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Energy efficiency in U.S. residential rental housing: Adoption rates and impact on rent

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  • Im, Jongho
  • Seo, Youngme
  • Cetin, Kristen S.
  • Singh, Jasmeet

Abstract

For 118 million residential housing units in the U.S., there is currently a gap between the potential energy savings that can be achieved through the use of existing energy efficiency technologies, and the actual level of energy savings realized, particularly for the 37% of housing units that are considered residential rental properties. Additional quantifiable benefits are needed beyond energy savings to help further motivate residential property owners to invest in energy efficiency upgrades. This research focuses on assessing the adoption of energy efficient upgrades in U.S. residential housing and the impact on rental prices. Ten U.S. cities are chosen for analysis; these cities vary in size across multiple climate zones, and represent a diverse set of housing market conditions. Data was collected for over 159,000 rental property listings, their characteristics, and their energy efficiency measures listed in rental housing postings across each city. Following an extensive data quality control process, over thirty different types energy efficient features were identified. The level of adoption was determined for each city, ranging from 5.3% to 21.6%. Efficient lighting and appliances were among the most common, with many features doubling as energy efficient and other desirable aesthetic or comfort improvements. Then using propensity score matching and conditional mean comparison methods, the relative impact on rent charged in each city was calculated, which ranged from a 6% to 14.1% increase in rent for properties with energy efficient features, demonstrating a positive economic impact of these features, particularly for property owners. This was further subdivided into five types of energy efficiency upgrade and three housing types. Single family homes generally demanded higher premiums with energy efficient features, however there was not a consistent pattern across the types of efficient upgrades. The results of this work demonstrate that investment in energy efficient technologies has quantifiable benefits for rental property owners in the U.S. beyond just energy savings. This methodology and results can also be used in other cities and by property owners, utility companies, or others, ultimately encouraging further investment and positive economic impact in residential energy efficiency and in turn improving energy and resource conservation in the building sector.

Suggested Citation

  • Im, Jongho & Seo, Youngme & Cetin, Kristen S. & Singh, Jasmeet, 2017. "Energy efficiency in U.S. residential rental housing: Adoption rates and impact on rent," Applied Energy, Elsevier, vol. 205(C), pages 1021-1033.
    • Handle: RePEc:eee:appene:v:205:y:2017:i:c:p:1021-1033
    DOI: 10.1016/j.apenergy.2017.08.047
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    References listed on IDEAS

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    3. Maria-Francisca Cespedes-Lopez & Raul-Tomas Mora-Garcia & V. Raul Perez-Sanchez & Juan-Carlos Perez-Sanchez, 2019. "Meta-Analysis of Price Premiums in Housing with Energy Performance Certificates (EPC)," Sustainability, MDPI, vol. 11(22), pages 1-59, November.
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    6. Richard S.J. Tol, 2018. "Energy and Climate," Working Paper Series 1618, Department of Economics, University of Sussex Business School.
    7. Omar Isaac Asensio & Olga Churkina & Becky D. Rafter & Kira E. O’Hare, 2024. "Housing policies and energy efficiency spillovers in low and moderate income communities," Nature Sustainability, Nature, vol. 7(5), pages 590-601, May.
    8. Steven März & Anja Bierwirth & Ralf Schüle, 2020. "Mixed-Method Research to Foster Energy Efficiency Investments by Small Private Landlords in Germany," Sustainability, MDPI, vol. 12(5), pages 1-18, February.
    9. Luiz de Mello, 2023. "Real Estate in a Post-Pandemic World: How Can Policies Make Housing More Enviromentally Sustainable and Affordable?," Hacienda Pública Española / Review of Public Economics, IEF, vol. 244(1), pages 111-139, March.
    10. Sean Hay Kim & Jungmin Nam, 2020. "Can Both the Economic Value and Energy Performance of Small- and Mid-Sized Buildings Be Satisfied? Development of a Design Expert System in the Context of Korea," Sustainability, MDPI, vol. 12(12), pages 1-29, June.
    11. Nie, Hongguang & Kemp, René & Xu, Jin-Hua & Vasseur, Véronique & Fan, Ying, 2020. "Split incentive effects on the adoption of technical and behavioral energy-saving measures in the household sector in Western Europe," Energy Policy, Elsevier, vol. 140(C).
    12. Li, Kai & Ma, Minda & Xiang, Xiwang & Feng, Wei & Ma, Zhili & Cai, Weiguang & Ma, Xin, 2022. "Carbon reduction in commercial building operations: A provincial retrospection in China," Applied Energy, Elsevier, vol. 306(PB).
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