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California Homebuyers Find More Value in Energy-Efficient Labeled Homes

A photo of a house.During a time when many homeowners have seen their homes' values decrease, some encouraging data shows how investing in efficiency will boost resale value. Aside from the increased comfort and reduced utility bills that stem from home energy efficiency upgrades, homeowners who invest in energy-efficient measures might see a bigger payback when they put their house up for sale.

Energy Upgrade California in Los Angeles County, a Better Buildings Neighborhood Program partner, and the Green Label Rebate Program funded three case studies to add support to a larger study that found upgraded homes sell for an average of 9% higher than those that are less energy efficient. Researchers at the University of California, Berkeley, and the University of California, Los Angeles, studied 1.6 million homes in California to see if those rated with ENERGY STAR®, LEED®, or GreenPoint Rated labels sold for a higher price than those without energy-efficient labels.

The case studies focus on three homes with GreenPoint Rated labels and describe how much energy and money the homeowners saved from installing upgrades, in addition to the supplemental benefits of comfort, health, and a lowered carbon footprint. For example, homeowners participating in the Energy Upgrade California program in Los Angeles County can earn a GreenPoint Rated label by installing a package of energy efficiency upgrades in their home. Each upgrade is worth points, and once the home meets the minimum point amount, it earns a label. Depending on what upgrades homeowners install, they can also receive up to $8,000 in rebates and up to $2,000 for earning a GreenPoint Rated label. The homeowners profiled have reduced their energy costs by $1,600 to $2,237 per year.

"We're helping homeowners make their homes more comfortable and increase their property value," said Howard Choy, general manager for Los Angeles County's Office of Sustainability, a statewide partner in the Energy Upgrade California program, and sponsor of the Green Label Rebate Program. "We hope this information and the energy upgrade rebates available to Los Angeles County homeowners will encourage more people to acquire energy efficiency upgrades and green home labels."

As new data emerges, energy efficiency programs can learn why labeled homes are more attractive to homebuyers and replicate these methods in other regions. For example, areas where homeowners paid the highest prices for upgraded homes correlated with those areas where the most electric cars were registered. Yet, environmentally conscious buyers weren't the only ones who paid more for these features. Homeowners in the hottest climates also paid significantly more for homes with energy efficiency features.

Although the recent studies did not extend past California, their conclusions only echo what other areas have reported. In Seattle, Washington, GreenWorks Realty has followed how efficient homes have consistently sold for more money. Similarly in Portland, Oregon, Earth Advantage Institute reported that efficiency-labeled homes sold for 30% more than non-labeled homes in 2011. The organization has been tracking these sales for four years and certified homes have outsold non-labeled homes each time. Regardless of climate or demographics, these reports show that homeowners highly value a home with energy-efficient features already installed.