6.12.2007

Proponents of transit oriented development have started to mainstream
a concept called "location efficient mortgages." Meaning that
residential development near transit stops should translate into banks
giving bigger mortgages to home buyers, since they don't have to spend
as much on the cost of maintaining and operating a car.

I wonder if we can pioneer some monetization of energy-efficient
building materials. Right now, developers are insufficiently
motivated to build with environmental sustainability and cost savings
in mind, because such materials are usually more expensive, and that
cost doesn't get recouped in anything the developer sees (i.e. the
sales price of the house).

But obviously, paying 25% more in building materials to conserve
natural resources and get the homeowner a three to five year payback
on his utility bills is a compelling trade-off. Energy Star publishes
the efficiency of appliances, allowing purchasers to see not only the
upfront price of the item but how much it'll cost to operate over
time, relative to other choices. I wonder if a similar rating could
be created for homes.

Alternatively, might banks run the numbers and offer "energy efficient
mortgages," which would work similarly to location efficient
mortgages? I.e. if a bank would normally allow a mortgage payment up
to 38% of gross income, might it be willing to allow a slightly higher
one if the homeowner buys a certified energy efficient house whose
utility bills would be much lower than a regular house?

I'm intrigued by this topic, because it sits at the nexus of so many
things I'm interested in. You know I love saving money and saving the
environment, especially when you can do both at the same time. And
I'm always intrigued by the distribution of costs and benefits, and
the ways you can create incentives so that everyone acting in their
own interest leads to the optimal gain for all, rather than a
suboptimal situation. So if anyone knows anything more about this
topic, and whether there are Energy Star ratings for houses or energy
efficient mortgages, give me a shout.

Postscript: I should do my homework before I post stuff like this. Of course there are Energy Efficient Mortgages out there. Go to http://www.energystar.gov/index.cfm?c=bldrs_lenders_raters.energy_efficient_mortgage or http://www.pueblo.gsa.gov/cic_text/housing/energy_mort/energy-mortgage.htm for more information.

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