one reason.  Right now, with lower oil prices, companies aren’t spending as much looking for oil.



Don’t be fooled by today’s cheap oil

January 17, 2009

John Porretto, in an AP story, writes to warn against complacency.  As bitter cold swept the north of the U.S. and Canada this week, we were reminded of the high oil prices just a few months ago.  The downturn in the economy helped sink prices just before winter really hit.  But some people are locked in.  And some are seeing higher natural gas prices this winter for other reasons.

We will claw our way out of this recession—and the world demand for oil will climb back up.  As the rising demand hits the supply ceiling, price will again soar.  According to Porretto, “Some analysts say oil eventually could eclipse $150 a barrel, maybe even on its way to $200. In such a scenario, gasoline would easily cost more than the record high of $4.11 a gallon set last summer…No one knows for sure, but some analysts say the spike could happen as soon as next year, or perhaps in 2011 or 2012.”

Take advantage of the lower prices today to insulate yourself from the inevitable price increases down the road.


Investing in Your Home

October 1, 2008

Wow!  The financial markets are a mess.  My 401(k) has tanked this quarter. The economy is reportedly in dire straits, and Congress hasn’t agreed on a bailout or any other action plan yet.
A lot of people are wondering what to do with their money. You have to go somewhere else for financial advice about your portfolio and your retirement plan.  I would like you to think about one arena, though, that still can deliver a big Return on Investment (ROI).  Home energy improvements. Even with recent declines in oil, home energy prices are still quite a bit higher than they were a year ago and forecasted to rise again this winter. Smart investing in your home can deliver returns better than the current bond market and extremely volatile stock market.
Here are a few examples to quickly illustrate the potential.

Let’s say you invest $2,700 in attic insulation and air-sealing.  (Remember, never think about insulation without thinking about air-sealing, too.)   And let’s assume that insulation is able to help you save $400 per year off of your gas bill based on last year’s prices.   Your first year ROI is $400 divided by $2,700 or 14.8%.  When natural gas prices rise this winter, you save more and your ROI is even higher.
Another example, with a simple calculation tip for your furnace.  If your present furnace is at 70% efficiency (AFUE), and you install a high-efficiency system with an AFUE of 95%, then the projected saving is 25% of the fuel you burn.  Or, said differently you save $25 per $100. If your annual fuel bill is $1,400, then your total annual savings would be about $25 x 14 = $350.  If that new furnace cost $3,850, you’ve got a 9.1% ROI—plus, you won’t be wasting money on service calls to fix your old furnace. Like the earlier example, as energy prices go up, your return goes up.  
Now these are just simple examples.  You might want or need a combination of several home energy improvements.  You’d need a comprehensive assessment like GreenHomes offers to determine exactly which improvements make the most sense for you and your home.  And a GreenHomes Advisor can more accurately estimate your savings.  The take away, for you, is that now more than ever, energy-reducing improvements are a smart investment that will deliver consistent returns for years to come.

Oil Prices are Dropping—Why Worry?

July 30, 2008

In the news over the past week we’ve seen stories about the price of oil “plummeting” to just under $125 per barrel. Whew!  I guess our troubles are over.
Wrong!  While some of the media are excited about the recent drop in Jay Romano raises the right flag in his July 24th article in the NY TimesTime to Worry About Heat Bills” .  
Oil prices are still about twice as high as they were a year ago.  And as goes oil, so goes the rest of energy prices.  Natural gas is up. Electricity is going up.  Even dirty coal is up.   And although they’re not beating the warning drum very loudly, the U.S. Department of Energy says we can expect them to stay up.   Utility prices will be higher this winter, and many people can expect to pay 25% more with some oil customers getting whacked with 100% increases.  Utilities continue to announce gas rate hikes and fuel oil continues to sell at prices double last year.  And electric rates are following suit.
The smart way to fight this and to protect your bank account in the long run is with energy-efficiency improvements.  Investment to save energy in your home start paying dividends immediately, and they’ll continue to pay you back through the winter and long into the future.
Taking steps to save now means you won’t have to worry regardless as energy prices bounce around tomorrow.



%d bloggers like this: