Invest in Your House and Beat the Stock Market

The stock market’s been making news lately, and the news isn’t good. With so many people agonizing over when and what to sell or buy, the dream of a solid and significant return on investment seems a long way off. But it could be closer than you think. If you plan to stay in your house for a few more years, you don’t need to keep rolling the dice on Wall Street. Instead, think seriously about investing in your house.

Hold on a minute. I know what you’re saying: “How does home improvement make sense in our current real estate market? There are still plenty of foreclosures out there. Home prices are stagnant or even falling in many parts of the country.”

Right you are. But I’m not talking about expensive home improvements with dramatic visual appeal, like new kitchen cabinets, bathroom makeovers and hardwood flooring. No, most of these improvements are actually out of sight. You won’t notice them unless you go up into the attic or down to the basement.

Energy Saving Improvements

The home improvements that really pay off these days are based on the increasing cost of energy in the form of electricity, fuel oil, natural gas and propane. We depend on these energy sources every day to keep our homes comfortable and to operate innumerable devices; from washing machines and water heaters to laptops, lights and microwave ovens.

In Connecticut, where I live, we have some of the highest energy costs in the country, so there’s a great deal to be gained from energy-saving upgrades. But energy costs will continue to rise everywhere because of conditions we can’t control –like political instability with oil-producing countries, severe weather events that shut down refining operations, and speculation about global energy resources.

To hedge against these inevitable price increases, it’s smart to invest in home improvements that can, collectively, transform an energy hog of a house into a model of energy efficiency. Below are just a few of the ways that you can put more money in the bank by paying less money to utility companies.

Get in over your head. The attic is the most significant source of energy loss in most houses, especially during cold winter months. A survey done by the Dept. of Energy (DOE) revealed that most houses have attic insulation in the range of R-19 or lower. In New England, the DOE recommends R-49 to R-60 of attic insulation. You can cut your heating and cooling costs by 30% by sealing air leaks between the living space and the attic, and upgrading attic insulation.

Deal with your ductwork. If you have forced-air heating or central air conditioning, you’ve got a ductwork system that delivers conditioned (heated or cooled) air to your living space. Unfortunately, most ductwork systems haven’t been properly sealed, and leaky ducts can diminish HVAC system efficiency by as much as 40%. Duct leaks have undesirable health effects too; they can allow “bad” air from crawl space, basement, attic and garage areas to be drawn into the system and distributed throughout the house. Sealing leaky ducts ups the efficiency of your HVAC system, enabling you to be more comfortable for less money.

Trade up for HVAC savings. If you’ve completed attic insulation and duct sealing upgrades as described above, you’re already on track to save hundreds of dollars on heating and cooling (which together account for nearly half of your total energy expenses). Next you might want to investment in a new heating system. Even when it’s in perfect condition, a furnace or boiler that’s more than 15 years old is probably only 65% efficient at turning fuel into heat. By replacing this outdated appliance with a new 95% efficient model, you’ll save over $30 on every $100-worth of heating fuel. Wall Street can’t beat that ROI.

Give your old water heater early retirement. Heating water for washing is typically your third-largest energy expense. An old water heater is like an old furnace: It can waste energy even though it’s in good working order. To maximize savings in this category, consider replacing a tank-type water heater with a “demand,” or tankless hot water heater that only consumes energy when a hot water tap is turned on. Some homeowners who have made this switch have seen water heating costs plummet by 40%.

How to Begin

If you already know that your house needs some or all of the above-mentioned improvements, it’s a great idea to seek help from qualified contractors. But to get the total picture on how your house uses and loses energy, you’ll need a home energy audit, also known as a home energy assessment. Energy audits subsidized by local utilities tend to be less comprehensive than those performed by home energy specialists like Dr. Energy Saver®. What you’re looking for is a complete profile of your home’s energy consumption and specific recommendations on improvements that will cut energy costs in numerous areas.

To sweeten the deal on these energy-saving investments, you can take advantage of different incentive programs offered by local, state and federal agencies. To find out what incentives apply in your area, check out the Database for State Incentives for Renewables and Efficiency.

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