How does energy efficiency impact a home’s value?

When you’re planning to build a new custom home, it’s easy to focus on upfront expenses and costs of construction without thinking about ongoing costs once the home is built. These operating costs of your home are equally important and have huge effects on the lifetime return on your investment.

Higher energy efficiencies lead to higher home values.

Meet the Average family

Mr. and Mrs. Average built a conventional 3,500 square-foot home in a northern California neighborhood where they pay about $130/month for their electricity, which is the average for California residents. The cost to build their home, which conforms to CA Title 24, was $315/SF.

After paying off their 30-year mortgage, the Average family will have spent $46,800 on electricity, assuming the average kWh cost remains at 2018 levels of $0.2056. (Unfortunately, we’ve just seen 5 consecutive years in which the annual increase of electricity spending was actually higher than the rate of inflation.)

Meet their neighbors, the Smarts

The Smarts also built a 3,500 square-foot home — it’s right next door to the Averages. However, they built a high-performance home — specifically, a Passive-Certified Home. They only paid 7% more to have their home built, making it $337/SF.

In contrast to the Averages, the Smarts only average $47/month on electricity. When the Smarts finish paying their 30-year mortgage, they’ll have spent only $16,920 on electricity.

ROI of a high-performance passive home

The Smart’s savings above only relates to their power bill; it does not take into consideration other efficiencies such as water conservation. In addition, costs are offset by rebates such as the California Solar Initiative, as well as state and federal tax credits. Ultimately, a high-performance home is a sound investment, with an annual rate of return of 7%.

To learn more about how Clarum Homes can reduce your utilities costs, call us at 650.322.7069.