Home buyers have said in repeated surveys that the energy efficiency of homes is a priority. Yet sellers rarely include efficiency information in their listings, so potential buyers using the major real estate aggregation websites—where 93% of home buyers begin their searches—generally cannot find this information. Only Portland, Oregon, requires home energy information in real estate listings; a dozen other U.S. cities or states mandate or suggest some type of home energy disclosure at various stages during transactions, often well after prospective buyers have evaluated competing options.
“We always thought home buyers would respond to energy efficiency information, but now we’ve shown it’s really true,” said Reuven Sussman, co-author of the report from the American Council for an Energy-Efficient Economy and director of the organization’s Behavior and Human Dimensions Program. “Prospective home buyers have a lot of information at their fingertips, but usually they know little about the energy efficiency of the homes they’re considering. Just getting the right information in front of people can make big differences in their choices. If we can help buyers find efficient homes, we can really stimulate demand for them.”
ACEEE used a panel research firm to recruit a national sample of 1,538 individuals who indicated they were planning to purchase a home within the next five years. Participants viewed a mock real estate website showing three sample homes at a time and were asked to select the home they preferred the most within each set. The listings—including information such as price, bedrooms, and square footage—were part of a “discrete choice experiment” that allowed researchers to determine the weight of participants’ preferences among competing factors.
Some participants saw information about the homes’ energy efficiency, presented in one of five possible ways: a simple Home Energy Score, based on the U.S. Department of Energy’s rating system; an HES along a continuum (line) from inefficient to efficient; estimated annual home energy costs; estimated annual home energy costs plus HES along a continuum; or a HES for only above-average homes (simulating a voluntary labeling program).
Using the data on participants preferences, ACEEE found the following:
The report recommends that state and municipal policymakers require efficiency information in all real estate listings and use an intuitive energy scoring system.
The report cautions that low-income home sellers could be adversely affected by energy efficiency disclosure requirements unless they are accompanied by complementary policies, given that homes owned by low-income households tend to be less efficient than those owned by non-low-income households. It calls for policymakers considering disclosure requirements to research and develop such complementary policies to help home sellers, especially low-income sellers, increase the efficiency of their homes.