Energy Efficient New Homes Get a Marketing Boost

energy efficient homesIf buyers could see from the start how energy efficient new homes save major dollars on energy costs, would they be more likely to open their wallets wider for a new home over old? In a market heavy with competition from distressed properties, Los Angeles-based builder KB Home and other new-home companies are betting they will -- and slapping stickers on their new homes with the relevant numbers to prove it.

Taking a cue from automobile manufacturers, KB Home is now giving consumers the complete energy lowdown before they buy, so the new home sticker shock isn't quite so shocking. The company provides prospective homebuyers with an upfront estimate of what their monthly gas and electric bills would be living in a brand- new, energy-efficient KB Home.

The label also shows buyers where the home ranks on an energy efficiency scale, much like appliances.

Houston-based McGuyer Homebuilders Inc., is also in on the act: McGuyer provides customers with estimates of what the annual heating and cooling portion of their utility bills will be on homes in the company's four Texas markets, where summers can run up huge electric bills.

Even better, if buyers end up paying more in utilities than what the sticker says, McGuyer
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promises to reimburse them for the difference in the first two years of homeownership.

This unusual strategy comes as home builders face fierce competition from existing homes, which are selling at huge discounts now in many areas. New home sales in the U.S. sank last year to the lowest level since at least 1963. New homes are often loaded with more energy-efficient features, such as thermal windows and better insulation, which can make them pricier than older homes. Given the choice, builders think buyers will choose the bargain-priced, pre-owned properties to pinch pennies, but claim they will end up spending more on utilities.

"It's the biggest purchase decision that people are making at that time in their lives, and typically they have no idea what it's going to cost to truly own the thing until they've been there for several months," said Jeffrey Mezger, KB Home's president and CEO. "It's a cost of home ownership that hasn't been out there."

Energy costs are not considered in PITI affordability determinations, that is, how much housing expense a family can afford. Mortgagors look at principle, interest, taxes and insurance.
And the vice president of residential market development at the U.S. Green Building Council, Nate Kredich, says builders have been adept at showing off bells and whistles within a home, but not showing buyers how it all translates to lower utility bills. This new approach could make energy efficient homes more popular, just as it did with fuel-efficient cars and hybrids.

KB's Energy Performance Guide utilizes the Home Energy Rating System (HERS) Index, which is regarded as an industry standard for calculating energy efficiency, to determine a home's ranking. The lower the score - which also is displayed on the label - the lower its projected energy costs, and the more a homeowner will save living in the home.

For example, the average newly constructed home will garner a score of 100 on the index, while Energy Star qualified homes rank at about 85. In comparison, pre-owned older homes typically fare around 130 on the scale.

Now what does that mean to consumers in dollars and cents? The difference between a score of 80 and 130 could amount to a doubling of the energy bill, KB's Mezger says. And as fuel and energy costs continue to rise, that difference will be more significant.

A Department of Energy program has been issuing certificates to builders whose homes achieve a HERS score of 70 or less. Like KB's, it features the home's HERS score and an estimated average monthly energy bill. The program has issued certificates on 5,500 homes.

Of course, the rankings and energy bills vary, depending on home size and location. A 2,167-square-foot KB house in Jacksonville, Fla., received a HERS score of 74 and an estimated monthly energy bill of $100; a 1,550-square-foot home in Las Vegas ranked 66 on the HERS index, estimated $89 a month in energy costs.

Of course, just as with autos, a lot depends on the user's conservation efforts, which puts limits on how far these builders will go. KB Homes won't guarantee specific level of gas and electric utility costs;the McGuyer Home builders energy guarantee wisely has its limits.

"If somebody puts 50 tanning beds in their home," says Ken Gezella, regional sales manager for the home builder's Dallas and Fort Worth markets, "that's not what the energy guarantee is for."

Real estate reporter & bloggerCandy Evans is an award-winning, Dallas-based real estate reporter, blogger, and consultant. She's the gal who brought House Porn to the Bible Belt! Read more at Send story ideas and tips to

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Candy is an award-winning, Dallas-based real estate reporter, blogger, and consultant. She's the gal who brought House Porn to the Bible Belt! Read more at and send story ideas and tips to
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