The three-page Appraisal Institute form should guarantee at the minimum that an appraiser will take notice of a home’s energy improvements and seek to come up with a value adjustment for local market conditions.

What’s new?

The 2012 code requires more insulation, a tighter envelope, tighter ducts, better windows, and more efficient lighting than the 2009 code.

Here is a summary of the important changesfor residential builders in the 2012 International codes:

• The 2012 International Residential Code (IRC) no longer includes its own energy-related code provisions. Instead, the IRC simply references the International Energy Conservation Code (IECC).
• While the 2009 codes required that 50% of lighting fixtures in a new home to be so-called “high-efficacy” fixtures (fixtures using a CFLs or equivalent), the percentage has been raised to 75% in the new code.
• Duct tightness requirements have become more stringent.
• Blower-door testing requirements have become mandatory and more stringent; the 2009 threshold of 7 ach50 has been changed to 5 ach50 for climate zones 1 and 2 (Austin is in zone 2), and 3 ach50 for homes in all other zones.
• All homes in zones 3 through 8, and some homes in zones 1 and 2, will be required to have a whole-house mechanical ventilation system.
• In many climate zones, window glazing U-factor and solar heat gain coefficient (SHGC) requirements have been changed.
• Wall insulation requirements have become more stringent in climate zones 3, 4, 6, 7, and 8; for the first time, builders in climate zones 6, 7, and 8 will be required to install exterior rigid foam insulation (or to use some other comparable wall insulation strategy).

The bottom line: every new home will need to be tested with a blower door, every cold-climate builder will need to come up with a strategy to stop thermal bridging through studs.

Chapter 11 in the IRC

The 2012 IRC still includes energy efficiency requirements in Chapter 11. However, these requirements are now identical to the residential provisions found in the 2012 IECC.

In essence, chapter 11 of the IRC is just a reprint of the applicable sections of the 2012 IECC.

Until the most recent round of code revisions, residential builders could choose to comply with one of two energy codes: either Chapter 11 in the IRC (the “Energy Efficiency” chapter), or the residential section of the IECC. Most builders found it easier to follow the IRC. However, any builder who wanted to follow the performance path (rather than the prescriptive or component-tradeoff path) had to use the IECC, since the IRC didn’t include a performance path option.

The fact that there were two parallel energy codes — one in the IRC, and one in the IECC — was confusing to many builders. While the two codes were aligned on most matters, they occasionally conflicted, further adding to confusion.

The 2012 code revisions have simplified the situation. Now that the IRC now simply references the requirements of the IECC, residential builders have only one option. Residential builders should ignore the sections of the IECC that refer to commercial construction; section R401 of the 2012 IECC governs residential construction.

If you are willing to endure the limitations of a quirky website, you can download several versions of the IRC as well as several versions of the IECC — one paragraph at a time — from a website maintained by the International Codes Council.

High-efficacy lamps

In section R404.1, the 2012 IECC requires that “a minimum of 75 percent of the lamps in permanently installed lighting fixtures shall be high-efficacy lamps.” The percentage has been raised from 50% in the 2009 code.

The code defines a high-efficacy lamp as either:

• A compact fluorescent lamp (CFL);
• A T8 or smaller linear fluorescent lamp; or
• Any lamp meeting the following minimum efficiency requirements: 60 lumens per watt for lamps over 40 watts, 50 lumens per watt for lamps over 15 watts but no more than 40 watts, and 40 lumens per watt for lamps rated at 15 watts or less.

This definition excludes incandescent light bulbs. High-efficacy lamps are allowed to have any type of base; screw-base (Edison-base) lamps comply with the new code.

Duct tightness testing

Like the 2009 codes, the 2012 IECC requires duct leakage testing unless the duct system is located entirely inside of the home’s thermal envelope. The new code has increased the stringency of the duct leakage thresholds.

The code permits builders to test a duct system in one of three ways:

• One option is a so-called “rough-in” test before the air hander is installed. While the 2009 code had a threshold of 4 cfm per 100 square feet of conditioned floor area for this test, the 2012 code has lowered this threshold to 3 cfm.
• Another option is a so-called “rough-in” test after the air handler is installed. While the 2009 code had a threshold of 6 cfm per 100 square feet of conditioned floor area for this test, the 2012 code has lowered this threshold to 4 cfm.
• The third option is a so-called “post-construction” test. While the 2009 code had a threshold of 12 cfm per 100 square feet of conditioned floor area for this test, the 2012 code has lowered this threshold to 4 cfm.

