Weatherization: An Overlooked Business Opportunity
Home improvements may be the last thing on the minds of homeowners constantly threatened by depreciation, as housing costs are an even bigger, more immediate concern.
There are however some rudimentary signs that home values are stabilizing. Clear Capital's Home Data Index Market Report based on July 27 to Aug. 25 data show the national quarterly price increased 7.3%, posting monthly gains for the third month in a row. Add to these hopeful signs billions of federal dollars currently available to help lower-income families upgrade their energy systems and in the process improve home values and create new jobs - and home improvements start to make sense.
A growing number of specialty lending firms are taking advantage of these opportunities. In fact, while the industry focus is on the Home Affordable Modification Program, another $8 billion in funding as part of the American Recovery and Reinvestment Act launched in February 2009 is earmarked for the Weatherization Assistance Program and the State Energy Program. These programs are expected to create 87,000 new jobs and save families hundreds of dollars a year in energy bills. Remodel Auction Inc. of Charlotte, NC has launched a proprietary bidding system for the Weatherization Program in North Carolina based on its online home improvement pricing technology. The goal, RAI said, is to facilitate competitive bidding for the $131 million allocated by the state, in compliance with federal and state rules, which do not endorse any specific contractors for the work.
In North Carolina, the weatherization assistance program provides an average investment of up to $4,000 for one home in energy upgrades. It is available to families making no more than 200% of the federal poverty level, which is about $44,000 a year for a family of four.
These funds can be used to add more insulation, and modernize heating and air conditioning equipment. The process usually starts with audits of the property, the company said.
Remodel Auction expects at least 25,000 weatherization projects to be completed through the North Carolina program. The 30 participating local community development organizations are funded with federal stimulus money through the state.
Moreover, according to a Department of Energy statement, the department will release "additional funding over time as states demonstrate that they are using the funding effectively and responsibly to create jobs and cut energy use." Certified "energy audit" and "weatherization" professionals are recruited through the RemodelAuction.com website. Founded in 2005, the company provides property analysis and calculation of price differences for remodeling projects.
In Sunnyvale, Calif., Serious Materials provides sustainable green building materials that save energy and money while addressing climate changes, thus supporting energy efficiency funding under the American Recovery and Reinvestment Act, including weatherization programs.
Recently the firm started offering an affordable super-insulated window line specifically created for agencies and states participating in the federal Weatherization Assistance Program for use in low-income housing projects old and new.
The firm reported that since the mission of the federal weatherization program is to assist low-income families, its SeriousWindows series was designed to increase energy savings for household by 12 times higher than other common weatherization measures.
Serious Materials CEO Kevin Surace calls using such highly cost-effective and energy saving materials an opportunity to secure the country's energy independence, combat climate challenges and strengthen the economy. "Their benefits for WAP agencies and for the low-income families they serve are tremendous."
According to Serious Materials, SeriousWindows options help reduce heating and cooling bills by up to 40%. Department of Energy WAP funding has increased to allow for an average investment allowance of $6,500 per household.
Elsewhere in California earlier this year, SunWize Residential Power Systems, a subsidiary of Technologies Inc. of San Jose, offers a flexible residential solar financing program that enables homeowners to adopt solar panels that - beyond the upfront cost of the system installation - makes homeownership more affordable and "green."
To make it more affordable, a SunWize Solar Electric Solution that its designers say saves thousands of dollars, the firm offers an incentive where users can make their investment more cost-effective by avoiding the burden of a bulk initial investment.
"Funds are readily available with applications taken over the phone and credit decisions typically are made in minutes. SunWize listened closely to the needs of homeowners and developed this program so more homeowners can take full advantage of the federal solar incentives," SunWize executive vice president David Kaltsas says.
Approved borrowers qualify for an unsecured, same-as-cash loan of up to $45,000 for solar installations that does not require principal or interest payments for up to 12 months.
The 12-month time leverage financing enables borrowers to benefit from the 30% federal tax credit that applies to residential solar energy system loans. At the end of the year homeowners can either pay it in full or in fixed interest rate installments.
It is offered in partnership with home improvement loan provider Financial Services, the administrator of the loan, while EnerBank USA provides the loan funding.
Demand for the program appears to be in an upswing mode.
Financial Services and EnerBank USA recently partnered with Houston-based global provider of renewable energy solutions Acro Energy Technologies Corp. to introduce the same type of financing in Texas.
"With financing for solar installations improving and the impact of government programs coming online, we see potential for tremendous growth for the reminder of the year and into 2010," says Acro Energy CEO Harry Fleming.