Building Home Equity through Energy Efficiency

Between 1999 and 2013, those who made the switch from renting to owning a home enjoyed a median gain in wealth of $85,400, according to HSH.

That’s a pretty sweet deal.

It’s evident that homeownership puts you on the path to building wealth: those who remained homeowners during the same period, HSH also states, enjoyed a median gain of $91,900. Because your home can be such a vital asset (and a money-maker), it’s important that you take steps to build equity and increase its value. 

One of today’s most popular ways of increasing a home’s value is by making it energy efficient. This is largely thanks to the fact that energy efficiency upgrades increase a home’s value faster than any other improvements. As green home builders in Florida, we can tell you that most energy-efficient homes command a 10–15% premium on the market.

How much could you increase your home’s value with the right upgrades and financial moves? 

In this article, we’ll discuss how to build your home’s equity by making energy efficiency upgrades. We’ll show you how—and why—making your home more energy efficient can boost its value. 

Before we continue, we’d just like to say that our hearts go out to everyone affected by the COVID-19 pandemic. These are difficult times, but we will get through them together. Stay safe, stay healthy, and stay strong.

How do you build equity in your home?

You’ve probably heard the saying before: A home is your biggest asset. 

Well, you should take care of that asset. That begins with knowing how to build home equity. 

Traditional strategies used to build home equity include: 

  • Paying off your mortgage: The less you owe, the more equity you have. 
  • Home improvements: Certain home improvements build more equity than others.  Good home improvement investments include a deck, more square footage, and kitchen and bath remodels.
  • Let time do its work: Real estate has appreciated at a rate of 3–5% annually. If you bought a $200,000 home in 2015 and that home’s value grows at an annual rate of 5%, it will be worth more than $325,000 by 2025. 

Sure, factors outside your control, such as the current pandemic, can affect your home’s value. But simply put, if you consistently make your mortgage payments and update your home, you’ll naturally build home equity over time. 

The key is to be patient. Wealth isn’t built overnight, unless you invent something as revolutionary as aircraft (way to go, Wright Brothers!). In the long run (and provided you’re in a good market), your home’s value should increase substantially. 

Why you need energy efficiency upgrades to build home home equity

Do you want to know how to build home equity quickly? Make your home more energy-efficient.

When the  Environmental Protection Agency was created in 1970, energy efficiency became a common element of home construction. Within a few years, it also started affecting home prices (for better or worse). A look at historical data shows that energy efficiency has had an impact on home values for quite some time.

Energy Star conducted research on home values in the late 1970s. In 1978, it found that energy-efficient homes commanded $3,248 more than comparable homes without energy efficiency features.

Fast forward to today, and you’ll find that energy efficiency has an even bigger impact on home values. NerdWallet research shows that homes with greener appliances, windows, and insulation get higher bids on the open market. By making such energy efficiency upgrades, NerdWallet found that you could increase your home’s value by 2–6%.

Going forward, energy efficiency will take center stage in the home appraisal process. That’s not only because of the benefits the energy-efficient homes can offer (such as utility bill savings, superior comfort, and incredible durability), but also because so many individuals and groups—from homebuyers to builders to local and national governments—have begun placing high importance on living green. 

“As net zero home builders in Florida, we consult with many home appraisal experts,” states Robert Kociecki, President of Brite Homes, a leading zero energy ready home builder in Florida. “In 2023, home appraisers will start including home energy efficiency in their appraisals. They believe energy-efficient homes may command 10–15% higher resale values.”

What kinds of energy efficiency upgrades build home equity?

Not sure which particular energy efficiency upgrades will increase your home’s value the most? We can help. As a green home builder in Florida, we know what upgrades will boost energy efficiency and build home equity. 

At Brite Homes, our houses achieve high energy efficiency thanks to the following features:  

  • Smart automation
  • Air-tight doors and windows
  • Solar panels
  • High-performance foam insulation
  • LED lighting
  • Energy Star appliances

Each improvement will require a different degree of work and investment. But rest assured that each and every one will deliver a great return by increasing your home’s value. 

Photos of the energy efficient Alex model

One of Brite’s net zero homes in Florida. Living green no longer means sacrificing comfort or style.

Home buyers value the perks that come with energy-efficient homes, such as reduced utility costs, better temperature regulation, more comfortable lighting, more reliable appliances, and greater overall durability (which means less maintenance work). But how much more will home buyers pay if you make such upgrades? 

A lot, actually. A study from the National Association of Home Builders found the average buyer would pay $8,728 more upfront to save $1,000 a year on energy bills. 37% would even pay $10,000 or more.

Want even more great news? You can save money on such upgrades through incentives offered by local, state, and federal governments. Search the Database of State Incentives for Renewables and Efficiency for details on your state. 

For example, in Florida, where we operate, people that purchase net zero homes receive 100% property tax exemptions for a period of time. That’s thousands in savings per year.

Where can I find the best homes for building home equity?

The more energy-efficient a home is, the higher its resale value will be. One great way to determine a home’s energy efficiency is to look at its Home Energy Rating System (HERS) score. You can check out our guide to the HERS Index here. 

The lower a home’s HERS score, the more energy-efficient it is. A home with a HERS score of zero is a zero energy ready home (also known as a net zero home). There’s a growing trend toward zero energy ready homes—largely because they generate as much energy as they use, meaning hundreds or thousands in savings on energy bills each year. Furthermore, given their high construction quality and comfort, net zero homes naturally have a higher value than similar homes that aren’t as energy efficient. 

So, where can you find net zero homes for sale? 

Everywhere! You just have to search through reputable green home builders in your area.

For instance, at Brite Homes, we have a variety of net zero homes for sale in Florida, from North Port to Palm Bay. These homes begin in the low $200,000s, giving you an affordable way to buy the most energy-efficient home.

Want to learn more?

Contact us at (833) 922-7483, email us at info@britehomes.com, or click the link below. We can give you a virtual tour of our homes and answer any questions you have about net zero homes, building home equity, and more. 

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