Low-Income Housing and the IECC

Codewatcher low income housing IECC

Part 3 of a 9-part series on the IECC addresses why low-income housing advocates support strong energy codes that ensure efficient homes and multifamily buildings.

National Housing Institute President Harold Simon had never testified at an IECC Development Hearing before, but when he did, he had everyone’s attention.  “As advocates for low-income families, one of the greatest tragedies we see is when a family realizes their dream of owning a home, only to lose it because they can’t pay their energy bills,” he said in support of “The 30% Solution” that helped produce historic efficiency gains in the 2012 IECC.

Those who oppose building efficiency because the “first” cost of efficiency improvements “prices American households out of the home buying market” should listen to Mr. Simon and other low-income advocates who view those first costs as an investment that secures home ownership.  Their evidence is strong and compelling, and it all starts with substantial data showing that “inability to pay energy bills” is the leading reason for home foreclosure behind “losing your job.”

Defaults from high energy costs aren’t confined to residential property.  The June 2017 study, “Impact of Energy Factors on Default Risk in Commercial Mortgages” by the University of California Berkeley & Lawrence Berkeley National Laboratory ran building energy simulations that confirmed that “building-level energy consumption and the electricity price gap are statistically and economically associated with commercial mortgage defaults.”

The study concluded that the efficiency of commercial buildings and locational price risks do increase the likelihood of commercial defaults and should be a serious consideration in evaluating the risk of mortgage originations.

Energy Bills Are the Highest and Least Predictable Cost of Home Maintenance

An analysis by the Institute of Market Transformation identified energy as the highest cost of home ownership outside of mortgage principal and interest . . . higher than property taxes and higher than homeowner insurance.

Because energy bills also dependent on weather, it’s also the least predictable cost for homeowners.  Part 1 of this series discussed how strong building envelopes hold air conditioning and heating better during heat waves and cold snaps like the recent polar vortices that crippled the Midwest.

Housing advocates point to inefficient building envelopes as the reason why many families fall behind in their energy bills during extended heat or cold.  Because their data shows fewer turn-backs and foreclosures from efficient homes, most Habitat for Humanity Chapters require construction to meet the most recent published IECC, regardless of the IECC that’s in place.

Choosing Between Buying Medicine and Paying the Energy Bill

It is well-documented that high energy bills can have dramatic negative effects on quality of life. The U.S. Energy Information Administration recently reported that nearly one in three households struggle to pay energy bills or to maintain adequate temperatures in their homes every year.[2]

Worse, more than one in five households reported reducing or foregoing the purchase of basic necessities, like food or medicine, to pay energy bills.

Easing the Burden on Low-Income Assistance Programs:  Proactive Building Energy Codes Are Far More Cost-Effective than Reactive Post-Construction Governmental “Fixes”

Costly “fixes” at federal, state, and local levels of government react to the above-stated problems of energy bill fluctuations, affordability and predictability after construction.  In contrast, by ensuring that all homes are built right in the first place, strong building energy codes will proactively ease the burden on these assistance programs, allowing funds to be better focused on the greatest areas of need.

Without question, incorporating permanent efficiency measures at initial construction is both easier and much more cost-effective than later retrofits. By ensuring the construction of ever more energy efficient homes, stronger energy codes will ease the pressure on governmental programs that assist low-income families struggling to pay their energy bills.  Specifically:

  • Programs that directly offset energy bills for households that can’t afford them, like the federal government’s $3.6 billion a year Low-Income Home Energy Assistance Program (LIHEAP), will benefit from home features that stabilize energy bills during lengthy heat waves and cold snaps, when energy demand and prices peak.
  • Increasing the number of efficient homes with permanent efficiency measures will also ease costly retrofits under the federal Weatherization Assistance Program (WAP), which currently spends more than $7,000 to improve the energy efficiency of an average low-income home (more than twice the cost of the same efficiency improvements at initial construction)!

Building Energy Codes Make a Difference Keeping Low-Income Families Financially Afloat

In its bulletin “Energy Efficiency Makes Homes More Affordable,” Habitat for Humanity states “Cutting energy waste saves money and builds community wealth.  Low-income families may spend over 15% of their income on energy to operate their homes. Simple energy efficiency improvements can cut energy costs by over 40% in most affordable housing. The money that families save on energy can help them make mortgage payments, and pay for food, clothing, and other essentials.”  The bulletin adds “While energy codes set minimum standards, it is often wise to exceed code requirements. The results will be more efficient, healthy, durable, comfortable, and affordable homes.”

Stay tuned for Part 4 of this 9-Part series: “Much to NAHB’s Chagrin, Their Own Poll Showed 9 of 10 Americans Willing to Pay 2-3% More for Homes with Permanent Efficiency Improvements.

Bill Fay is Executive Director of Bill Fay leads the broad-based based Energy Efficient Codes Coalition (EECC). Stay tuned for the next blog in this series.