A Game Changer for New Home Construction

Meritage homes, a big national production home builder, has announced its intention to only offer ultra energy efficient homes.  They will document this by using the HERS Index (Home Energy Rating System), which is currently used for ENERGY STAR qualified homes, and is a standard of the U. S. mortgage industry.  A home built to the current 2006 IECC energy code has a HERS Index of 100, and is considered the "reference" home for a given design.  To meet ENERGY STAR requirements in our climate zone in Arkansas a home must score 85 or less.  The Meritage homes are to have a HERS Index of 20, which means they will use 80% less energy than the standard code-built home. 

Follow this link to watch a short video clip that explains more about the Meritage program.

The Meritage homes appear to be reasonably priced, and when homebuyers do the math on the decreased cost of home ownership due to the 80% lower utility bills, they may decide that buying a Meritage home is a no-brainer.  Meritage builds in six states, including Texas, California and Florida.  If their approach is successful, and it already appears to be well-received by the market, this could indeed be a game changer.

What are the implications for the real estate market in Northwest Arkansas? Home builders will be under increasing pressure to build energy efficient homes, and to learn how to market the advantages of these homes.  Realtors will have to get more informed on energy efficiency.  The market for existing homes will be affected, as fewer people will want to take a chance on owning a home that has a high operating cost.  This will tend to drive demand for aggressive home energy upgrades, documented by a HERS Index calculated for the finished project.  And why not?  Most car buyers want to see the miles-per-gallon sticker before purchasing a car; much the same for a home.  It's all about total cost of ownership, not just sticker price.

It is also notable that  Meritage chose to base its program strictly on the HERS Rating, and nothing more.  There is a plethora of home programs offered currently, such as ENERGY STAR qualified homes, NAHB Green Building Standard, LEED homes, and many other state and regional programs.  Marketing is confusing to many, and the benefits of many so-called "green" features do not readily translate to a monetary benefit.  The HERS Index, on the other hand, is strictly concerned with energy flows, and provides the projected annual utility cost for each individual home.  When a company such as Meritage can make a well-documented claim that its homes cost 80% less to operate than a code-built house, that's pretty simple for a homebuyer to grasp.  It may be very smart marketing, and it may be the future of homebuilding in Arkansas, and in America.

This post originally appeared on Home Energy Consultants' House Whisperer Blog.