Massachusetts Senate Set to Vote on Bill that would be Harmful to Commonwealth’s Housing Market

by Eric Berman - eberman@marealtor.com - 781-839-5507 | Jun 28, 2016

S.2372 would also negatively impact home values in less-affluent communities and Gateway Cities

WALTHAM, Mass. – June 28, 2016 – The Massachusetts Association of Realtors® (MAR) and its 22,000 members formally oppose several sections of Senate Bill S.2372, An Act to promote energy diversity. As drafted, the bill would be extremely harmful to the Massachusetts housing market and would disproportionately hurt low- and moderate-income homeowners. The Massachusetts Senate is scheduled to vote on S.2372 this Thursday.

“Realtors® support the main goal of the bill, but there are provisions that will cause more harm than good if the bill is passed,” said 2016 MAR President Annie Blatz, branch executive at Kinlin Grover Real Estate on Cape Cod. “A mandated home energy labeling program, while well-intended, would significantly hurt the housing market for all homeowners, really stick it to low-income homeowners with older homes and won’t actually create energy efficiency.”

The goal of the bill is to diversify the state’s energy acquisition to include more renewable energy, but it also includes provisions that mandate a new energy auditing and labeling system. This system would include information about a dwelling’s energy costs, energy consumption and would be required to be available at the time of listing a home. In addition, this private information would be tracked and reported by the state.

In reality, these requirements would have drastic negative impacts on Massachusetts’ old housing stock. This would be significantly more severe in low- and moderate-income communities where the homeowners cannot afford to make upgrades. The ratings could cause depressed values of those older homes as well.

“Proponents of the legislation try to simplify the argument of an energy score by equating it to a miles per gallon (MPG) rating. Unfortunately, this would be like putting out new MPG requirements on cars that were built over 50 years ago if you were to use the median age of Massachusetts homes, which is second oldest* in the country,” said Blatz.

The bill as drafted would further complicate an already complicated process of buying and selling a home. Requiring an energy audit prior to listing a home will lead to home buying delays. Adding a mandatory inspection to the home buying process is counterproductive to encouraging a healthy real estate market and opportunities for home ownership. In addition, a home inspection is customarily not performed until the buyer is under contract to purchase a home.

There are currently alternatives already available. Under existing state law, home inspectors are required to provide consumers information regarding home energy audits at the time of a home inspection (see 266 CMR 6.08). Additionally, the standard contract to purchase produced by MAR includes a provision allowing for a buyer to conduct an energy audit as part of the inspection. These alternatives provide consumers the opportunity to voluntarily conduct inspections and obtain upgrades if they so choose. Continuing to educate consumers about these alternatives is critical to the success of energy policies and programs.

“Instead of focusing on ways to incentivize all homeowners to make energy efficient upgrades to their homes, the bill would hinder and cause delays of home buying and selling process,” said Blatz. “MAR has long supported a property owner’s ability to voluntarily obtain an energy inspection of their home through programs such as MassSave. What the Senate is proposing is penalties and not incentives.”

About the Massachusetts Association of REALTORS®:
Organized in 1924, the Massachusetts Association of Realtors® is a professional trade organization with more than 22,000 + members.  The term Realtor® is registered as the exclusive designation of members of the National Association of Realtors® who subscribe to a strict code of ethics and enjoy continuing education programs.

* Massachusetts has second oldest median house age at 54 (New York State is the oldest with a median age of 57) According to the latest data from the Department of Housing and Urban Development American Housing Survey (AHS)

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Editors and reporters: Please note that the term Realtor is properly spelled with an initial capital “R”, per the Associated Press Stylebook.