The American Dream: The Green Solution?

American automakers are suspending production on low mileage vehicles. Inventory levels of SUV’s and Light Trucks exceed four months. Gas is selling at $4.25 a gallon. Americans have reduced their mileage driven by over one billion miles per month. Meanwhile hybrid cars are selling above list.

Americans want to do what is right for society, the environment, the trees…but more importantly they want to save energy and energy costs. It makes good sense. But in the new home building business we simply trudge onward…reducing prices, increasing incentives, hoping to find the bottom of the market.

Take a look at this video...it spells out the challenges and the opportunities pretty clearly.



We need a new building boom but a sustainable and responsible boom. We need the American Dream business to be part of the American Green Solution.

I would like to propose that Senator Obama suggest an enhancement to the federal tax credits for energy efficient new homes as is contained in the federal Energy Policy Act of 2005. I would suggest that this program could also be combined with a tax incentive for consumers that purchase an energy efficient new home as well.

Currently the 2005 Energy Policy Act limits the tax credit to builders at $2000. It is estimated that making a new home “energy efficient” enough to qualify for the tax credit would require as much as a 4% to 7% increase in direct cost. This cost would be passed on to the consumer and would have a direct and negative effect on the pricing elasticity relative to less efficient new homes. I propose increasing this credit to a maximum of $5000 per home. The credit could be targeted to new homes under $500,000 for maximum impact. We would then increase the likelihood that builders will build more homes that would qualify for this sort of tax advantage.

The consumer should also be rewarded for purchasing a more energy efficient new home as well. The tax incentives should be immediate and worthwhile. A $500 tax rebate would be a reasonable target as it would not be a budget buster but it would provide real tangible benefits directly to the consumer. We need to address both the supply and demand pressures for adopting green building technology.

The homebuilding industry is not only a major employer but it is also a driving force for our economy as a whole. We are currently experiencing the worst housing downturn in over 19 years. We need to stimulate responsible growth in this industry. We also need to increase the focus on energy efficiency in our homes as well as our automobiles. Rather than constantly focusing on gas prices, we can save energy and reduce harmful by products just by changing the way we build our new homes. It is estimated that new homes may be as much as 20% to 30% more efficient than homes of thirty years ago.

Right now programs like Energy Star and LEED are delivering homes that are between 25% and 50% more energy efficient than other new homes. Why not encourage that? It would be the equivalent of taking a car that currently gets 25 miles per gallon and improving that to 31-37 with no new technology!

A program that targets energy consumption and green house gas reduction while stimulating the housing industry would be a great way to get America building again!