Energy

Improvements to a home’s energy efficiency often have cost trade-offs — building in extra insulation can provide energy cost savings over time, but it increases the overall cost of the project. A new study from the National Association of Home Builders aims to quantify how much of that additional upfront cost buyers are willing to bear. For a theoretical savings of $1,000 a year on their utility bills, buyers would pay an additional $8,728 up front, on average. The median response was $5,000. And buyers of costlier homes are willing to pay more. Those who expected to pay more than $500,000 for their homes will pay an average of $10,560 to achieve those upfront savings.

One way to look at the results is by expected payback: The median homebuyer would want to recoup their investment in about five years. That’s valuable insight for builders weighing more costly energy-efficiency improvements such as geothermal systems. Our recent comparative heating study found that the higher upfront cost of these systems can take 20 years or more to recover through energy savings. A high-efficiency propane furnace, on the other hand, offers reasonable first costs and lower energy costs than a standard air-source heat pump, the study found, so it’s an option that meets multiple project needs in cold climates.

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