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Myth Busting: Are Sustainable Homes More Expensive?

By Tobias Roberts Rise Writer
Aug 25, 2021

Green homes are expensive homes. That is a widespread assumption. While some studies have shown that homes that incorporate sustainable features sell for almost  3.5 percent more than those without added sustainability characteristics, it turns out that energy efficiency, salvaged building materials, and good indoor air quality do not necessarily need to cost you a fortune. An energy-efficient and sustainable home could be more affordable than conventional homes.

Table of Contents

  1. How Much Do Energy Efficient Homes Cost?
  2. Case Study 1: Insulating an Older Home
  3. Case Study 2: Energy Efficient New Home
  4. Are Smaller Homes More Energy Efficient?
  5. What Is the Least Expensive Type of Home to Heat?
  6. Do Energy Efficiency Renovations Increase the Value of a Home?
  7. How Can You Finance Sustainable Home Upgrades?
  8. Are Home Energy Rebates Still Available?
  9. Bottom Line
Liberation Tiny Homes
Photo Credit: Liberation Tiny Homes

When we think of sustainable homes, the first thing that probably comes to mind is solar panels, low-flow water fixtures, and LED lights. These features are undoubtedly important and come with the benefits of lower utility bills. But, it is essential to remember that one of the most significant decisions that homeowners can make is the size of the home they choose to build or purchase. 

How Much Do Energy Efficient Homes Cost?

Every year, energy-efficient homes meeting net-zero or passive house requirements are built across North America. On average, they cost about 10% more than homes built to code that are energy-hungry and expensive to maintain.

Let's take a look at a couple of examples of sustainable projects. First, we will look at the financial viability of insulating an older home. Second, we will examine a cost comparison of building a new, conventional home versus a new house built to Passive House Standards.

spray foam insulation

Case Study 1: Insulating an Older Home

If your older home is in good shape but poorly insulated, a comprehensive insulation and air sealing upgrade can make it much more comfortable. But what about the cost? As an investment, properly insulating your home is going to provide a pretty good return. Here is a typical example of a significant insulation upgrade to an older, drafty home in a cold climate community like Halifax, Nova Scotia, Canada.

Insulation Cost and Savings Comparison

Insulation upgrade costs

Not only can investing in insulation save over 200 tonnes of carbon dioxide emissions, but it can also create a financial return. This is especially true if you are starting with an older, leakier home. The return will vary depending on how inefficient your home is now, how much you can upgrade it, and the cost of energy in your region. A home energy assessment by a Certified Energy Advisor can help you determine your best insulation investment.

Passive House Halifax Canada
Passive House in Halifax, Canada. Photo Credit: Wayne Groszko

Case Study 2: Energy Efficient New Home

If you are building or buying a new home, you have a perfect opportunity to choose a super energy-efficient option. When you make that choice, you save on energy bills, and the savings allow you to afford a house built to a higher standard. Here, we examine a 2,400 square foot new home built in Halifax in 2017. Compare building a Passive House, the highest energy efficiency standard for homes globally, with a regular house.

Passive House vs. Standard House Cost Comparison

Passive House vs Standard House Cost comparison

In this example, the actual total monthly cost is lower than a traditional house. You also have extra comfort, a buffer against energy price increases, and the security of knowing your home cannot freeze in winter even if the power goes out. All that, and the feel-good factor of saving the environment from unnecessary greenhouse gas emissions – 128 tonnes of avoided carbon dioxide emissions over 20 years. Your emission savings will vary depending on the emission intensity of your energy supply.

Are Smaller Homes More Energy Efficient?

A 4,000 square foot home lit by LED lights and protected by high-performance insulation will still require more energy to operate than a 600 square foot home that is drafty and continues to use incandescent light bulbs. The size of a home is an essential element of overall sustainability. Not only will smaller homes have a much lower embodied energy footprint, but the operational energy required will also be lower. A well-built smaller home will require less energy to heat and cool, fewer lights to illuminate the house, and easier to maintain. Smaller homes will significantly decrease the carbon footprint and environmental impact of the home and dramatically reduce the cost of the house - both upfront and ongoing.

What Is the Least Expensive Type of Home to Heat?

Heating systems for Passive Houses are less expensive because the heating load is so much lower. The required load can often be met with a simple, low-cost ductless mini-split heat pump. The average house requires a complete furnace or boiler system at a much higher cost. This is the advantage gained in a Passive House through adequate insulation and air sealing.

Moving

Do Energy Efficiency Renovations Increase the Value of a Home?

Some families might live in the same home their entire lives. They benefit from the long-term savings that come with renewable energy and other features to improve the efficiency of your home. However, the average American moves over 11 times throughout their lifetime, and most homeowners look at their house as an investment. Rest assured, improvements to a home will often pay for themselves when it comes time to sell. For example, in North Carolina, homes with some green certification sold for 9.5% more than their counterparts.

Financing

How Can You Finance Sustainable Home Upgrades?

Things you can do to live more sustainably involve investing and then raking in the savings afterward. For a significant investment like a house or a vehicle, access to financing is critical. Adding a little more to the mortgage to build a better home can save you a lot on operating expenses. Lending institutions like banks and credit unions now recognize this. They are offering 'green energy loans' with something extra, like the ability to borrow a bit more or a reduced interest rate. Look around and see what you can find for special financing deals.

You might find an even better deal with municipal government financing programs for sustainable energy, where they are available. PACE programs (Property Assessed Clean Energy) offered by towns and cities allow you to borrow from the municipality to make energy-efficient improvements to your home. You then pay the loan back through your property tax bill. The interest rate is typically competitive. The big advantage is that if you sell the house, the obligation to finish repaying the loan transfers. For example, you could use a municipal loan program to finance solar panels for your home over ten years. Three years later, you decide to sell the house. At that point, the solar panel's loan goes with the house. Check whether your municipality offers a PACE or similar program.

Rebates

Are Home Energy Rebates Still Available?

Federal and local governments have implemented rebate and saving programs to assist with the cost of energy-efficient and sustainable home upgrades. Rebates are often divided into commercial and residential and often require certain conditions are met, including income or the requirement of a home energy audit to determine the most impactful upgrades. Programs differ from region to region and utility to utility but often focus on upgrades that reduce your home's overall energy and water usage. Rise has put together a database to find out what rebates your state or province is offering. Find them all here!

Passive House San Diego Alliance Green Builders
Passive House in San Diego. Photo Credit: Alliance Green Builders

Bottom Line

Having a more sustainable home does not have to cost more. A smaller home simply costs less. Energy efficiency upgrades pay for themselves through lower operating costs and increased resale value - while at the same time making the home more comfortable and durable. And, there are many programs at the municipal and state levels, as well as from utilities, that help reduce upfront costs. Be sure to check for low-income assistance in your city, as well as rebates and incentives. You may be surprised at how affordable it is to upgrade your home!

Disclaimer: This article does not constitute a product endorsement however Rise does reserve the right to recommend relevant products based on the articles content to provide a more comprehensive experience for the reader.Last Modified: 2021-10-20T17:25:56+0000
Tobias Roberts

Article by:

Tobias Roberts

Tobias runs an agroecology farm and a natural building collective in the mountains of El Salvador. He specializes in earthen construction methods and uses permaculture design methods to integrate structures into the sustainability of the landscape.