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New Building Standards Expected to Drive up the Price of New Homes

New-home buyers in California, who already are confronting the nation's most expensive housing, will face a round of price increases late this year as improved energy efficiency standards take effect for all residential construction.

No matter how the state's energy crisis plays out, builders say it is certain that the cost of buying a house will go up in San Diego County by as much as $3,000 due to the new rules.

But state officials are hoping the standards will help ease the drain on available electricity and, over time, pay off for homeowners through lower utility bills. And the new standards could give the upgraded homes an edge in resale value over those without the energy improvements.

"California has serious problems with meeting the (energy) demands of existing housing stock. As we add new housing on top of that, we're aggravating an already existing problem," said Bill Pennington, chief energy efficiency program specialist for the California Energy Commission.

"We don't want to say stop economic growth, but as we're building, we want to make sure new houses aren't wasteful," he said.

Many local builders, who say energy conservation also needs to be directed more toward existing housing, are still trying to figure out their construction costs for the measures announced in January by the Energy Commission. The measures result from emergency legislation known as AB970 that was passed by the Legislature last year.

The statewide standards, which also apply to commercial buildings and apartments, take effect June 1 for new housing project plans. Developments that are already under construction have until Jan. 1, 2002, to comply with the upgraded code. The upgrades will be enforced by local building departments, which are trying to work out details of how the law will be administered.

California already had one of the toughest energy-efficiency laws for home construction in the nation, said Pennington. Still, the improvements are estimated by the California Building Industry Association to make new houses between 12 percent and 15 percent more energy efficient.

Figuring the cost

"This is our best guess at this point," Doyle said. "We really won't know until summer when the bidding (for the improvement work) goes out." He based his figures on a 2,500-square-foot home.

The bulk of San Diego County's population falls within two climate zones -- 7 and 10 -- established by the energy commission. There are 16 zones throughout the state.

Along the county's coast, which is within Zone 7, Doyle said the energy standards could add between $450 and $1,000 to the price of a new home. That cost will jump to between $800 and $3,000 in Zone 10, an area that is roughly east of Interstate 15 in much of the county and which extends into the foothills.

Farther east, less-populated areas of the county within the mountains and desert are in Zones 14 and 15.

"A lot of the cost has to do with the design of the home, how much glass you have, how many heating and cooling units, the ducting systems and whether it is one or two stories," said Doyle.

With so many variables in play, such as square footage and location, the actual costs of the upgrades are difficult to determine.

The energy commission's Pennington, using a statewide average for a 2,000-square-foot home, said the improvements should amount to $300 to $750 per home. "That turns out to $2 more per month on the mortgage," he said.

And the California Building Industry Association estimates the statewide average cost to be $1,100 per home.

Affordability at issue

Areas of California where new-home prices are comparatively cheaper, such as the Central Valley, the high desert and parts of Riverside County, are where the energy upgrades may be at their costliest because of extremes in heating and cooling needs. The add-ons could price some in those areas, particularly first-time home buyers, out of the market, builders say.

The standards focus on two main areas: improving duct work for HVAC systems (heating, ventilation and air conditioning) and windows.

Builders can choose from a menu of options to meet the energy- efficiency standards.

Throughout the state, however, tighter duct sealing is expected to be one of the most universal changes in new-home construction adopted. This improvement effectively will eliminate the long- standing use of cloth-backed duct tape as the sole binding agent for joints in heating and cooling systems. Instead, a mastic compound and metal bands will become the required way of joining ductwork, the commission rules state.

To assure that ducts are properly installed, builders will be required to hire third-party inspectors to test a certain percentage of homes within a development. The testing costs about $440 per home, said one vendor.

Other upgrades expected to be widely adopted by builders are spectrally selective glass windows that reflect the sun's heat in summer and reduce heat loss in winter without tinting. Another improvement is the use of thermostatic expansion valves in central air conditioning. The valves regulate proper refrigerant charge.

In addition, builders in hot-weather areas are expected to shift to radiant barrier plywood roofing that keeps attics cooler.

"With these inspections, it's not just sealing ducts and putting a valve in; you have to turn on the air conditioning and heating, and plug the vents for test -- that's where the third party comes in," Doyle said. Testing includes pressurization of homes to determine if air leaks to the outside and measuring air flow.

Builders said the law could create a mini-boom for a new type of home inspector who checks a house's energy usage.

"We're going to need more folks like that when it becomes mandatory," Doyle said.

Two San Diego builders -- Shea Homes and Continental Homes -- have chosen to bring in a Stockton-based company, ConSol, as their energy adviser.

In terms of marketing energy efficiency, Doyle said Shea has become the acknowledged leader among San Diego builders. The company, which last year sold more new houses than any other builder in the county, announced in January a "high-performance home" at its Scripps Highlands community that offers solar electric home power generation and solar water heating. The project is the largest in the nation offering solar power for new houses.

Through a program already established in some of the Shea's and Continental's new-home developments, ConSol offers its ComfortWise energy plan that assures construction standards exceed present state energy regulations.

ConSol provides design of heating and air-conditioning systems, assures energy codes are met in construction and provides third- party inspections and diagnostic tests for new housing, as well as comfort checks to assure that homes are properly ventilated. The program then is marketed to buyers under the ComfortWise name. An energy rating documents the upgrades and potential savings on utility bills. "This can mean higher resale value," the company promotional materials say.

Robert W. Hammon, a ConSol principal, said the program produces homes that are 25 percent to 30 percent above today's state energy code. With the AB970 upgrades, the ComfortWise homes still will exceed the state standards by about 15 percent to 20 percent.

ComfortWise is one of several programs aimed at achieving new- home energy efficiency, but overall, the National Association of Home Builders says, builders nationwide have been reluctant to embrace the programs. The new statewide regulations may change that attitude among California builders.

Also focused on the same energy-saving goal, other programs are offered by individual utilities such as San Diego Gas & Electric, and by Energy Star, E Seal and Comfort Home.

ConSol formerly operated San Diego Gas & Electric's new-home energy program, but the utility took its program in-house last year and now markets it under its Home Energy Partnership Program.

SDG&E's program has lured only eight builders, many of them smaller or custom-home builders. Julieann Summerford, the utility's program manager for residential new construction, says interest among builders in the program has grown as a result of the protracted energy crisis. She said SDG&E is in discussion with 25 builders hoping they will participate. SDG&E offers rebates that can amount to $400 or $500 per new home to builders who adopt energy-efficient standards.

Doyle said the Building Industry Association has been working with the utility for the last year to offer training in energy conservation to its member builders and subcontractors.

But he wonders if overall the standards will do much good given what he sees as homeowners' growing demands for electricity.

Any conservation is good, he said. But he noted that home buyers today are demanding extra power connections for a variety of household entertainment and home-office products.

He, along with San Diego builder Mick Pattinson, vice president of the CBIA, questioned the focus on new-home construction over retrofitting the 12 million existing California homes, many of which were built without any state energy requirements.

"If conservation is the issue, where's your best bet for the buck?" Doyle asked.

- Carl Larsen

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