Driving Innovation in Housing Technology

Needs & Motivations of Remodelers for Adding

Energy Efficiency

Amber Wood

Manager, Energy Programs

NAHB Leading Suppliers Council

June 7, 2012

Building America

Private/public R&D partnership sponsored by DOE

Energy-efficient solutions for new and existing housing Technologies/Systems Whole-House Test Homes Quality Processes

Needs & Motivations of Remodelers

Current remodeling industry Role of energy efficiency Identify the gaps and barriers

Quantify and prioritize needs to increase sales & projects involving improving home energy efficiency

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Remodelers’ View of Current Industry & Energy Efficiency

(initial set of focus groups)

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Current Remodeling Industry

The economic climate has shifted greater to focus to remodeling More consumers are staying in their homes Many builders are turning to remodeling work

Competitive, price sensitive market due to Lending restrictions Lack of appraisal value on energy efficient

upgrades Flood of individuals into the remodeling arena

5

Current Industry (cont.)

Qualified remodelers strive to differentiate themselves Convey to the consumer the value of an

experienced, qualified remodeler Position the remodeler as the expert &

serve to build trust and confidence among consumers

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“This is the way we build”Believe energy efficient upgrades are part of “doing things the right way”; incorporate as part of their business model

Have certain upgrades that include as standard part of process, if warranted

Approach as “this is what we’re going to do” then educate consumer as to why they do it

“My responsibility to recommend”Believe energy efficient upgrades are in customer’s best interest and actively seek opportunities to recommend upgrades

Seek to guide consumers as to benefits; try to drive them toward it

May recommend upfront, but most often wait until have gotten a feel for the house and customer

“We’ll offer as an option”Intellectually know it should be recommended, but don’t have strength of conviction

View more as a consumer driven decision; give them information then let them decide

Anticipate consumer bottom line focus

Role of Energy Efficiency in Remodeling

Provide a cost/benefit analysis for energy efficient upgrades Include an energy audit assessing

energy consumption & lifestyle Demonstrate potential savings for

various upgrades; connect the dots in terms of upgrades and real world benefits.

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Best Approach to Energy Efficiency

Knowledgeable recommendation with the consumer’s best interest in mind

Sales attempt with the remodeler’s/builder’s financial interest in mind.

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Remodelers’ Gaps & Barriers to Adding Energy Efficiency into

Remodeling

(2nd set of focus groups)

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Gaps & Barriers to Adding Energy Efficiency

See growth potential for energy efficient upgrades

Long-term success is dependent on upgrades becoming market driven. Need incentives based on improved home

performance (not specific products) Shifting homeowner mindsets to

“performance” of the home

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Challenges . . .

Perceived value in doing energy efficient upgrades

Costs Auditing/testing Limited homeowner resources Energy savings vs. upgrade investment Energy efficient improvements do not

add appraisal value

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Reasons to Invest in Energy Upgrades

Motivators Include: Reducing monthly energy bills Having more predictable energy bills Increased comfort Improving indoor air quality Environment, conservation, and/or green

Helping homeowners to connect the dots between a problem and solutions is necessary for buy in

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Selling vs. Solutions for Remodelers

Educational information regarding energy inefficiency can create awareness Did you know that you could be paying

more than you should be in monthly energy costs because of leaky ducts, drafts, outdated heating & cooling systems or insufficient insulation?

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Growing Energy Upgrades

Nationwide existing home performance scores

Establishing appraisal value for energy efficient upgrades

Realtor education as to value energy efficient upgrades bring, and how to sell the features

Points off mortgage interest for energy efficient upgrades

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Tools Needed

Informational/educational resources Shift consumer thinking to home

performance Increase understanding of problems Understand benefits of various types of

upgrades Website, DVD, printed materials

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Tools Needed (cont.)

Consumer campaign Free/low cost energy audits for

homeowners Key questions to ask in order to

identify opportunities Means of quantifying impact of

energy efficient upgrades Connecting remodelers with energy

auditors to develop referral network

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Remodelers’ Needs for Improving Home Energy

Efficiency

(quantitative market research based on focus

groups)

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Prioritize the Support Needs

Quantitative market research with remodelers.

Build upon the qualitative remodeler focus groups,

Quantify and prioritize the support needs Increase sales and projects

involving improving home energy efficiency

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% Clients in Following Groups MeanBottom line focused - will not spend any more than they have to.

40%

Can be convinced - may or may not think about energy efficiency, but are open to the upgrades once they understand the benefits.

39%

Embraces, or actively seeks, energy efficiency. 21%

Total 100%

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What percentage of your recent clients fit into the following groups when it comes to accepting energy efficient upgrades?

Company Approach to Energy Efficient Upgrades Freq.We do not try to sell or offer energy efficient upgrades unless they are specifically asked for by the client.

6%

We offer or recommend it when the energy efficient upgrade is cost effective and is directly related to the home improvement project.

51%

We believe energy efficient upgrades are part of “doing it the right way” and incorporate this into as many remodeling jobs as possible.

43%

Total 100%

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When working with clients, which of the following statements most closely describes your company’s approach to energy efficient upgrades?

Priority Issues sorted by Importance to Remodelers1 Appraisal values factor into what type of remodels clients are

willing to undertake, and energy efficiency is difficult to value.2 Clients are typically unable to discern between high quality and low

quality construction at the bidding phase. Often they select the lowest cost bidder. This makes selling upgraded energy efficiency difficult.

3 Realtors, who are in contact with homeowners as they buy/sell homes, aren’t able to describe the value of energy efficiency.

4 There is no standard way to compare a home’s energy efficiency when buying or selling an existing home.

5 Homeowners want to see tangible differences, often focusing on aesthetics or functionality, which makes energy efficiency a difficult sell.

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What is the relative importance of all of the issues?

Priority Issues sorted by Importance to Remodelers6 One popular way to determine airtighness, a blower door test, is

expensive and most clients are not willing to pay for just an evaluation.

7 Homeowners see energy efficiency upgrade costs as an expense and not an investment.

8 Clients don’t understand the value of energy efficiency. They place little value on it. If consumers don’t see a problem, then they won’t purchase the solution.

9 There is little real demand for energy efficiency. Homeowners are just following the money for rebates.

10 No coordinated efforts between the federal government, state government, and utilities when it comes to offering, applying for, and complying with energy efficiency incentive programs.

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What is the relative importance of all of the issues?

Next Steps

Outline potential solutions Determine homeowners gaps &

needs

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Resources

Building America www.eere.energy.gov/buildings/building_america

Builders Challenge Program: www.eere.energy.gov/buildings/challenge

NAHB Research Center Main Website: www.nahbrc.com Technical Info: www.toolbase.org

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Questions?

Driving Innovation in Housing Technology

Thank You!

Amber Wood

NAHB Research Center

Manager, Energy Programs

400 Prince George’s Blvd Upper Marlboro, MD 20774(direct) 301.430.6309 (fax) 301.430.6180

www.nahbrc.com