Buying an efficient home is about to get easier in Massachusetts

Blog Post | April 04, 2018 - 12:27 pm
By Annie Gilleo, Senior Manager, State Policy

Home buyers in Massachusetts may soon be able to better gauge the energy efficiency, or inefficiency, of their potential future homes. On Tuesday, Governor Charlie Baker introduced legislation that would establish energy performance ratings and disclosure requirements for homes across the state.

Tuesday’s proposal is the latest addition to a suite of successful policies undertaken by the state. Massachusetts has topped ACEEE’s State Energy Efficiency Scorecard for the past seven years, buoyed by strong utility policies, building energy codes, and state-led energy efficiency programs. But with California and Rhode Island nipping at its heels, the Bay State isn’t resting on its laurels. Instead, it’s working to integrate energy efficiency more deeply into its economy.

The legislation calls for the development of an energy scorecard, which would include a performance rating that must be disclosed to potential buyers of residential properties. The legislation also calls for a number of features to support implementation of the energy scorecard system, including trainings for home assessors, real estate professionals, and lenders.

By building energy performance information into residential real estate transactions, Massachusetts could significantly increase energy efficiency investments in existing homes, as many new homeowners look to make home improvements just after purchase. The Harvard Joint Center for Housing Studies found that households that moved within the past three years spent about one-third more on home improvements than otherwise similar non-movers. Additionally, research has found that home energy rating systems can help demonstrate the value of home energy efficiency measures, leading 12-37% of home buyers to make recommended upgrades.

Currently, cities tend to lead the way when it comes to energy benchmarking and transparency policies for private buildings. ACEEE’s most recent City Energy Efficiency Scorecard identified 17 cities with residential or commercial benchmarking policies in place. Boston is one city tackling efficiency by making energy performance information on large commercial buildings public. Since 2016, Boston’s Building Energy Reporting and Disclosure ordinance has required that all buildings greater than 35,000 square feet in the city benchmark and report their energy and water use.

Portland, Oregon and Berkeley, California both have policies requiring that home energy ratings be provided when a home is listed for sale (Portland) or when the sale closes (Berkeley). Chicago, meanwhile, has a voluntary program to disclose energy bills to potential purchasers and has found that homes that provide this information sell more quickly and for a higher percentage of their asking price. In Europe, such policies are common and evaluations find that homes with higher ratings sell for 1-5% more than unrated homes.

Meanwhile, fewer than ten states have any sort of energy transparency policies in place, and the depth of these policies varies greatly. Alaska, Hawaii, Kansas, and Maine require the disclosure of energy efficiency information at the time of lease or sale of residential properties. California and Washington, along with the District of Columbia, are the only states to require benchmarking and disclosure of energy usage information for private commercial buildings.

By integrating energy efficiency information into the residential housing market, Massachusetts can help homebuyers ensure that one of the largest purchases they may ever make is also smart and comfortable.