The bottom line: get out your tub of mastic, and seal everything well.

Better air tightness requirements

The 2009 International codes included provisions to improve the air tightness of new homes. Builders were given two compliance options: either follow a checklist of measures or have the home tested with a blower door.

The new 2012 code doesn’t give builders a choice anymore; builders now have to comply with both the checklist requirements and the requirement to conduct a blower-door test.

The air-sealing checklist in the 2012 IECC is called Table R402.4.1.1, “Air Barrier and Insulation Installation.” The 2012 table is based on the earlier checklist (2009 IECC, Table 402.4.2); however, the 2012 version is written in mandatory language, and a few ambiguities in the earlier table have been cleared up.

All items on the checklist must be followed; however, the way builders prove compliance is likely to vary from jurisdiction to jurisdiction. The 2012 code provides a lot of leeway to the local inspector; according to the code, “Where required by the code official, an approved third party shall inspect all components and verify compliance.”

Table R402.4.1.1 requires:

• “A continuous air barrier shall be installed in the building envelope. Exterior thermal envelope contains a continuous air barrier. Breaks or joints in the air barrier shall be sealed. Air-permeable insulation shall not be used as a sealing material.”
• “The air barrier in any dropped ceiling/soffit shall be aligned with the insulation and any gaps in the air barrier sealed. Access openings, drop down stair or knee wall doors to unconditioned attic spaces shall be sealed.”
• “Corners and headers shall be insulated and the junction of the foundation and sill plate shall be sealed. The junction of the top plate and top of exterior walls shall be sealed. Exterior thermal envelope insulation for framed walls shall be installed in substantial contact and continuous alignment with the air barrier. Knee walls shall be sealed.”
• “The space between window/door jambs and framing and skylights and framing shall be sealed.”
• “Rim joists shall be insulated and include the air barrier.”
• “Insulation shall be installed to maintain permanent contact with underside of subfloor decking. The air barrier shall be installed at any exposed edge of insulation.”
• “Where provided in lieu of floor insulation, insulation shall be permanently attached to the crawlspace walls. Exposed earth in unvented crawl spaces shall be covered with a Class I vapor retarder with overlapping joints taped.”
• “Duct shafts, utility penetrations, and flue shafts opening to exterior or unconditioned space shall be sealed.”
• “Batts in narrow cavities shall be cut to fit, or narrow cavities shall be filled by insulation that on installation readily conforms to the available cavity space.”
• “Air sealing shall be provided between the garage and conditioned spaces.”
• “Recessed light fixtures installed in the building thermal envelope shall be air tight, IC rated, and sealed to the drywall.”
• “Batt insulation shall be cut neatly to fit around wiring and plumbing in exterior walls, or insulation that on installation readily conforms to available space shall extend behind piping and wiring.”
• “Exterior walls adjacent to showers and tubs shall be insulated and the air barrier installed separating them from the showers and tubs.”
• “The air barrier shall be installed behind electrical or communication boxes or air sealed boxes shall be installed.”
• “HVAC register boots that penetrate building thermal envelope shall be sealed to the subfloor or drywall.”
• “An air barrier shall be installed on fireplace walls. Fireplaces shall have gasketed doors.”

Every new home must pass a blower-door test

Once you have completed the air-sealing checklist, you still need to conduct a blower-door test.

According to section R402.4.1.2 of the 2012 IEDD, “The building or dwelling unit shall be tested and verified as having an air leakage rate of not exceeding 5 air changes per hour in Climate Zones 1 and 2, and 3 air changes per hour in Climate Zones 3 through 8. Testing shall be conducted with a blower door at a pressure of 0.2 inches w.g. (50 Pascals). Where required by the code official, testing shall be conducted by an approved third party. A written report of the results of the test shall be signed by the party conducting the test and provided to the code official. Testing shall be performed at any time after creation of all penetrations of the building thermal envelope.”

It’s up to the local code official to determine whether builders can conduct their own tests or whether builders need to contract with a third-party tester. The code does not require third-party testers to have completed any type of certification or training in how to use a blower door.

What about mechanical ventilation?

Although the 2012 IECC includes provisions to improve a home’s airtightness, it is silent on the question of whether new homes need mechanical ventilation systems. However, the 2012 IRC does include requirements for mechanical ventilation.

