Green Mortgage Northwest

Does up to $20,000 in fees to convert your garage into a living space sound steep? In the past, such a thing was not uncommon. Thanks to some hard work from local believers, the City of Portland recently voted unanimously on a resolution to suspend System Development Charges (SDCs) for Accessory Dwelling Units (ADUs) in Portland. Commissioner Randy Leonard’s blog has more information and a link to the resolution.

One way to think of ADUs is as affordable housing. With a strict urban growth boundary and the resulting scarcity of land, ADUs are a great alternative for Portland. Also known as mother-in-law units, they are an option for adding extra, private living space to a property without buying a new house. And it isn’t just limited to converting garages – you can build an entirely new structure if you’d like, or perhaps convert a basement space into separate living quarters.

The benefits are many:

• Small buildings require comparatively little energy to heat or cool versus McMansions;
• In-fill development keeps housing close to transit lines or within the new 20-minute neighborhoods that Portland’s city planners are embracing;
• Families can assist one another as parents age;
• More open space can be devoted to parks and community spaces.

There are probably some downsides – perhaps a neighbor who doesn’t want to look at your new building? – but it seems a small price to pay. I look forward to seeing more ADUs popping up backyards in the coming years!

I had the honor of being one of six inaugural members of the GreenLending Specialist course earlier this week. Created by Seattle-area-based PorterWorks, GLS is a great 2-day course to educate mortgage lenders, appraisers and other real estate professionals regarding green in general, green building and green as it relates to lending.

You’ll learn about green building, the different certifying institutions, what it means to be green, how it relates to lending and much more. Totally worth two days of your time.

Check out the website at www.greenlendingspecialist.com and sign up for a class. I’ll be guest teaching at the Portland course on November 3rd and 4th – come on down.

Bonus: To get 5% off your course registration, use the promotional code PW325682.

Portland’s Build It Green home tour is happening next weekend, September 19-20, between 8-5 on Saturday and 11-5 on Sunday. Take a look at some of the finest examples of green building in the Portland area.

Visit the Portland Online website for more information and to see which homes are available for viewing.

I am working with three of the projects on the list as a preferred lender: Eightx17, K4 Condos and Ash Creek Home. All offer a variety of different green features and their own take on green building. Check ‘em out!

Green mortgages are coming – Energy Efficient Mortgages (EEMs) might finally have their day!

Beyond standard incentives for energy measures like better insulation, efficient furnaces and the like, the Department of Housing and Urban Development (HUD) is beginning a huge push for efficiency in homes.

A new generation of energy-efficient mortgages is being rolled out, starting with FHA loans that offer 5 percent larger mortgage amounts to people who plan to undertake energy-efficiency improvements.

For example, if you qualify for a $300,000 FHA mortgage to purchase a standard house, under recent guidance to lenders FHA might now be able to offer you $15,000 more up front (for a $315,000 total loan amount) if the extra money is used to substantially lower the property’s annual energy
consumption.

HUD Secretary Shaun Donovan wants the FHA to offer additional incentives. One of the possibilities: Give applicants credit on their qualifying incomes for a home loan in exchange for documentable savings in annual energy expenditures. This is HUGE!

A new bill also contains an entire subsection devoted to creating incentives for consumers and federal agencies to build and finance more energy-efficient dwellings. Among the key housing-related provisions in the bill:

• The FHA must insure at least 50,000 new energy-efficient mortgages in the next three years, where energy-efficient = 20% drop in energy consumption.
• Fannie Mae and Freddie Mac must develop mortgage products and more flexible underwriting guidelines to reward energy-conscious borrowers and builders. This is big because Fannie and Freddie drive the secondary market and without them, a huge number of prospective mortgages will not be made.
• Additional concessions on loan applicants’ incomes would be extended for properties located in areas close to employment centers or mass transit lines. No concessions would be made on homes in distant suburbs requiring long commutes and large carbon footprints. Buy close-in and ride that bike!
• Real estate appraisers would be required to take energy improvements and the money they save into account as they value houses. Upgrades that will save you money on monthly bills need to be factored into the property’s value. States would require licensed appraisers to undergo additional professional training to equip them for their new energy-efficiency valuation responsibilities.
• Federal financial regulators will support the establishment of privately run “green banking centers” inside banks and credit unions across the country. The centers would help consumers understand how best to obtain financing for energy-conserving home improvements, second and primary mortgages and energy audits and ratings.
• State governments would be required to ensure that homeowners whose energy technologies allowed them to get “off the grid” are not denied property hazard coverage by insurance companies.

None of this is official law yet, but just the fact that such a bill is on the docket is AMAZING. People like to save money, and living in a healthy, comfortable, well-lit home close to where you work and play is something that people will definitely pay for. Earth Advantage’s new study certainly supports it, at least in the Portland and Seattle markets.

Come on Congress – make it happen!

I am always on top of coming trends in green lending, so feel free to contact me with any questions you might have.

I recently received an official copy of Earth Advantage’s certified home performance study, which so far had only been a press release on their website.

For a breakdown of how much more green homes in Portland and Seattle are selling for, here is a full copy of the report. For a synopsis of the report, read my blog post on green home valuation.

Keep in mind that I am in no way affiliated with the production of the report, I just want to educate all you green buyers, sellers, developers and Realtors with some cold, hard facts!

I gave a presentation a few days ago to a group of Realtors at the very nice property located at 2514 NE Highland Street. Darcie Pelsor and Hilary Bourassa are co-listing this beautiful home.

My talk, entitled “Green Building: An Overview,” covered the following information:

1. A basic understanding of what LEED is
2. Examples of the different areas of LEED and the points obtainable
3. How homes are certified
4. Basic resources to get accredited (specifically, USGBC.org and EarthAdvantage.com)
5. The fact that green building is a whole-systems approach.

If your real estate or development company is interested in scheduling an hour presentation, let me know and we can set something up!

One of the biggest problems for developers and Realtors in today’s green building market is capitalizing on the green features included in the homes. The disconnect between sustainable homes, the benefits they provide and the lack of a formal structured metric for appraisers to use is a big deal. After all, if you build a green home, charge a premium for green features, find a buyer who recognizes the value and then have an appraisal not valuing the home accordingly, nobody is happy!

In March 2009, the Green Building Value Initiative (GBVI) did a survey of 92 homes and hundreds of comparables. Results are in – green homes in Portland sell for 3-5% more, while in Seattle they sell for 9% more! In the Portland area, homes with an Earth Advantage or comparable certification (e.g. LEED for Homes) also sold more quickly in the Portland metro area by about 18 days. I’ll link to the full report when it’s available; for now, see the full press release here.

However, none of that matters if the homes won’t appraise. On May 28th, 2009, the Earth Advantage Institute brought together builders like HOST Development and Legend Homes, appraisal company Appraisal Trust and various local lenders to announce a new professional green appraisal certification program in September 2009. The new program will cover building methods, sustainability trends and valuation techniques.

If you are a Realtor or appraiser and would like to learn more about Earth Advantage’s available courses, including their S.T.A.R. program (Sustainability Training for Accredited Real Estate Professionals), call 503-968-7160 or send an email to education@earthadvantage.org.

**Update** For a copy of the report, visit a more recent blog post.