How Green?

Another gap in the posts. Closed two escrows is two weeks, so been a little busy. Feast or famine defines real estate and consulting--when you do both it can get really hectic. Famine is worse, although having nothing on the calendar sometimes seems attractive. Folks who retire from real estate seem to experience rapid aging and loss of mental acuity, so the empty calendar has a darker side to it.

Went to a class a couple weeks ago intended for appraisers on valuation of energy efficient features. It lasted 7 hours--about 3 longer than my back endured some monumentally uncomfortable seating--I'm sure the designer's brother in law was an orthopedist. A couple of take away ideas emerged from the squirming
1. Appraisers don't set fair market value. I looked up "Fair Market Value" in Wikipedia--there's a specific definition that came out of a Supreme Court case. Doesn't mention appraisers. The point being---if appraisers were to start factoring in energy efficient characteristics in their reports, BUT the Sellers and Buyers remanded largely ignorant of their role in valuation, there's no market value incentive to increase energy efficiency. The appraisers would have another source of wiggle room in making the value come in, but those attributes would not have played a role in either pricing the house or in the Buyer's decision on how much to pay. The Buyer and Seller must be knowledgeable before fair market value is achieved. At present they aren't--at least in most cases.

2. The other idea involved the complexity of comparing energy efficient feathers between houses. Duct sealing vs additional insulation, vs more efficient HVAC, vs more effective passive solar characteristics, etc. etc. Sellers, Buyer and Agents don't have the skills now and probably won't. That makes energy ratings particularly important. The MPG approach isn't perfect, but it's certainly necessary to raise awareness and speed increasing the energy efficiency of the existing housing stock.

Unfortunately, the state and national real estate trade associations are still pounding their 600 lb gorilla chests about point of sale and energy ratings are considered point of sale fodder. So far, the local politicians are pretty cold on point of sale mandated ratings, BUT the election hasn't happened yet.

Bigger picture here is that AB32/SB375 sets standard that will be met or a huge amount of funds will be lost. Whatever happens at the state level that has the effect of reducing energy efficiency improvements at the local level merely raises the bar for the local Climate Action Plans. The state trade organization opposes several bills that would increase energy efficiency, but 2020 will come and the local governments will not wait until 2019 to figure out they aren't going to meet the standards.

The real estate industry seems to feel if they can beat back point of sale the game is over---they don't need to do any more. They can continue to do business as usual free of those onerous mandates. It's like the Meatloaf song "I'll do anything for love, but I won't do that". Agents will do anything for a sale, but they won't do green and they won't do energy ratings--and the trade associations are apparently fine with that.

The public will bring about the change--when and if they become knowledgeable that their best interests (as in fiduciary duty interests) are involved in determining total housing costs (including utility use), resale value, exposure to potential mandatory retrofits in the event the house they bought has poor energy efficiency. Ratings are a relatively simple solution to many of these problems, but adoption is impeded by the "no point of sale" knee jerk doctrine.

Next post will discuss some new thinking on whether mandatory point of sale ratings are really a good idea. I've changed my perspective over the past weeks. I can do that---unlike certain trade organizations.