Massachusetts faces two enormous challenges: The cost of housing and the changing climate.
And while nearly everyone agrees the state needs to tackle both of them, the debate over a new report out last week highlights how — at least to some — the solutions sometimes conflict.
The report, published by the Home Builders and Remodelers Association of Massachusetts (HBRAMA), and written by economists at MIT and Wentworth, argues that the new net-zero building codes being adopted by communities around the state could increase the cost of building a new single-family home by anywhere from $10,000 to $23,000. That, they warn, could push housing out of reach for even more Massachusetts families.
But climate advocates, city council members, and state officials are pushing back, noting the homebuilders’ report failed to account for energy savings over the life of a house from adopting greener technology, or the myriad incentives that the state offers to subsidize its installation. It amounts, they said, to painting decarbonization as exacerbating the housing crisis.
“It’s very suspicious who paid for it,” said Lisa Cunningham, director of climate advocacy group ZeroCabonMA. “I am so aghast at the methodology that was used here. They haven’t included any incentives, they’ve misquoted the [gas line costs], and these figures are completely wrong.”
Houses built under the new codes would use energy-efficient insulation, heating and cooling systems, and even windows, similar to the current stretch codes, only with more stringent caps. The specialized energy codes for new buildings are not mandatory — cities and towns have to vote to adopt them. So far, Cambridge, Brookline, and Concord are among the places that have done so, with new codes set to take effect in January 2024.
For builders, anyway, those costs add up. Researchers at the MIT Center for Real Estate and Wentworth Institute of Technology estimated they would raise the cost of single-family homes by 1.8 to 3.9 percent, no small sum in a state where the price of the median single-family house in April amounted to $553,500.
“As homebuilders, we very much appreciate and understand the crossroads that we’re at as a region, nation, and even globally,” said Rob Brennan, chair of government affairs at HBRAMA. “As an industry and homebuilding association, we also recognize it was our responsibility to bring to that discussion an examination that would document exactly what the costs are to housing in moving to a net-zero code.”
But climate advocates — and even state officials — say the report ignored a key factor: The long-term cost for the people who actually live in these houses. Better energy efficiency and all-electric appliances may cost more upfront, but they can save homeowners money over the long run.
“There is sometimes an upfront premium, but you have to balance that against the lifetime cost savings, which are enormous,” said Quinton Zondervan, a City Councilor in Cambridge, one of the first cities to adopt the net-zero code.
Then there are state and federal initiatives that help pay for them. One of the major state programs, Mass Save, provides a $15,000 subsidy for all-electric single-family homes. The state also offers tax credits of up to $1,000 for homes that use solar-generated electricity and hot water.
Leaving those out was a major omission, said Kyle Murray, Massachusetts program director for the Acadia Center, a non-profit organization for clean energy solutions.
“The report estimates a cost premium, but that’s without factoring in public incentives,” he said. “So I would disagree with that major conclusion about costs going up.”
Justin Steil, a researcher from the MIT Center for Real Estate who worked on the study, said public incentives were left out of the cost analysis because of the “variation in the availability of some of these subsidies across the state and the inability of some developers to rely on them,” he wrote in an e-mail to the Globe.
And Rob Brennan from HBRAMA argued that while utility bills may be lower in the long-run, mortgage lenders typically don’t take that into account when deciding how much they’ll underwrite.
“Lower utility bills do allow for savings and benefits your net income,” he said. “But currently, under standards of Fannie and Freddie underwriting, those decreased costs of utility are not factored into appraisals and underwriting and what [borrowers] can afford.”
Other studies on the issue have come up with different results. A state Department of Energy Resources report commissioned last year that analyzed the cost of building energy efficient housing that adheres to the current stretch codes found that building costs decrease under the energy efficient standards, with the assistance of these public incentives.
And a study conducted last year by the Rocky Mountain Institute (RMI) assessing the impact on housing construction costs in nine cities (including Boston) found that “all-electric, single-family new construction is more economical to build and operate than a home with gas appliances and has lower lifetime emissions.” The study found lower total upfront and annual operating costs for all-electric homes in comparison to mixed-fuel homes.
That’s been the experience in Lexington, too, said Town Select Board Member Mark Sandeen, who noted the town has been building all-electric affordable housing for 10 years.
“We’re finding that the cost of construction is lower, and that the cost of utility is lower,” he said.
Lacey Tan, a researcher who worked on the RMI study, agreed with the issues raised in the homebuilders‘ report, but raised concerns about the study’s cost analysis with regards to gas-related infrastructure. More importantly, Tan said, building affordable and building green need not be at odds with each other. In the long run, if anything, they go hand in hand.
“Affordable housing and climate change are connected,” she said. “They’re not separate issues.”