If you are building in a jurisdiction where residential construction must comply with the 2012 IRC, any new home with a blower-door test result of less than 5.0 ach50 must include a whole-house ventilation system complying with requirements listed in 2012 IRC section M1507.3. Since the new code requires homes in all zones except zones 1 and 2 to achieve 3 ach50, the code effectively mandates a whole-house mechanical ventilation system for homes in zones 3 through 8.

More information on these IRC requirements can be found in the comments posted below on 9/21/2011. Note that the whole-house ventilation system requirements in the 2012 IRC refer to two tables, Table M1507.3.3(1) and Table M1507.3.3(2). These tables are reproduced on this page as images (see below).

Better windows

Builders in many climate zones will need to choose windows with a lower U-factor and a lower solar heat-gain coefficient (SHGC).

Here are the changes to the prescriptive window requirements:

• In climate zone 1, the maximum window U-factor changes from U-1.2 to U-0.65, while the maximum SHGC changes from 0.30 to 0.25.
• In climate zone 2, the maximum window U-factor changes from U-0.65 to U-0.40, while the maximum SHGC changes from 0.30 to 0.25.
• In climate zone 3, the maximum window U-factor changes from U-0.50 to U-0.35, while the maximum SHGC changes from 0.30 to 0.25.
• In climate zone 4 (except Marine), window SHGC is regulated for the first time. The maximum permissible SHGC is 0.40.
• In climate zone 5 and Marine 4, the maximum window U-factor changes from U-0.35 to U-0.32.
• In climate zone Marine 4 and zones 5, 6, 7, and 8, the maximum window U-factor changes from U-0.35 to U-0.32.

There are no restrictions on SHGC in climate zone Marine 4 and zones 5, 6, 7, and 8. In these climates, a high SHGC is usually desirable, especially on the south orientation.

Prescriptive requirements for glazing U-factor and glazing SHGC are found in Table 402.1.1 of the 2012 IECC; the table is reproduced on this page as an image (below).

Cold-climate builders will need exterior foam sheathing

In Table 402.1.1, the 2012 IECC ratchets up minimum prescriptive insulation levels in several climate zones:

• In climate zones 2 and 3, the minimum ceiling R-value has been increased from R-30 to R-38.
• In climate zones 4 and 5, the minimum ceiling R-value has been increased from R-38 to R-49.
• In climate zones 3 and 4 (except zone Marine 4), the minimum R-value for above-grade walls has been increased from R-13 to R-20 (or R-13 with an additional layer of R-5 continuous insulation).
• In climate zone Marine 4 and zone 5, the minimum basement wall and crawl space wall R-value has been increased from R-10 continuous to R-15 continuous.
• In climate zones 6, 7, and 8, the minimum crawl space wall R-value has been increased from R-10 continuous to R-15 continuous.

However, the most earth-shaking changes found in Table 402.1.1 are the wall insulation requirements for climate zones 6, 7, and 8— an area that includes Wyoming, Montana, North Dakota, South Dakota, Minnesota, Wisconsin, Vermont, New Hampshire, and Maine. In these zones, the 2012 code calls for above-grade walls to have at least “R-20+R-5” insulation or “R-13+R-10” insulation.

The table includes the following footnote explaining the wall R-value requirements that include a “plus” sign, including the requirements for climate zones 6 though 8: “[The] first value is cavity insulation, [the] second is continuous insulation or insulated siding, so ‘13+5’ means R-13 cavity insulation plus R-5 continuous insulation or insulated siding. If structural sheathing covers 40 percent or less of the exterior, continuous insulation R-value shall be permitted to be reduced by no more than R-3 in the locations where structural sheathing is used – to maintain a consistent total sheathing thickness.”

Most builders in these climate zones will find that the easiest compliance option will be to include R-5 or better foam insulation on the exterior of a 2×6 wall, or R-10 or better foam insulation on the exterior of a 2×4 wall. To meet R-5, builders will need at least 1.5 inch ofEPS, 1 inch of XPS, or 3/4 inch of polyisocyanurate. To meet R-10, builders will need at least 3 inches of EPS, 2 inches of XPS, or 1.5 inch of polyiso.

Note that all of these code requirements are minimum requirements. In many climates, the minimum code requirement for the R-value of the continuous insulation (usually rigid foam) is not enough to keep OSB or plywood wall sheathing above the dew point in winter. Builders in Vermont who choose to install R-5 foam on a 2×6 wall will eventually discover that their OSB stays damp and begins to mold. For more information on this subject, see Calculating the Minimum Thickness of Rigid Foam Sheathing.

