The Unintended Consequences of the Not so ‘Simple’ Home Energy Label

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By Annie Blatz, 2016 President, Massachusetts Association of Realtors®

Unless we contact our legislators within the next few weeks, state government could require all homes to be inspected and scored on energy efficiency before they could be sold here. Unlike Miles Per Gallon (MPG) and Energy Star ratings, which only appear on new cars and appliances, there is a proposal before the legislature that would require government testing and labeling on all homes before they are sold. The program could stigmatize entire neighborhoods and communities of older housing stock in Massachusetts.

These potential mandatory energy inspections and scoring provisions are only a small part of S.2400, An Act to promote energy diversity, which is now in House-Senate Conference Committee.  These provisions requiring a home inspection and rating before selling a home would be extremely harmful to the Massachusetts housing market and would disproportionately hurt home values for low- and moderate-income homeowners and possibly entire neighborhoods.

Proponents like to compare home energy labels to MPG ratings of new cars or Energy Star scores on new appliances. But older cars and appliances are not rated and neither should older homes. Following New York and Rhode Island, our state has the third oldest median house age at 57 years, according to the latest data from the U.S. Census Bureau, American Community Survey. If passed, these requirements would be like putting a new MPG requirement on a 50-plus-year-old car; it doesn’t make sense.

According to the American Council for Energy-Efficient Economy (ACEEE) State Energy Efficiency Scorecard, Massachusetts has been the number one most energy efficient state in the country since 2011. While improved energy efficiency is an important goal for all of us, a blanket “MPG” requirement on all homes would have significant and very real unintended consequences. A labeling system not only would have negative impacts on older homes, but would significantly impact low- and moderate-income communities where homeowners cannot afford to make upgrades. Essentially a state statute could result in depressed home values, especially in our older neighborhoods.

In addition to disproportionally hurting low and moderate-income homeowners, the requirement of an energy audit prior to listing a home for sale would complicate and delay an already complicated process of buying and selling a home. Currently the number of homes for sale is critically low and this would make it even more difficult for potential sellers to list their home for sale. This is not how you encourage a healthy real estate market and a strong economy.

What we need is a common sense approach to energy efficiency and alternatives already exist. We need to continue to work with our utility providers to promote the strictly-voluntary Mass Save program to all homeowners. This program provides an incentive-based approach to energy efficiency rather than a punitive home inspection/label mandate. We should remind buyers to consider a Mass Save audit shortly after purchase or as part of their home inspection process.   We should also make it easier to build new homes that set the standard for energy efficiency.

This all starts with the Conference Committee understanding that requiring energy inspections and home energy labeling before you can sell a house in Massachusetts provides no energy efficiency, but is merely another government mandate. We urge the Conference Committee to reject the energy auditing and labeling provisions contained in the Senate version of this bill.