Although home heating costs in New England are expected to skyrocket in the coming months as winter bears down, real estate industry experts say a home’s energy efficiency – or lack thereof – is having little effect on homebuyers’ decisions to purchase.

In the existing-home market, Realtors across the commonwealth say the trend is not caused by consumers’ lack of concern over heating costs or the environment. It’s the continued lack of available inventory that forces homebuyers to be less choosy.

“With the increases we’re expecting in heating prices in New England, affordability is going to be difficult anyway,” said Shari Marquis of Marquis Real Estate GMAC in Brighton and president of the Greater Boston Real Estate Board’s Residential Association of Realtors. “I really haven’t seen much of a difference in the market in terms of what people are looking for.”

Similar sentiments were echoed in other parts of the state.

“Once in a while, I’ll hear someone ask about the energy efficiency of a home,” said Elizabeth Randall of Elizabeth Randall Realty in North Adams and president of the Berkshire County Board of Realtors. “It’s a valid question, and everyone should ask about the home’s insulation and if it can be insulated further … but we just don’t have a huge inventory, and a lot of our inventory is older homes. It’s not really affecting whether the homes are selling.”

“It’s not making a difference here, with the inventories being so short,” said Rosalind K. Levine of R. S. Residential in Worcester and president of the Greater Worcester Association of Realtors. “Buyers are looking at the location first, then they’re thinking about the condition of the home.

“They figure in their own mind that they can do things to make the home more energy efficient later on, and if it’s an older home, they negotiate that in the price,” she continued.

“Most of the energy upgrades occur after the sale, whether the buyer is doing a rehab or they just see where there’s a draft in the house,” Marquis said.

Although ultimately it may not affect the home sale, the energy price hike does present some challenges to Realtors. “When people are looking at the home and they ask how much it costs to heat the home, if it’s oil we give them the figure in gallons instead of dollars because we don’t know what the price will be from one day to the next,” Randall said.

“We still have problems with electric heat,” Marquis said. “Those homes are sometimes difficult to sell because people still have concerns over the cost of it.”

Levine, however, said even that mentality is beginning to change. “It used to be if a house was all electric it would take forever to sell, but electricity prices are almost on par with oil or gas, and now it’s no longer such a negative.”

‘Increased Awareness’
In the new-home market, Massachusetts builders report strict state building codes require that homes being built here are among the most energy efficient in the United States. However, because of the high cost of new construction, the typical new-home buyers are coming from an income bracket that allows them to afford spending extra money on heating, and therefore is less interested in the energy efficiency of a home. But builders add that the interest in energy efficiency is not completely void in the market.

“In the last 60 days, I would say there has been an increased awareness in energy efficiency in new homes,” said Gary Ruping, president of Billerica-based Ruping Builders, which constructs homes in the $500,000 to $1 million range. “New homes by their very nature are more energy efficient, but I think consumers are more interested in cosmetic upgrades than in the R-value of the building envelope. They’d rather spend $10,000 to upgrade their kitchen than upgrade the insulation envelope.”

“At the price range I’m building at, it’s really not a huge issue,” said third-generation builder Scott Colwell, trustee of Hoover Realty Trust in Medfield and president of the Builders Association of Greater Boston. Colwell is currently working on developments in Norfolk and Medfield where home prices range from about $600,000 to $1 million.

Colwell said that building codes in Massachusetts now require insulated glass for most windows and higher R-value insulation throughout the home. “They’ve really tightened up on air infiltration too, requiring more weather-stripping and foam insulation,” he said.

“Even though I explain all of this [to my clients], I don’t think it’s a huge issue,” he said. “They’re all driving their SUVs, and even though the cost of gas is up, they’re still driving them.”

Colwell added that he has always worked to build energy efficient homes, including working extensively with solar heating when that trend was popular in the late 1970s.

Paul Gallagher, vice president of Hanover-based J. P. Gallagher Construction, which also builds higher-end homes, said one reason new-home buyers don’t appear to be concerned about energy efficiency is because it’s something that they automatically expect to get.

“Most high-end builders already use Tyvek house wrap and low-E windows,” he said. “It’s expected in the market. Some things go without saying. There’s a certain benchmark you try to meet because you’re putting your name on the house.”

Gallagher added that another reason concern among consumers hasn’t risen significantly yet may be because concern over energy prices is still a relatively recent topic. “It depends on how long this goes on; many people haven’t felt [the effect] yet,” he said.

Regardless of the level of consumer concern, environmental agencies are working with builders and using marketing campaigns to make the public aware of how homes can become more efficient.

Locally, Westborough-based Conservation Services Group is working with developers on making their homes Energy Star certified, meaning they meet the highest standards of energy efficiency set by the Environmental Protection Agency and the Department of Energy.

“We’ve had some success with large builders in the region,” said John Livermore, spokesman for Energy Star Homes. “Fifteen percent of the new housing starts in Massachusetts will earn the Energy Star designation.”

As one example, Livermore said, the Green Cos. will build the 43 homes in the first phase of the 2,854-unit The Pinehills development in Plymouth to be Energy Star compliant.

Livermore said that while Massachusetts has the strictest energy-efficiency code in the nation along with California, new-home buyers still need to be aware because that energy code is not always heavily enforced.

“Enforcement is not always consistent,” Livermore said. “Local inspectors want to make sure the house isn’t going to fall down, and worry about the energy efficiency later.” He added that Energy Star homes are inspected separately by Energy Star representatives before they earn that label. “We go soup to nuts, looking at all the features of the home,” he said.

Livermore said it can sometimes be a challenge to get homebuilders to use the latest in energy-efficient technology. “Some builders like to build the way they always did,” he said.

He agreed with builders’ observations that affluent homebuyers don’t always have energy efficiency on their minds. “There’s some truth to that,” he said. “If people can afford a $750,000 house, if their utility bills are $2,000 to $3,000 a year, that’s not a big concern.

“But if you talk to [the homebuyers] about the environmental effects, you can make some headway. It really depends on the customer.”

Hot Home Market Surviving Chill of Mounting Energy Woes

by Banker & Tradesman time to read: 5 min
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