Financial Analysis

Students have to analyze the financial implications of siting and constructing the DOE Zero Energy Ready Home design. The financial analysis includes both costs and affordability. Costs should include estimates for the land, utility infrastructure (i.e. an improved lot), house construction including high-performance features, energy use, and optionally, water use and estimated maintenance costs. Construction costs can be based on standard cast databases such as RSMeans or be based on standard cost data provided by DOE (see resources below). If applicable, teams have to include federal, state, and local financial incentives for use of renewables or for energy efficiency upgrades in the analysis (refer to the supporting resources below).

The purpose of the financial analysis is to relate the design to the marketplace by defining a financial profile of a buyer based on estimated sales price and the overall cost of home ownership. Affordability may be estimated for typical market segments (entry level, move-up, etc.) but should result in the necessary household income required to purchase and live in the project home assuming a 30-year fixed mortgage. Elements of the financial analysis include the estimated sales price, financing (mortgage), insurance, household debt, and taxes. Various resources are available to estimate the elements included in the financial analysis; however, consultation with builder, realtor, and lender partners can help teams navigate this analysis.

Resources

A description of the NREL National Residential Efficiency Measures Database: http://www.nrel.gov/ap/retrofits/pdfs/development_document.pdfNational Residential Efficiency Measures Database: http://www.nrel.gov/ap/retrofits/about.cfmRSMeans database of construction costs:http://subscription.rsmeansonline.com/Registration/TrialRegistration?id=OGOG-2004Software that utilizes the database cost measures: http://beopt.nrel.govClemson Extension, How Much House Can You Afford: http://virtual.clemson.edu/groups/psapublishing/Pages/FYD/EC676.pdfDOE DSIRE: http://www.dsireusa.org