Cincinnati’s Greening of the MLS: Increasing the Value of Energy Efficiency Homes

The Cincinnati Multiple Listing Service (MLS) manages housing information for real estate professionals throughout the region. When you search for houses online, all the data about the home, from lot size to number of bedrooms, is tracked by the Cincinnati MLS.

Greening the MLS

The Cincinnati MLS recently announced an important milestone in the enhancement of local green and energy related home buying tools. Homeowners and their agents are now able incorporate a number of new energy features into the MLS systems via an Energy Efficient/Green Features form.

With this form, a homeowner can identify a comprehensive set of enhancements to a home, including specific building rating information such as LEED ® and Home Energy Score ®. The form is then uploaded into the MLS system and available for prospective homebuyers to review. In addition, the presence of the form is searchable, allowing homeowners interested in energy saving homes to quickly and easily identify where those homes exist. In the years ahead, the MLS team hopes to develop further green resources to enhance the value of local real estate.

Why Add Green Features to the MLS?

Home energy costs are typically greater than the combined costs of homeowners insurance and property taxes, yet there is no easy way to report on and compare a home’s energy value. Home sellers can experience similar frustrations. Those homeowners that have made investments in home energy improvements (such as insulation/air sealing upgrades, high-efficiency heating and cooling systems, and other elements that can significantly reduce a home’s operating costs), are often unable to recoup their investments when selling due to the inability to effectively communicate these benefits. Incorporating this information into the MLS system is thus crucial in creating value.

A Need For Green

National research has identified a growing consumer interest in green [1] and energy efficient homes. Of more than 120 features rated in the National Association of Home Builders 2012 Annual Survey, energy efficiency now ranks among the top two most wanted features, favored by more than 85 percent of respondents.[2] Indeed, home energy costs can make up a sizeable portion of a homeowner’s annual home expenses. Analysis from the Energy Information Administration’s Annual Energy Outlook highlights that home energy costs are typically larger than either property taxes or homeowners insurance.[3] Yet despite the continued interest from homeowners and the significant cost considerations, there is often limited information available for a home buyer to understand a home’s energy or utility profile.

Studies conducted in markets throughout the country have shown that homes with green features have increased value, transact more quickly, and experience lower rates of foreclosure, compared to similar homes without these features. A 2012 study conducted by a pair of UCLA economists found that green labeled homes were selling for a 9% premium compared to non-labeled homes.[4] A 2013 study from the University of North Carolina Center for Community Capital and the Institute for Market Transformation found a 32% lower risk of default for energy-efficient homes.[5]

Where are Green Homes in Greater Cincinnati?

Like much of the country, the Cincinnati region has experienced a rapid growth of green rated homes in recent years, exemplified by significant transformation in the new home market. A recent Smart Market Report from McGraw Hill Construction noted that within five years, half of builders expect more than 60% of their new home projects to be green, nearly double the number of firms that are currently building green. ENERGY STAR® has more than 7,800 certified homes in the Cincinnati region, the Energy Alliance has directly supported more than 1,800 home energy upgrades in recent years, and the Home Energy Rating System (HERS) is on pace to continue to rate more than 1,000 regional homes per year. When combined with new market entrants from new home sales, the number of green homes in the regional market is expected to reach a critical mass in the years ahead. Now is a opportune time to take advantage of this growth.

How the MLS Became Green

Back in 2013, the Energy Alliance began a community dialogue about the value of energy efficient homes in the Cincinnati market. Studies from across the country had revealed that homes with energy efficiency or other green features are more valuable than there non-energy efficient counterparts. In addition to savings homeowners money, these homes have been shown to increase value by nearly 10%.

The Energy Alliance suspects that similar value exists in the local market and is committed to helping homeowners who have made these investments gain the most value for their homes. To help grow this dialogue, the Energy Alliance joined together with some of the region’s leading voices for energy efficiency, including the City of Cincinnati, Greater Cincinnati’s Green Umbrella network, the U.S. Green Building Council’s Cincinnati Chapter, and Efficiency First Cincinnati.

To test its assumptions and explore options to grow the industry, these partners convened a series of stakeholder discussions that included a diverse array of local real estate agents, appraisers, home builders, planning officials, and mortgage bankers. The purpose of this dialogue was to discuss the opportunities and challenges associated with increasing transparency of green and energy efficient homes. Out of these conversations a consensus began to emerge around the potential value of green homes and the group developed a series of recommendations to the Cincinnati MLS to help incorporate more green building information into the local MLS database.

The Energy Alliance is committed to working with the local real estate community in support of their new initiative. The implementation of green fields will require ongoing training and outreach (among agents, appraisers, homebuyers, and even mortgage bankers) to ensure proper understanding and implementation of these new tools.

What’s Next?

The Energy Alliance is committed to working with the Cincinnati MLS and other partners to broadly shre these important new resources and support homeowners seeking to gain value for their homes. The Energy Alliance is in the process of developing a series of training sessions and informational materials to share with homeowners and members of the local real estate community.

 

FOR MORE INFORMATION:

Contact Rob McCracken at the Greater Cincinnati Energy Alliance: rmccracken@greatercea.org

 

DOWNLOAD THE ENERGY EFFICIENCY/GREEN FEATURES FORM:

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[1] Green homes can include a variety of different features. Most green home certifications focus primarily on a home’s energy usage. Some also include consideration of s home’s indoor air quality, water efficiency, durability, and building materials, among other features.

[2] National Association of Home Builders Annual Survey (2012).

[3] Info provided through the Energy Information Administration’s Annual Energy Outlook (2013), the American-Community Survey (2010), and the National Association of Insurance Commissioners Annual Homeowner Insurance Report (2010).

[4] The Value of Green Labels in the California Housing Market (2012). UCLA Environmental Economics Series. Matthew Kahn and Nils Kok. The study included a hedonic pricing analysis of all single-family home sales in California between 2007 and 2012. Study focused on homes labeled with ENERGY STAR, LEED, or Greenpoint Rated, transact for a premium of nine percent relative to otherwise comparable, non-labeled homes.

[5] Home Energy Efficiency and Mortgage Risks (2013). Institute for Market Transformation and UNC Center for Community Capital.

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