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Evidence of rational market valuations for home energy efficiency

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  • Nevin, Rick
  • Watson, Gregory

Abstract

According to this study, residential real estate markets assign to energy-efficient homes an incremental value that reflects the discounted value of annual fuel savings. The capitalization rate used by homeowners was expected to be 4%-10%, reflecting the range of after-tax mortgage interest rates during the 1990s and resulting in an incremental home value of $10 to around $25 for every $1 reduction in annual fuel bills. Regression analysis of American Housing Survey data confirms this hypothesis for national and metropolitan area samples, attached and detached housing, and detached housing subsamples using a specific fuel type as the main heating fuel.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 35343.

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Date of creation: Oct 1998
Date of revision:
Publication status: Published in The Appraisal Journal 66.4(1998): pp. 401-409
Handle: RePEc:pra:mprapa:35343

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Related research

Keywords: Energy; Housing;

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References

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  1. Laquatra, Joseph, 1986. "Housing market capitalization of thermal integrity," Energy Economics, Elsevier, vol. 8(3), pages 134-138, July.
  2. Longstreth, Molly, 1986. "Impact of consumers' personal characteristics on hedonic prices of energy-conserving durables," Energy, Elsevier, vol. 11(9), pages 893-905.
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Cited by:
  1. Nevin, Rick, 2010. "Energy-efficient housing stimulus that pays for itself," Energy Policy, Elsevier, vol. 38(1), pages 4-11, January.
  2. Nevin, Rick & Jacobs, David / E., 2006. "Windows of opportunity: lead poisoning prevention, housing affordability, and energy conservation," MPRA Paper 35342, University Library of Munich, Germany.
  3. Palmer, Karen & Walls, Margaret & Gordon, Hal & Gerarden, Todd, 2011. "Assessing the Energy-Efficiency Information Gap: Results from a Survey of Home Energy Auditors," Discussion Papers dp-11-42, Resources For the Future.
  4. Lester, T. William, 2013. "Dedicating new real estate transfer taxes for energy efficiency: A revenue option for scaling up Green Retrofit Programs," Energy Policy, Elsevier, vol. 62(C), pages 809-820.
  5. Konstantin A. Kholodilin & Claus Michelsen, 2014. "The Market Value of Energy Efficiency in Buildings and the Mode of Tenure," Discussion Papers of DIW Berlin 1398, DIW Berlin, German Institute for Economic Research.
  6. Nevin, Rick & Jacobs, David / E. & Berg, Michael & Cohen, Jonathan, 2007. "Monetary benefits of preventing childhood lead poisoning with lead-safe window replacement," MPRA Paper 35340, University Library of Munich, Germany.
  7. Hernandez, Patxi & Kenny, Paul, 2011. "Development of a methodology for life cycle building energy ratings," Energy Policy, Elsevier, vol. 39(6), pages 3779-3788, June.

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