The code makes no mention of double-stud walls, so builders who choose this method of construction will need to convince their local building official that a double-stud wall complies with the code. Here’s one way to make the argument:

• To comply with the R-20 plus R-5 requirement, some of the insulation — at least R-5 worth — must be continuous. That means you need at least 1.5 inch of cellulose between the two rows of studs, implying that a double-stud wall needs to be at least 8.5 inches thick.
• Since 8.5 inches of cellulose has an R-value of R-31.5, the total R-value of the wall exceeds the R-20 plus R-5 requirement.
• In conclusion, any double-stud wall that is at least 8.5 inches thick appears to comply with the R-20 plus R-5 requirement.

Prescriptive insulation requirements for ceilings, walls, and floors are found in Table 402.1.1 of the 2012 IECC; the table is reproduced on this page as an image (below).

New pipe insulation requirements

The 2012 IECC includes new requirements for R-3 or better pipe insulation on most types of hot-water pipes. A full explanation of the pipe insulation requirements can be found inImprovements to 2012 IECC.

What about enforcement?

The 2012 IECC is a significant improvement over all previous U.S. energy codes. However, energy experts should probably refrain from popping any champagne corks. An improved energy code is all fine and good, but if the code is unenforced, its existence is largely irrelevant.

Unfortunately, in most jurisdictions, most provisions of U.S. energy codes have never been enforced. For the 2012 IECC to be meaningful, thousands of local building code officials will need extensive training, and the budgets of thousands of local building departments will need to be substantially increased. Considering the current political climate, however, these essential steps may never be taken.

As the unemployment rate stays stubbornly high and housing remains mired in recession, several proposals have come down the pike lately on how to jumpstart a recovery in both areas. Here’s a look at a few of the recent plans:

(Click on each plan name for more info)

• Homestead: Act 2 – Proposed by U.S. Rep. Gary Ackerman, D-N.Y., this plan is designed to encourage homeownership by offering subsidies for those who want to buy single-family homes to live in them and tax exemptions for investors in rental properties.
• The Huntsman plan – Introduced as part of presidential candidate and former Utah Gov. Jon Huntsman’s jobs plan yesterday, this proposal calls for privatizing Fannie Mae and Freddie Mac and scaling back homeownership subsidies. The current programs are stopping a “natural stabilization” of the market, Huntsman says.
• The Spitzer plan – Former New York Gov. Eliot Spitzer (along with others) is calling for the administration to force banks and the GSEs to write down mortgages for underwater borrowers to the current market value of the home, with the banks sharing in any upside profits.
• The Obama administration’s plan – It’s not clear at this point exactly what the administration is planning to do on housing, although it will apparently be part of the President’s job creation program that he will introduce to a joint session of Congress next week. Most indications are that it will at least include some form of an expanded refinancing program for underwater borrowers.
• The Foreclosure plan – Voiced by a number of economists, this one’s rather simple: Just stop propping up the market and push foreclosures through as quickly as possible to get through the crisis.

(Presidential candidate and former Massachusetts Gov. Mitt Romney is also introducing his jobs program next week, but there’s no word yet on whether or not he’ll say anything about housing.)

I recently had a 5 star Green Builders Program duplex appraised that I built in Austin and I was astounded to find out that appraisers show no value at all for energy efficient features or energy efficient recognition.  A builder may spend tens of thousands of dollars to build a home correctly and the banks will compare it to any old leaky inefficient home the same size.

Last week, HUD Secretary Shaun Donovan and U.S. Department of Energy Secretary Steven Chu met at an energy auditing company on Long Island to announce the launch of the FHA’s new PowerSaver pilot program.

Working with 18 lenders across the country, the program will allow homeowners to borrow up to $25,000 to finance energy improvements in an existing home, including improvements to insulation, duct sealing, replacement doors and windows, HVAC systems, water heaters, solar panels, and geothermal systems. Terms can go up to 20 years, and rates will be lower than standard. The FHA will guarantee up to 90% of the loan.

The idea is to generate interest in the private sector, which Donovan is hoping will get on board by providing these types of loans more readily.

Fannie Mae recently came out with a similar offering, a new Energy Improvement feature for mortgage loans. Fannie had already stopped offering its Energy Efficient Mortgage feature, which could have been used to finance the purchase of a new energy-efficient home. The replacement program can only be used to make energy improvements to an existing home.

