Will Ann Arbor’s new home energy ordinance be used in other Michigan communities?
Have you heard about Ann Arbor's new HERD ordinance?
The Home Energy Rating Disclosure (HERD) ordinance requires that a Home Energy Score (HES) assessment be conducted before an existing/used home is listed for sale with a real estate company or for sale by owner (). The ordinance took effect on March 12, but the enforcement of HERD requirements began on Sept. 8. The city of Ann Arbor's Office of Sustainability and Innovations manages the program. This ordinance is part of the city's push toward carbon neutrality by 2030. The city has hired two employees to oversee and enforce the program. Could something similar be coming to your city? Is it overreach or helpful? You decide.
According to the city of Ann Arbor, the HERD ordinance requires that single-family detached homes and side-by-side townhomes within Ann Arbor city limits acquire a HES prior to being listed for sale from a certified assessor. The score must be shared/disclosed to potential buyers in the sale listing along with documentation and with the city of Ann Arbor before listing the home. The score ranging from 1 to 10 is based on an evaluation of the home's insulation in the attic and walls, the foundation, windows, heating and cooling systems, hot water heating, etc. The higher the score, the more efficient the home. The HES report can also include specific recommendations for how to improve the score with projects that have an expected payback of 10 years or less. The HES is valid for eight years or until any major changes are made to the home.
Based on my experience of selling real estate for more than 26 years, I have never had a buyer not buy a home because of any of the following: had a good working mid-efficiency furnace and central air system vs. a high- efficiency system, had 6 inches of attic insulation vs. 18 inches, had a hot water heater tank vs. a high-efficiency tank or tankless system, had a manual thermostat vs. a programmable thermostat, had regular kitchen appliances vs. Energy Star rated appliances, etc.
Windows are a little trickier. If they are maintained and in good working condition with no rotting wood, defective seals and double-paned glass, buyers are almost always satisfied knowing the windows are good and down the road may need replacing. Single-pane windows with no insulation properties can deter some buyers. With that said, I have never had a buyer not buy a home because it didn't have the highest-rated windows or Low-E glass.
Penalties: A violation of any provision of this ordinance is a civil infraction punishable by a fine of not more than $500 for a first offense and not more than $1,000 for each additional or subsequent offense, plus the costs of prosecution including court costs. Each act or violation shall constitute a separate offense. Violations shall be enforced by Building and Rental Services Unit employees. Development Services inspectors are eligible to enforce. The court may issue and enforce any judgment, writ or order necessary. Knowingly submitting a false Home Energy Score Report or submitting it with reckless disregard for the truth and accuracy of it is a civil infraction punishable by a fine of not more than $500 plus the costs of prosecution, including court costs. In addition, the city may also seek equitable or other remedies.
A prudent person has to wonder what the real end game is here and ask the hard questions because there are usually unintended consequences. It's one thing to have energy efficiency codes for new construction just like the MPG disclosure on new cars, but on existing/used homes? (There is no requirement on used cars.) Is it to try and shame the homeowners into spending tens of thousands of dollars to fix up their homes to sell? If they do, they will pass the costs onto the buyers by increasing the price of their homes. Another scenario is the homeowners won't do anything and stay in their homes instead of selling, causing the persistent low inventory of homes to get even worse. What happens in 2030? Will there be forced compliance in order to sell your home? Conjecture, maybe. Possible, yes.
Market update
August's market update for Macomb and Oakland county's housing market (house and condo sales) is as follows: In Macomb County, the average sales price was up by more than 9% and Oakland County's average sales price was up by almost 14%. Macomb County's on-market inventory was up by almost 2% and Oakland County's on-market inventory was down by more than 8%. Macomb County's average days on market was 23 days and Oakland County's average days on market was 25 days. Closed sales in Macomb County were down by 11% and closed sales in Oakland County were down by almost 14%. The closed sales continue to be down as a direct result of the continued low inventory. Demand still remains high. (All comparisons are month to month, year to year.)
By the long-standing historical definition from the National Association of Realtors, which has been in existence since 1908, a buyer's market is when there is a seven-month supply or more of inventory on the market. A balanced market between buyers and sellers is when there is a six-month supply of inventory. A seller's market is when there is a five-month or less supply of inventory. Inventory has continued to stay low. In August, the state of Michigan's inventory increased a little to 2.5 months of supply. Macomb and Oakland county's inventory was at 2.1 months of supply. Even though inventory rose a little, by definition it's still not a buyer's market.
Steve Meyers is a real estate agent/Realtor at RE/MAX First in Shelby Twp. and is a member of the RE/MAX Hall of Fame. He can be contacted with questions at 586-997-5480 or You also can visit his website: AnswersToRealEstateQuestions.com.
