Though prior attempts have been made to attach a precise value to energy efficiency at the whole home level, there has never been a broadly accepted standard. The Sensible Accounting to Value Energy Act (SAVE), currently being considered in the United States Congress, may represent a step toward codifying the relationship between home energy use and resale value.
In the wake of the 2008 housing crisis in which lenders were faulted for not screening mortgage applicants thoroughly enough, the SAVE Act aims to add an additional metric for qualifying new loans. Like property taxes and homeowners insurance, SAVE would also require lenders to factor energy costs into the requested loan amount.
Essentially, a potential home buyer could be turned down for a new loan because they don’t appear financially capable of meeting future obligations to utility companies. But given the inverse relationship between energy costs and home value under SAVE, potential buyers may also stand a better chance of getting approved for a mortgage on an energy efficient home.
With SAVE, anticipated energy savings are used to calculate the loan-to-value ratio, boosting value where energy savings can be verified by (1.) licensed industry professionals or (2.) a review of past utility bills. A higher valuation with respect to the loan amount is, of course, more attractive to mortgage issuers.
Likewise, higher appraisals mean that homes can be marketed at higher prices. Thus home owners are given a powerful incentive to commission upgrades, helping to ensure that their investment is reclaimed even if they don’t stay in the home long enough to collect yearly dividends.
Beyond establishing a much-needed reward system for energy efficient homes, there are, of course, other incidental benefits of such legislation including extra revenue flowing to businesses at various stages of supplying the energy-efficient home. Perhaps this broad distribution of benefits is the reason why the bill seems to be enjoying such widespread support.