Real Estate: The Green Gap

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By Sukhjit Purewal

This rooftop is almost magical, holding enough solar voltaic cells to power 40 100-watt light bulbs. That’s 4 kilowatts if you are keeping count. And while that won’t make much of a dent in the world’s energy consumption, it is more than enough to make the owner feel good about doing his bit everyday.
    Unlike other rooftops that cry out solar, this goldmine atop a Roseville home is also designed not to offend aesthetically. Still, its guarantee of financial savings was just one of the features of this property that attracted the buyer, who was able to snag it at a below-market price of $1.2 million, says Mike Wix, a realtor with Re/Max, who represented the buyer.
    Trading in traditional electric energy for green power may be the environmentally correct thing to do, but to sway potential home buyers, the cost savings have to be dramatic.
    Buyers aren’t interested in one or two energy-saving appliances that are going to save them, say, $20 or $30 a month, says Bob McKiernan, owner of Better Homes Realty in Folsom. They want to see monthly savings of $100 or $200.
    “They are interested in big ticket items,” McKiernan says.
    A buyer shopping in the El Dorado Hills looking at a home built in the 1970s is going to look very favorably at a home with new heating and air conditioning and dual pane windows as opposed to a fixer-upper that doesn’t have those improvements, McKiernan notes.
    That said, McKiernan acknowledges that all those improvements are expensive, up to $15,000 for installing new windows and new central air. The return for those improvements may be only 80 percent if the house is sold.
    The reality of converting to green or high efficiency is that it won’t bring the seller a dollar-for-dollar return on the selling block.
    “The market isn’t willing to pay for it,” says Herbert Foster, owner, Foster Appraisal Services of Sacramento. 
     And some buyers still say utility bills be damned and choose to pay more for homes equipped with high-end Viking and Wolf stoves than for homes outfitted for energy savings, says appraiser Raymond Rode of Folsom-based Rode & Associates Appraisal Services.
    When it comes to buying a home, logic doesn’t always win out, real estate professionals know. Some buyers might find solar panels ugly or too cumbersome to maintain. And on a basic level, many people still don’t understand the ability of solar-panels to harness the free power of the sun.
    For the time being, solar powered or otherwise energy-efficient homes seem to be a better long-term investment for the homeowner who plans to stay put. McKiernan recently doled out $10,000 for a high-efficiency central air system at his home.
    But as human nature goes, tastes and appreciation do evolve. That may be the case with green homes once the first batch of homes built in subdivisions billed as energy efficient hit the resale market, Rode says.
The value of these enhancements to future buyers is what really drives the market.  “That’s what we care about,” says the appraiser.

Read the rest of Prosper's special real estate package, including:

After the Boom, Roseville Renewables, Northstar Rising and Ski In, Buy In 

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