The financing will cover energy improvements deemed cost-effective by a RESNET home energy rating, and amounts can go up to 10% of the post-improvement appraisal.

Unlike Fannie, the FHA still has a program for buyers of energy-efficient new homes intact. Its Energy Efficient Mortgage program can be used to help home buyers finance energy-efficient features in a new home as part of an FHA insured mortgage.

However, the increasing shift in emphasis toward improving the energy efficiency of existing homes rather than new homes is symptomatic of the disconnect between what government entities see as the market reality and what builders are seeing in the field.

According to a Fannie Mae spokesperson, the company feels that private lenders are meeting the needs of buyers of energy-efficient homes, suggesting that lenders will value energy-efficient features appropriately.

Shaun Donovan agrees. When Builder questioned Donovan after the PowerSaver announcement about why the government seemed to be moving its focus to existing homes, Donovan emphasized that the benefits of energy-efficient building are being recognized by private sector lenders and appraisers.

“We’ve seen greater progress in the new-home market through local building codes,” Donovan told Builder. “What we’ve seen more and more are appraisers and Realtors who see the value in [energy-efficient construction], and lenders are recognizing that.”

But that’s not what builders are saying.

About two years ago, Meritage Homes decided to go all-in with energy efficiency. “We took the approach that we were going to start over and change the way we build,” C.R. Herro, vice president of environmental affairs at Meritage, told Builder. “We frame different. We build different. We use different appliances and features.”

As a result, Herro reports that Meritage can build a home that uses half the energy and half the water of a traditional home with only a 10% increase in the cost of construction. The energy-saving upgrades Meritage includes can save the homeowner between $1,200 and $3,600 a year in utility bills, depending on the home (some of Meritage’s homes achieve net-zero energy efficiency).

But when asked if appraisers and banks recognize the value of the energy-efficiency benefits Meritage includes, Herro replied emphatically, “Absolutely not! We’re building a lot of significant improvements into our homes. We’re doing net zero. We’re doing solar. And we’re struggling to get a penny out of it.”

“Conventional construction is leaky,” Herro said. “A traditional home will have to recondition all of the air in the entire house 70 times a day. When you rebuild [to high energy-efficiency standards], you can cut that down to five.” According to Herro, such a reduction would cut heating and air-conditioning costs down by 60%.

The trouble, Herro said, is that the people consumers look to when trying to gauge the value of a home—appraisers and lenders—are failing to recognize the value in the energy-efficiency upgrades the homes include, and as a result, the builder is forced to absorb that additional cost.

Despite these challenges, Meritage has been able to make energy-efficient building work as a business model, largely because of customer awareness that sees the value in it. Also, as one of the largest builders in the country, Meritage is able to achieve economies of scale by building all of its homes to energy-efficient standards. “But the average builder is incentivized to build a less energy-efficient home,” Herro said. “It’s ridiculous that you can build to [a high] level of efficiency, but it has a negative effect on your income statement.”

In an effort to remedy the problem, Herro is promoting the Sensible Accounting to Value Energy (SAVE) Act, a proposal supported by Sen. Michael Bennet (D-Colo.) that would require federal loan agencies to take into account the expected energy costs of a home when assessing a mortgage loan application.

“Homeowners who spend less on energy will have more money to make mortgage payments and to maintain and repair their homes,” SAVE Act press materials say. “A person will be less likely to have to choose between paying the utility company or his or her lender.”

The materials also point out that the average U.S. household will spend more than $2,300 in energy costs over the course of a year, “more than the average cost of property taxes or homeowners insurance, two expenses that are routinely underwritten in a mortgage loan. Energy costs are not accounted for in this process.”

“If you take all the things out of a home that waste resources and money, that innovation costs a little bit more,” Herro said. “The problem is that building better, until the average consumer recognizes the benefits, is disincentivized by the establishment.”

Claire Easley is senior editor, online, at Builder.

I recently installed window film in my own home and i thought this article might be of interest.

With interest in green building and utility rebates on the rise, builders and remodelers are looking at solar-controlling window films as a cost-effective solution for boosting home efficiencies and reducing costs for clients while lifting sales and profits for themselves. Applied to the window, transparent film acts as a solar shield, blocking up to 80% of the sun’s heat, according to the International Window Film Association.

