Houston makes affordable homes less affordable

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The city of Houston has added thousands of dollars to the cost of building new homes (via the Chron‘s Carolyn Feibel):

New homes built in Houston will have to meet more stringent energy-saving standards starting next October under a new energy code approved Wednesday by the City Council.

“The modern trend among both some of the finer small and large home builders is to build much more energy-efficient homes,” said Mayor Bill White. “In fact, you’re going to see people are drawn into the city because we have good building standards.”

The council passed the code unanimously with no discussion.

The new code requires new residential construction up to three stories to attain a 15 percent energy savings over the existing 2006 International Residential Code.

While it’s a noble goal, should it really be mandated through regulation, or should it be voluntary? For example, if someone wants to buy a green home, shouldn’t they just buy from a builder who chooses to build green homes?

Right now, local homebuilders are struggling to stay afloat for a myriad of reasons, including the high cost of materials and the credit crunch. They cannot eat the costs associated with building “greener” houses; the costs will be passed on to the consumer. When one is an entry-level homebuyer, this will inevitably price some out of the lowest end of the market.

The Greater Houston Builders Association approved of the changes, but wants to see the city add some incentives, said Adam Aschmann, the group’s government affairs director.

For example, he said, the group would like the city to pay for the cost of energy compliance inspections for homes that sell for less than $175,000.

Aschmann said the energy goals could add between $1,000 and $2,000 to the construction cost of a median-priced home.

The new energy code also would apply to home additions of 500 square feet or more.

Barry Klein, president of the Houston Property Rights Association, said he feared the regulations would hurt homebuyers.

“For new construction, the cost becomes more and more prohibitive for people to purchase those new homes,” Klein said. “There is a long established pattern of people moving out of the city to escape the city’s regulations. I’m sure this is the kind of thing that will accelerate that.”

Aschmann’s estimate of the extra costs is probably optimistic at best for some homebuilders — especially the ones who build affordable homes which have not been Energy Star certified previously.

Unfortunately, Mayor White’s justification shows a lack of real-world understanding:

White said homeowners will recoup the added costs on their utility bills within four or five years.

“So, that is a good investment, and it makes it so homes are more affordable in the long run,” he said. “If somebody is, say, laid off or suffers a financial reverse, then they will be able to stay in their house longer, and I would encourage people to shop for energy-efficient homes.”

The extra money required to build the house will be tacked on to the purchase price. At the most affordable end of the housing market, that means some people will not be able to buy a starter house, with the extra cost included. Therefore, recouping the added cost is out of the picture.

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Anne Linehan is a co-founder of blogHOUSTON.