Buyers of energy-efficient homes are less likely to default.
Chicago, IL (PRWEB) June 30, 2013
Are buyers of energy-efficient homes less likely to default on their mortgage? According to a March 2013 study, the answer is “yes.”
“There’s definitely a logical connection between saving on home energy use and the probability the home loan will be repaid on time,” said Hobbs, who has a long-standing association with the green, energy efficient and sustainable movement in the Midwest. “Now we have some hard evidence.”
Hobbs said the study by researchers at the University of North Carolina found that the owners of homes with Energy Star certifications were, on average, 32 percent less likely to default on their mortgages than owners of homes with no energy-efficiency improvements. “Thirty-two percent is huge,” he said, “and getting a home certified as Energy Star is not that onerous a task.”
Hobbs explained that an Energy Star home can be renovated or newly built, and must provide documentable savings of 15 percent or higher on utility bills compared to a similar home with only minimal energy improvements.
“I trust the facts in this study,” said Hobbs. “I like that they used a massive sample of 71,000 home mortgages from across the country originated between 2002 and 2012, and that the researchers factored out a host of other attributes so that the effect of energy efficiency was clear.”
So now that there is evidence that loans on energy-efficient homes are more secure, will banks begin to recognize that such loans should qualify for a lower interest rate? “Stay tuned – the more data like this, the more likely financial institutions will recognize the value of sustainable, energy-efficient construction,” said Hobbs.
Michael Hobbs, SRA, LEED GA, President of PahRoo Appraisal & Consultancy, is an expert on real estate appraisal and property valuation, with an emphasis on sustainability and energy efficiency’s impact on property values. His firm is an Angie’s List 2012 Super Service Award Winner, and has been the top firm for four years in a row. Mr. Hobbs can be reached at 773.388.0003.