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Energy Efficiency: What Homebuyers Want

Are new homebuyers really interested in energy-efficient homes? If we look at the data, then it seems the answer is yes, as more homeowners are often claiming home-related energy-efficiency tax incentives today.

But let’s back up a bit because these types of tax incentives for homes are relatively new in the past two decades. If we look back to 2005, Congress began establishing many energy-efficiency tax incentives for housing. The benefits extend to both new homebuyers and remodeling homeowners—and let’s not forget the most important point here is to have a lasting impact on the environment around us.

A closer look shows us the policies include section 25D of the internal revenue code, which is a tax credit for the installation of power production property in new and existing homes. From 2019 to 2020, claims associated with solar electric power grew by 86,000 taxpayers and $2.1 billion.

The NAHB (National Assn. of Homebuilders) analyzed data to discover most of the claimed qualifying activity for the credit in 2020 was the installation of solar electric property. In fact, more than 600,000 taxpayers claimed the credit for almost $12.6 billion in qualifying installation costs.  

Solar panels are a great option to help reduce emissions and long-term costs in homes, but as most of us already know, they can come with a steep price tag. While the cost often depends on the type of system, roof type, and location of the home, the average cost can range anywhere from $3,000 to $35,000. Tax incentives can certainly help, but there are still a lot of considerations for the average consumer. Some of the biggest tax credits really depend on where you live in the country, as we have already reported.

The second most common installation in 2020 was for solar water heating, which was claimed by roughly 114,000 homeowners and totaled almost $627 million in installation costs, according to the association.

In addition to analyzing this data, NAHB also surveyed homebuilders about the features they will most likely include in new homes they build this year. The results show five of the top 15 features have an energy efficiency focus. These include:

  1. Low-E windows
  2. Efficient lighting
  3. ENERGY STAR-rated appliances
  4. ENERGY STAR-rated windows
  5. Programmable thermostats

Additionally, the association uncovered that for repeat homebuyers, ENERGY STAR windows, appliances, and energy-efficient lighting were listed in the top 10 most wanted features in a new home. In the weeks ahead I will share more about our decisions, including the companies and products we selected with the Living Lab. What tops your list of home features? Are they energy efficiency focused? Does solar factor in? Is the tax incentive a driving factor in this decision?

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