Evidence of rational market valuations for home energy efficiency
AbstractAccording 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 InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 35343.
Date of creation: Oct 1998
Date of revision:
Publication status: Published in The Appraisal Journal 66.4(1998): pp. 401-409
Find related papers by JEL classification:
- Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
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