I recently received an e-mail from someone following my blog and he asked if I could revisit the issue of payback as it relates to this prototype and smart ("green") building in general. Payback is often a term relating to how many years it will take for a particular technology to pay back the extra investment that the owner makes. Many homeowners, whether building a new home or buying an existing home, don't pay enough attention to what the utility bills are going to be as this is directly related to the total cost of home ownership. A good example comes from a family member of mine and his partner. I was asked to look at a very old home, circa 1897, to give my opinion on their potential investment. Although I didn't like the floor plan, as it was very inefficient, that's not what they were asking my opinion about. Simply put, I told them that while their mortgage payments would be well within their means, my concern was that their energy bills were going to be extremely high, particularly in the winter months. Not only were they going to have very high energy bills, but specifically in the winter, they also would most likely still be cold and uncomfortable even when the heat was turned on. They purchased the home and in some of the winter months, their utility bill was more than 1/2 their mortgage payment...up to $450/month for a living floor square footage area of maybe 1200 sq ft. When I would visit their home in the coldest parts of winter, both of the home owners were usually wrapped in several layers of fleece, while their heat was being mostly lost to the outdoors. This, of course, also contributes to more air pollution and the wasting of natural resources because of the significant inefficiencies of this home. Needless to say, but their old historic home, was not nearly as charming as when they first made the purchase.
Now as it relates to green building. I've used my prototype as an example in the past, but I will, for convenience purposes, use a more generic example. Let's say that someones budget is $200,000 to build a new 2000 sq ft home, not including the land and permits. Using an interest rate of 4.25%, property tax at 1.25% and pmi at 0.5% (standard #'s), the mortgage payment would be $1,192.21. Let's also assume that the projected average monthly utility bill, including all fees and taxes, is $200. If this homeowner then decided to use some of the technologies that I've used in my prototype, like the Eco-Panels wall system, the casement windows (with special south facing glass), spray foam in certain areas, a high efficiency heat pump, an ERV and a hybrid heat pump hot water heater, how much would all of this add to the cost of constructing the home. For simplicity, I will round that cost # up to $10,000.00. Now this home will cost $210,000.00 to build and finance. The new mortgage payment will be $1251.82 or $59.61 extra a month. Although my prototype reduced energy usage in its 1st year by 73.2%, I will be a little more conservative and estimate that this example home will reduce energy usage by 65%. A reduction of 65%, reduces the average monthly utility bill to $70, a savings of $130 a month. So without these added energy saving systems, the total cost to finance this home and pay the utilities is $1,392.21 ($1,192.21 + $200). With the energy saving features added, the new cost for both the mortgage and utility payments is $1,321.82 ($1,251.82 + $70). With these simple changes, it now costs the homeowner $70.39 less per month the very 1st month of living in the home. The payback is immediate and not spread out over several years time. This example does not take into consideration that energy prices are expected to rise at least 30% over the next decade. Also, the homeowner now has a safer, stronger, healthier and more comfortable home to live in...they get a much better home for less money. This is why smart "green" building makes both dollars and sense.
I plan to start offering consulting services to people who are interested in building a new home. I am confident that my direct knowledge and experience can offer significant value while saving new homeowners time, money and headaches.
