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Report: Tough building codes save homeowners thousands

Last week we reported on efforts in Illinois to implement a new building code that would be the most energy-efficient in the Midwest.

The state’s homebuilders association opposes the changes, in part because it says the rules will add to the cost of home construction.

On that point, there’s little dispute. Building homes that are less leaky and better insulated certainly does come with additional expenses.

A recent study, however, suggests those costs are less than what some builders fear, and that the payback for homeowners is much greater.

An average Illinois home built under the 2012 code will cost about $1,500 more than a home constructed under the existing code, the report concludes.

That increase will lead to a slightly higher downpayment and add about $6 a month to a 30-year mortgage, but the added efficiency will save residents $33 a month in energy costs. The report estimates a typical homeowner will start seeing a net savings after 11 months.

A family buying a home built to the new code standard will save between $10,000 and $11,000 on their energy bills over the course of their mortgage, the report says.

“When you buy a new home, you instantly start saving,” says Bill Fay, executive director of the Energy Efficient Codes Coalition, a Washington, DC, advocacy group that released the report in October.

The group hired the Building Codes Assistance Project to analyze data specially prepared by energy consulting firm ICF International on the likely impact of the Illinois code.

The projected costs vary depending on the type of wall construction and the region. Homes built in the warmer, southern third of the state would see added costs between $950 and $1,775 with a recovery time between seven and 13 months.

“If anything we have erred on the side of overstating costs of the improvements and understating the savings,” Fay said.

The analysis looks at the cost of building a 2,400-square-foot, single-family home, the average size for new construction in Illinois. The costs are based on estimates in the RS Means Contractor’s Pricing Guide. It assumes a 20 percent down payment, and it also assumes the price of energy won’t go up over the course of the mortgage.

“Obviously, the savings are even greater if energy costs rise over the next 30 years,” the report says.

A 2008 survey by the National Association of Home Builders found that 51 percent of home buyers said they would be willing to pay $11,000 more for a home if energy costs were reduced by $1,000 annually. Yet, whenever mandatory energy code changes are brought up, home builders almost inevitably oppose them.

In Illinois, the state’s home builders association is seeking to delay the new code through legislative intervention, its chief lobbyist told Midwest Energy News last week. The association says the cost of complying with the new code will add $5,000 to the cost of building a 2,000-square-foot house.

In Michigan, the state’s home builder association sued in 2005 to block enforcement of a new energy code. The association claimed the code would add $4,000 to the cost of constructing a 1,000-square-foot home. A judge dismissed the case in October 2008.

After the Michigan code took effect, Scott Sanderson, co-owner of the largest builder in western Michigan, told the Grand Rapids Press that the new code wasn’t as burdensome as they expected.

“When it came out, we thought: Wow, this is going to be a big deal,” he said. “Then we started running the computer models, and we realized our homes were already there or close to there.

“On some of them, we’ll have to spend a couple of hundred dollars.”

Dan Haugen is an Energy Journalism Fellow at Midwest Energy News. Contact him at dan@danhaugen.com.

Photo by Dean Terry via Creative Commons

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