Green Home Remodeling Still a Good Investment

| by Gary Wollenhaupt
Green Home Remodeling Still a Good Investment

Although some federal real estate and home improvement tax breaks ended in 2016, there are some projects that will still pay off in the long run.

Three popular homeowner tax breaks ended in 2016, and at this point there's no indication Congress will re-instate them any time soon.

One of those was the Residential Energy Efficient Property tax credits that allowed homeowners to offset taxes up to 10 percent of the amount paid for qualified energy-efficiency upgrades. These included HVAC systems, energy-efficient windows and storm doors. There was a lifetime limit of $500 for this credit.

Although many homeowners funded home upgrades with this credit, there are still good investments to be made in remodeling a home to be more efficient or purchasing a new energy-efficient home.

In an exclusive interview with, Dave Gorman, a senior vice president at Bank of America, and Jennifer Amann, buildings program director with

Jennifer Amann
Dave Gorman

the American Council for an Energy-Efficient Economy, discussed changes in the tax laws and the value of investing in home energy improvements.

PGH: What trends are you seeing in the home renovation space, particularly for energy-efficiency related projects?

DG: Over the last 18 months we've seen a pretty steady improvement in home appreciation, which has freed up quite a bit of equity for homeowners. We're tending to find that instead of jumping into another home, a lot of folks are staying where they are and looking to remodel or upgrade energy efficient options for their home. We find that a lot of homeowners are borrowing the equity against their home that's now available and installing things like energy efficient windows and doors, siding, roofing or putting in energy efficient appliances and actually borrowing funds to do solar panels to generate solar energy for their homes.

When we ask homeowners what they're are using their loans for, if it's not for your standard remodel, which always has underlying energy efficiency when they're doing it, they're specifically doing it for energy efficiency reasons, especially given the cost of energy.

PGH: Is the real estate marketing starting to reflect the value of home energy efficiency improvements?

JA: As more real estate agents are starting to understand the value of these investments they're using that in smart ways to showcase the value of these properties, using some of the tools that are available now to provide better information on the energy savings from some of these types of upgrades. Also, more multiple listing services are including energy ratings and other kinds of green ratings and operational assessments of the home and using those in creative ways of getting that information across to homeowners.

PGH: Is the mortgage industry able to lend according to the total cost of ownership of home including energy costs vs. based on purchase price alone?

DG:Neither the appraisers nor the bank don't take into account what the energy benefits or credits they might get in valuing the home. We simply just value the home itself. If if a builder started a new plot of homes and there hasn't been an established market value, the appraisers will go into and value the home based on the neighboring community and what supports the value of the home. And if this builder is trying to tout this a more green, energy efficient home based on products or materials and prices are 5 percent to 8 percent higher, we might not be able to reflect that in the true appraisal initially.

In an established community, then we have an established market and then an appraiser might be able to reflect an appreciated price. From the lending perspective, we really look at the physical structure of the home and care less about the energy and environmental aspects.

PGH: How should homeowners approach remodeling and upgrading their homes?

JA:My main recommendation is to find a really good experienced home performance contractor, or someone else who can come in and work with them, and do a detailed assessment. Because even if the folks don't want to move forward  right away they can make a list of projects.

For instance in my case, I bought a house that had been rehabbed so it didn't make sense for me to make system upgrades, but I've been able to work with my contractor to identify projects I could do over time as other work needed to be done.

A lot of times folks may not think about about working with a contractor if they're not thinking about a specific energy project, but that that person can really help them think through what they might want to do sort of on a staged basis and plan out those improvements.

You can be thinking about what opportunities a roof replacement might give you for beefing up insulation or doing other structural work you might need to do if you have an older home in particular

If you're thinking about installing solar panels or other improvements, you can take advantage of other projects, if you're doing a siding project you could do some advanced insulation and air sealing at that time.

Think of it as a longer-term project and have somebody work with you to think through you what you might want to do over time.

Read more about home remodeling.


Topics: Building Green, Certification / LEED, Energy Audits, Energy Star, Home Design & Plans, Remodeling, Roofing, Sustainability Trends & Statistics

Gary Wollenhaupt

Gary Wollenhaupt is an experienced writer and editor, with a background as a daily newspaper reporter as well as corporate and agency public relations and marketing. He is constantly looking for affordable green upgrades to make to his home in eastern Kentucky.

wwwView Gary Wollenhaupt's profile on LinkedIn

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