Energy savings and home resale value

A study performed by ICF Consulting on behalf of the EPA and published in the Appraisal Journal confirms their research indicates that the value of a home increases between $11.00 and $21.00 for every $1.00 in annual energy savings. The example above translates into a $20/$1 ratio of value to savings, near the higher end of the range, which is expected given historically low mortgage interest rates.

Using a simple calculation and assuming you have a 30-year mortgage with a 5% interest rate and you’re in a 28% tax bracket. If you set your goal of saving $800 annually translates into a $16,000 increase in your home’s value. In other words, if you applied the $800 in savings to the mortgage, these savings support an additional $16,000 in home value.

As home buyers become more financially savvy and cost conscious, they will increasingly focus on energy costs. A potential rise in energy costs will only serve to make these energy saving upgrades even more valuable and attractive to home buyers.