Energy Efficiency Features of Homes – What Buyers Tell Us They Want
By Arun Barman, Research Economist
Home buyers look at a number of characteristics of the properties when they are searching for a home to purchase. In addition to traits like size, the number of bedrooms and bathrooms, and convenience to schools, shopping or other amenities, commuting costs, energy expenses and environmental efficiency and concerns have increasingly factored into the homebuying decision. This month we look at energy efficiency and its importance to recent home buyers, based on findings from the 2010 NAR Profile of Home Buyers and Sellers.
Energy efficiency is an important feature for many home buyers. The Profile shows that almost nine in ten buyers felt that a home’s heating and cooling costs were at least somewhat important in their buying decision. Roughly seven in ten buyers felt that energy-efficient appliances and energy-efficient lighting were at least somewhat important.
Buyers in the Northeast and South tended to place the highest premium on heating and cooling costs. According to the Department of Energy’s 2005 Residential Energy Consumption Survey, homes in the Northeast typically have the highest yearly energy bills: averaging $2,319, compared to less than $1,800 in each of the other three regions. In the South 23 percent of energy expenditures go to air-conditioning, compared with 14 percent in the West (the next highest region). Also, buyers in the South and West – the two regions where the housing stock tends to be newer – showed a stronger preference for energy-efficient appliances and lighting.
Preferences by Age
Interestingly, older buyers (those aged 55 and above) tended to have stronger preferences towards energy-efficient features than did younger buyers (18 to 34). Twenty-nine percent of older buyers felt that energy-efficient lighting and appliances were very important features, whereas just over 20 percent of younger buyers felt that those features were important. Part of the explanation may be the fact that younger buyers are more often first-time home buyers. Therefore older buyers may be more aware of energy-efficient appliances and lighting that can reduce monthly energy bills.
Differences by Buyer Income
Buyers with higher incomes tended to place less importance on environmentally friendly features. Twenty-nine percent of buyers with incomes over $100,000 per year thought heating and cooling costs were significant in their home buying decision, compared with 47 percent of buyers with incomes less than $45,000 per year. There is a similar trend for energy-efficient appliances and lighting features. The importance of each feature increases incrementally from higher to lower income groups. One reason may be that energy efficiency translates into cost savings, which is more important for lower-income home owners. That also indicates that the desire to be environmentally friendly is less important than the cost savings from energy efficiency.
Other Energy Savings Preferences
Half of all buyers felt that landscaping for energy conservation and environmentally friendly community features had some importance in their decision to purchase a home. Buyers in the West region showed a higher preference towards landscaping for energy conservation, with 17 percent responding that this was a very important feature. Also, about twice as many older buyers felt landscaping for energy conservation was very important compared with buyers 18 to 34 years old.
For more information
The 2010 NAR Profile of Home Buyers and Sellers is available to NAR members at no cost. Visit http://www.realtor.org/research for details. The Profile is available for purchase for nonmembers by calling 1-800-874-6500, or visiting the web site and going to www.realtor.org/prodser.nsf/products/186-45-10?OpenDocument.