“The biggest trend I’ve noticed over the past few years is that people put more and more glass into a home,” says Missouri window film installer Robert Kersten. “Solar control is the payback. [With window films,] in three years you’re going to get your money back and if you buy a good quality product from a reputable dealer, it will last you 20, 25 years. It’s really a bang for the buck.”

Nevertheless, lack of awareness, misperceptions, and the small additional cost are impeding the category’s growth, installers say.  Here are some of the product’s pros and cons.

Pros

• Window film can cut utility costs by 30% to 40%, says California-based consultant Donna Wells, and at $6 to $14 per square foot, it’s much cheaper than replacing windows.
• Solar films block 99% of UV light that fades furniture, and with better technologies, now do it without looking reflective or dark.
• Films add security, slowing down a break in and holding shards together if the window shatters.
• Some state and utility programs offer rebates for window films.
• While mainly a retrofit product, some films can make a low-cost new window as efficient as a low-E, triple-pane unit, says Wells.

  Cons

  • Some window manufacturers warn that films will void their window warranty; however, several film manufacturers offer to match it.
  • Certain lites, latches, and frames make installation difficult, and a bad application can leave glass looking bubbly.
  • Most homeowners are skeptical of the benefits, making film a hard sell that requires education.
  • Installers say some film brands are better than others, so buyers should look for NFRC certification.

  Still, experts say the future is bright. Products embedded with photovoltaics, even better solar energy-blocking film content, and tinting that users can switch on and off are the future for window films, says Charlie Curcija, a scientist at Lawrence Berkeley National Laboratory.

  But for installer Kersten, the biggest challenge is right now: “It’s so far out of people’s realm of thinking, the hardest part is to convey what a good product window film really is.”

  Evelyn Royer is assistant editor for Building Products. This article originally appeared in Building Products.

Government agencies say the benefits of energy-saving construction are recognized by private lenders, but builders say otherwise.

Last week, HUD Secretary Shaun Donovan and U.S. Department of Energy Secretary Steven Chu met at an energy auditing company on Long Island to announce the launch of the FHA’s new PowerSaver pilot program.

Working with 18 lenders across the country, the program will allow homeowners to borrow up to $25,000 to finance energy improvements in an existing home, including improvements to insulation, duct sealing, replacement doors and windows, HVAC systems, water heaters, solar panels, and geothermal systems. Terms can go up to 20 years, and rates will be lower than standard. The FHA will guarantee up to 90% of the loan.

The idea is to generate interest in the private sector, which Donovan is hoping will get on board by providing these types of loans more readily.

Fannie Mae recently came out with a similar offering, a new Energy Improvement feature for mortgage loans. Fannie had already stopped offering its Energy Efficient Mortgage feature, which could have been used to finance the purchase of a new energy-efficient home. The replacement program can only be used to make energy improvements to an existing home.

The financing will cover energy improvements deemed cost-effective by a RESNET home energy rating, and amounts can go up to 10% of the post-improvement appraisal.

Unlike Fannie, the FHA still has a program for buyers of energy-efficient new homes intact. Its Energy Efficient Mortgage program can be used to help home buyers finance energy-efficient features in a new home as part of an FHA insured mortgage.

However, the increasing shift in emphasis toward improving the energy efficiency of existing homes rather than new homes is symptomatic of the disconnect between what government entities see as the market reality and what builders are seeing in the field.

According to a Fannie Mae spokesperson, the company feels that private lenders are meeting the needs of buyers of energy-efficient homes, suggesting that lenders will value energy-efficient features appropriately.

Shaun Donovan agrees. When Builder questioned Donovan after the PowerSaver announcement about why the government seemed to be moving its focus to existing homes, Donovan emphasized that the benefits of energy-efficient building are being recognized by private sector lenders and appraisers.

“We’ve seen greater progress in the new-home market through local building codes,” Donovan told Builder. “What we’ve seen more and more are appraisers and Realtors who see the value in [energy-efficient construction], and lenders are recognizing that.”

But that’s not what builders are saying.

About two years ago, Meritage Homes decided to go all-in with energy efficiency. “We took the approach that we were going to start over and change the way we build,” C.R. Herro, vice president of environmental affairs at Meritage, told Builder. “We frame different. We build different. We use different appliances and features.”

As a result, Herro reports that Meritage can build a home that uses half the energy and half the water of a traditional home with only a 10% increase in the cost of construction. The energy-saving upgrades Meritage includes can save the homeowner between $1,200 and $3,600 a year in utility bills, depending on the home (some of Meritage’s homes achieve net-zero energy efficiency).

