Good Luck Financing Your Dream Green House
Mr. Blandings Builds His Dream House, but you won't get to build yours
At the start of the mortgage crisis, I wrote:
"In the last decade, appraisals didn't matter that much; the banks were just selling the paper in CDO s to someone else. Now they will again; guess what will happen when you say you want to put in a $25,000 ground source heat pump instead of a $5,000 furnace, or insulate the walls to R-30 or build out of FSC timber. Only a small percentage of the population understand or care what this means, so you will never get their value out of an appraisal."
Unfortunately, it turns out to be true.
Granite countertops: Appraisers understand that.
According to Alexandra Marks in the Christian Science Monitor, it is tough to get environmentally friendly homes appraised and financed.
The problem is threefold: a lack of education among appraisers about the costs and benefits of green construction; insufficient data for them to calculate the value of environmental benefits; and finally, real estate listing services that, in many parts of the country, do not take into account attributes such as solar panels and spray foam insulation in their market valuations.
One builder in North Carolina wanted to build a small, efficient house for a client. He says:
"We had to go back and strip out some energy features like the solar water heaters and cut back on insulation and add square footage, making it bigger and less [energy-] efficient to get to the appraisal."
Square footage they understand; insulation they don't. The appraisal industry says that's the way it should be; bigger houses sell for more, but there are no data that show that a solar water heater increases home value. The public still puts more value on a granite kitchen counter than it does on better insulation.
This is supposedly changing; Energy Star describes Energy Efficient Mortgages from the FHA, the Veterans Administration and an Energy Star Pilot Mortgage Program, which the CSM says is being expanded.
But ultimately, as we noted earlier, "Innovation and green design requires cold, hard cash from rich purchasers. It's history for everyone else."