Greener than what?

 The Home Energy Rating workshop on Sept 15th is history. Turnout was OK, fewer real estate agents than expected, but more members of the public than I anticipated. Event was reportedly mentioned at the SLOCo Board of Supervisors session the day before.

A couple of ideas occurred while I was running a couple days before (good thing the ideas were good, the run sucked--felt every one of my 62+ years--hate it when that happens).

Houses have a wide array of characteristics, features and attributes related to the house itself, the yard, the location etc. Some of these are obvious, some not at all. Some are easy to evaluate and compare, others are more difficult and still others involve personal taste that may defy analysis--the art effect--I know what I like.

Energy efficiency fits in there somewhere as an attribute of the house. With HERS II we have a standardized way of measuring energy efficiency that holds the potential to allow comparisons among otherwise similar houses (and dissimilar houses too). Predictably, trade organizations don't want point of sale HERS II reports--that's consistent with their historic doctrine, but this point of sale issue isn't about retrofitting or upgrading, it's just about measuring and making that measurement available to the decision process. That information may be a material fact to many Buyers. Buyer have the right to determine what their array of material facts are--the trade associations don't. Based on their own documents, trade associations don't want information about energy efficiency made available to Buyers, because it might devalue some houses with poor energy efficiency and it might trigger pressure to upgrade older houses at time of sale. It's important to note that this argument isn't really limited to Home Energy Ratings mandated at point of sale by ordinance. Logically, the trade associations would similarly oppose voluntary adoption of Home Energy Ratings as a prevailing practice at the time of a sale transaction. Put another way, the industry seem to believe energy efficiency should not impact value or desirability of existing housing stock, apparently to protect the "private property rights" of owners of older less energy efficient homes. What about owners of newer MORE energy efficient homes? What about owners of homes that received energy efficiency upgrades? Do those owners have a "private property right" to fully experience the benefits of energy efficiency in resale value or future appreciation? Measurement scale run both ways! Do we suppress sqft of living area because some houses are smaller than others? Decisions are made on the basis of differences--points of distinction. Prejudging what points of distinction the public might deem important is just bad policy.

In the more global view, how is this particular application of historic trade association doctrine consistent with increasing the energy efficiency of the exiting housing stock by the greatest amount possible in the least amount of time? It isn't. How does it benefit Buyers? It doesn't. How does it benefit Sellers? It might benefit a few Sellers of older, less energy efficient home who are able to complete a transaction to a Buyer who didn't care about energy efficiency (perhaps for economic reasons--could only afford the least expensive house regardless) or didn't understand the role energy efficiency will very probably play in present utility costs and future appreciation. MOST Sellers would actually benefit from wide use of Home Energy Ratings. Moreover, Sellers are often Buyers at a later time. Whose private property rights are being protected?

The ideal (you've read this before) is for the Buyer to find the RIGHT house--one that best meets the wants and needs of the Buyer from among all the houses available to purchase. Those wants and needs span the gamut. To evaluate how a house meets those wants and needs Buyers should have access to information across the full spectrum of attributes. Without that information, the decision is based on partial information reducing the probability that the house chosen is actually the RIGHT house. If the Buyer fails to buy the RIGHT HOUSE, an unknown Seller missed a sale and the Buyer made a less than optimal decision that could have significant financial and psychological implications.

On a larger scale, the real estate industry and the trade association are not concerned, at least in a statistical sense, with whether Buyers find the RIGHT house. The industry is focused on houses sold--two sides per sale--RIGHT houses are just another sale--it's the same commission whether it's the RIGHT house or not. GCC (gross closed commission) defines success -- just like it did 100 years ago.

Where's the Green come into the picture (aside from the commission currency color)? There may be a faint tint on the distant horizon--but it begs the question--Greener than what?

Maybe this climate change stuff is just a phase some of the public is going through?

Next post will cover a few bullet points from the event--pulled from my slideshow entitled Framing the Early Adoption of Using Home Energy Ratings in Real Estate Decisions.