GO
Loading...

There's No Extra Green in Green Homes

Wednesday, 21 Apr 2010 | 3:43 PM ET

Forgive me for jumping the gun on earth day, but I had to relay a really interesting conversation I had today with Rhone Resch, President and CEO of the Solar Energy Industries Association.

Solar Home
Solar Home

I'm actually going to be standing in front of his house in DC tomorrow, when I report a story on how home appraisers are not valuing green upgrades.

Home builders and green product manufacturers say this is one of the major roadblocks in the green building movement. If appraisers don't add green value in the form of cash, consumers aren't going to invest the upfront costs.

Anyway, Resch is obviously a huge green supporter and has modeled his home accordingly, with solar panels, energy efficient lighting and appliances, a rainwater collection tank and some kind of water-saving landscaping that I didn't really understand. (you can actually watch his home energy in/output online).

He upgraded his home four years ago and admits that today those same upgrades would have cost him about 40 percent less, largely because of tax incentives.

I've always kind of turned my nose up at the tax incentives offered for green upgrades, because while they're at 30 percent, they're largely capped at $2000, which anyone who's ever remodeled their home knows is chump change in a major upgrade.

Green Tech - A CNBC Special Report
Green Tech - A CNBC Special Report

What I didn't know was that solar is the exception. Resch informed me that in October of 2008, as part of the Emergency Economic Stabilization Act, the $2000 cap on "qualified solar electric property expenditures" was removed. So take 30 percent off all your solar expenditures.

Appraisers argue that the marketplace isn't really demanding upgrades like solar panels, and that's why the industry is not adding appraised value to homes with them.

Resch admits that in DC, he's not likely to see much of an increase on his home's value today, but if he lived in California, he says he would. That's because environmental upgrades are far more commonplace there, and so consumers tend to expect/demand them more.

DC will surely follow suit, but it will take a few years, especially since the nationwide housing collapse set green building back a bit. Once homeowners come up for air and start to see their home values increase, experts believe they will be willing to go greener, and appraisers will then respond.

Resch also enlightened me to the fact that major home builders, Pulte Homes in particular, are seeing far greater demand for homes with solar panels. Pulte offers solar technology as an upgrade.

While the homes may not see huge value increases from appraisers, in a crashed and crushed housing market like we're in today, these upgrades are a bright light for builders, looking to go beyond granite in order to sell.

Questions? Comments? RealtyCheck@cnbc.com

  Price   Change %Change
PHM
---

Featured

  • Diana Olick serves as CNBC's real estate correspondent as well as the editor of the Realty Check section on CNBC.com.

Real Estate Explained