But when asked if appraisers and banks recognize the value of the energy-efficiency benefits Meritage includes, Herro replied emphatically, “Absolutely not! We’re building a lot of significant improvements into our homes. We’re doing net zero. We’re doing solar. And we’re struggling to get a penny out of it.”

“Conventional construction is leaky,” Herro said. “A traditional home will have to recondition all of the air in the entire house 70 times a day. When you rebuild [to high energy-efficiency standards], you can cut that down to five.” According to Herro, such a reduction would cut heating and air-conditioning costs down by 60%.

The trouble, Herro said, is that the people consumers look to when trying to gauge the value of a home—appraisers and lenders—are failing to recognize the value in the energy-efficiency upgrades the homes include, and as a result, the builder is forced to absorb that additional cost.

Despite these challenges, Meritage has been able to make energy-efficient building work as a business model, largely because of customer awareness that sees the value in it. Also, as one of the largest builders in the country, Meritage is able to achieve economies of scale by building all of its homes to energy-efficient standards. “But the average builder is incentivized to build a less energy-efficient home,” Herro said. “It’s ridiculous that you can build to [a high] level of efficiency, but it has a negative effect on your income statement.”

In an effort to remedy the problem, Herro is promoting the Sensible Accounting to Value Energy (SAVE) Act, a proposal supported by Sen. Michael Bennet (D-Colo.) that would require federal loan agencies to take into account the expected energy costs of a home when assessing a mortgage loan application.

“Homeowners who spend less on energy will have more money to make mortgage payments and to maintain and repair their homes,” SAVE Act press materials say. “A person will be less likely to have to choose between paying the utility company or his or her lender.”

The materials also point out that the average U.S. household will spend more than $2,300 in energy costs over the course of a year, “more than the average cost of property taxes or homeowners insurance, two expenses that are routinely underwritten in a mortgage loan. Energy costs are not accounted for in this process.”

“If you take all the things out of a home that waste resources and money, that innovation costs a little bit more,” Herro said. “The problem is that building better, until the average consumer recognizes the benefits, is disincentivized by the establishment.”

Claire Easley is senior editor, online, at Builder.

2. Austin-Round Rock, TX

Market Health Indicator: 86.5

2011 Building Permit Forecast: 11,079

Percent Change in Building Permits: 57%

Though Austin was knocked from the top spot on this year’s list, its housing fundamentals continued to show solid improvement. The metro area enjoys some of the strongest job growth in the nation. Employment accelerated last year with the addition of 18,700 more jobs, most of them in service industries, lowering the unemployment rate to 7%. Google recently fanned the employment flames by announcing it wants to open a division there dedicated to location-based marketing and mobile recommendations.

Austin has grown to become the 15th largest city in the nation, according to the U.S. Census Bureau. Its strong fundamentals have attracted the interest of apartment owners and developers: MPF Research forecasts that it will be the second best apartment performer this year.

Median incomes rose 3% last year. Median home prices in Austin rose right through the economic recession, eking out a 1% gain last year to $195,000.

From Builder Magazine  Posted on: March 3, 2011

How much more does it cost to build to the Gold standard of the NAHBGreen rating system than to Silver or Bronze certification? What specs would have to be upgraded to escalate a home’s rating?

A builder north of New Orleans built 3 identical 1912 Square foot homes to compare the costs of upgrading to the different levels of green construction.  He found that upgrading to the Silver level (from Bronze) incurred a $7,455 premium , and that going to Gold cost another $15734.00 above that.  This does not include any federal or stat rebates.

The additional costs came from across a spectrum of upgrades. The air-conditioning systems, for instance, were scaled from a 14.5-SEER unit for the Bronze- and Silver-level homes to a geothermal, water-cooled heat pump for the Gold-level home that achieves a seasonal energy-efficiency ratio well over 20.

The builder also improved the thermal shell. The Bronze baseline features 2×4 stud walls at 16 inches on-center with R-30 batt insulation, OSB sheathing, and housewrap, while the Silver version upgrades to a spray-applied, R-15 rockwool insulation, with foam panels over the OSB to create a thermal bridge. The Gold-level house is advanced-framed with 2×6 walls at 24 inches on-center and R-24 blown-in-blanket insulation. Windows went from a baseline U-factor of .35 to .29 to .24.

from 11-2010 Builder Magazine