Home > Uncategorized > Does Energy Efficiency Drive Home Builders out of Business?

Does Energy Efficiency Drive Home Builders out of Business?

A couple of months ago, I was reading a discussion in one of the many LinkedIn groups that I belong to and came across a comment arguing that energy efficiency requirements drive builders out of business. Here’s part of what this fellow wrote:

“No one is against saving water or being more energy efficient, in fact if you can build a better mouse trap then the competition you will win over the customer. The point that I have been making is that the goverment is mandating things that most consumers can’t afford to pay for which puts builders out of business. The more builders that go out of business the higher prices will go for the consumers.

“Most builders who adopt a green agenda are very sincere in their ambitions but soon find out that customers love what they are doing, but they can’t or are unwilling to pay for it. In many markets today you can’t make it work because of appraisals. Also, understand if you come up with ideas that produce a better mouse trap and you can sell it, I will be the first to stand up and cheer you on. I am just stating what I have seen from my 25 years in the business.”

This argument is gaining traction among some home builders because energy codes have stiffened their requirements. For example, in Georgia, the state passed a new energy code that (mostly) went into effect on 1 January of this year. Among the new requirements:

Infiltration test required on all new homes, which must be 7 ACH50 or less
Duct leakage test required on all new homes, with 8 cfm25 per 100 square feet of conditioned floor area served by the system
No power attic ventilators, unless they’re solar
No electric resistance heat used as primary heat source
At least 50% of the lighting must be ‘high-efficacy’ or have sensors or automation to shut it off when not in use

Will these new requirements cost builders extra? Mostly, yes. If they’ve been installing power attic ventilators, though, they’ll now save a little bit by not putting them in.

Sealing up the house and the ducts to limit the amount of leakage shouldn’t cost extra because they should be doing this already. Plus, the thresholds for passing are pretty easy to attain. Once builders and their trade contractors learn the details, it’ll be easy to do and add little to no cost.

Yes, there’ll be a cost to have their work tested, and I think when Mike Barcik surveyed HERS raters around the state last year, he found the average cost of a test would be around $75. Also, the new energy code doesn’t even require third party testing. Builders and HVAC contractors can get trained as Duct and Envelope Tightness (DET) Verifiers and test their own work.

Getting back to the main question, will the extra burden and cost of meeting the new requirements drive home builders out of business? Hmmmm.

Have disposal requirements put tire manufacturers out of business?
Did the new security procedures instituted after 9/11 bankrupt airlines?
Does a former drill sergeant make a terrible therapist? (Oh, wait, that’s a Geico commercial. Sorry.)

My answer is an emphatic No. Yes, builders have gone out of business and will continue to fold. The main factor in the past few years, though, is the economic downturn, not new energy efficiency requirements. Correlation does not imply causality. Just because home energy efficiency requirements have increased and builders have gone under doesn’t mean one caused the other.

Also, if we’re talking government mandates, as the commenter above referenced, then we have a level playing field. All builders have to do it, so home buyers don’t have the option of going to one who’s not incurring the extra cost to meet the requirements.

In my opinion, new requirements for home energy efficiency are essential. Building science has come a long way in the past few decades, and we know that conventional home-building methods lead to a host of problems – and that they’re easily remedied. We’re also grappling with serious energy security issues, and every little bit helps.

The argument that efficiency drives builders out of business is similar to the claim that requiring greater energy efficiency takes away our freedom. Basically, I think, it comes down to people in the construction industry being resistant to change. They want to do things they way they’ve always done them, but that’s a guaranteed path to going out of business.

What do you think? Does energy efficiency drive home builders out of business?

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