WILL FEDERAL GREEN-HOME STANDARDS AFFECT YOUR RAPID CITY HOME VALUE?

Will the Federal “GREEN Act” require you to spend money to refurbish your home? Will it create “Green Standards” that your home may not meet when you try to sell it? This legislation is getting lost on page-2, but it could impact us all. Here are the facts, according to the National Association of Realtors.

The bill's Fannie/Freddie provisions are limited to:

• Provides credit toward GSE housing goals for encouraging use of energy- and location-efficient mortgages.
• Adds a new duty to serve for underserved markets for energy-efficient and location-efficient mortgages.

There are however, a range of financial incentive programs to help make HUD-assisted housing more energy efficient.

The bill:

• Provides for consideration of energy efficiency in underwriting and sets a goal of insuring 50,000 FHA energy efficient mortgages by the end of 2012.
• Develops a pilot program for financing energy efficient improvements in HUD-assisted housing.
• Creates block grants for energy efficient retrofits.
• Sets minimum increase in energy efficiency for a building’s owner to be eligible for the HUD-assisted financial incentive programs.

It also:

• Establishes a loan fund at the Dept of Treasury for states to provide incentives owners of buildings to use renewable energy sources.
• Ensures that homeowners not connected to the electricity grid be able to obtain homeowners insurance.
• Develops a grant program to provide technical assistance for energy efficient improvements in low-income communities.
• Develops guidelines for green banking centers to inform consumers about energy efficiency financing options.
• Allows Secretary to guarantee mortgages or portions of mortgages on sustainable building elements.

While the GREEN Act provisions are incentive-, not mandate -based, there are several unresolved issues that need to be addressed in the Senate:

• Definition of HUD assistance – this could be read as including FHA insured mortgages, which was not the intent of the legislation.
• The Fannie/Freddie new duty to serve – we do not believe this is not the right time to add a duty or complicate debate over the future of GSEs.
• Training & requirements for appraisers to value energy efficiency in federally related transactions; while appraisers are already required to consider all improvements, this could be precedent setting.
• Requires energy ratings on appliances installed in manufactured homes and on homes with an FHA energy efficient mortgage, but the language is confusing and could be construed to allow ratings for all FHA loans, which is not the intent.

The Senate version is yet to be finalized. So this could go a lot of ways. Still, the questions you need to be asking yourself are:

1. In buying a home now, should I be avoiding non-green built homes (like the cash-for-clunker-cars) that might become subject to a severe value-reduction when “green” home standards are implemented? (Or guidelines, or just de facto standards.)
2. Before remodeling my home should I learn what specific remodels would most likely be green-valued later on when I sell it?
3. If I am planning to sell my home soon, what features can I emphasize or changes can I make, to leverage this growing demand for green-building?
4. Will the Feds ever create a “cash-for-dumps” program for homes, similar to cash-for-clunkers? (Probably not.)

Do you understand green-building? Do you know how to recognize “green-washing” claims that are so common in real estate ad’s? Like the cartoon character (almost) said: “We have met the future, and it is here.”