New Regulations Set to Impact California Homeowners

The tradeoff between a more affordable living environment and a greener, more sustainable one isn’t always the easiest decision to make – especially for those on a tight budget. Sure, in many cases you’ll save money in the long run by switching to an energy efficient product, but the initial cost is often enough to turn buyers away. Homeowners may no longer have a choice when it comes to their air conditioner and water heater though, as new regulations from the U.S. Department of Energy could force them to make the costly leap – a change which brokers and agents need to know about.

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The first of the new regulations from the U.S. Department of Energy mandates that effective January 1, 2015 the Seasonal Energy Efficiency Ratio (SEER) for air conditioners would increase from 13 to 14. For those unfamiliar with SEER, it is a calculation based on how much a unit cools compared to the amount of energy the device consumes while cooling. As the SEER rating gets higher, the unit becomes more energy efficient but also more expensive.

According to Jeff Powell, president of First American Home Buyers Protection Corporation, “SEER 14 is different from past energy mandates because unlike past mandates, in almost all cases, a full system replacement (both the indoor and outdoor unit) will be necessary to make the system compatible.” While this may be a costly replacement in and of itself, if the new unit doesn’t properly fit the existing space, structural modifications may needed – further increasing the price tag homeowners face.

Unfortunately, total energy savings will vary based on location, amount of use and the rating of your current condenser, but homeowners can expect a new condenser to cost roughly 55-66% higher than that of a SEER 13 unit.

Many of the SEER requirements, both from former regulations and new are climate zone dependent. It is important that brokers and agents provide SEER requirements to buyers of residential property that accurately reflects the requirements of the specific parcel under the law and not just provide a generic advisory. A high quality NHD report will include this parcel specific information. Check to make sure your NHD provider discloses this information and not just advises that regulations exist.

The second change in regulation comes as an amendment to the National Appliance Energy Conservation Act. Starting on April 16, 2015 the Department of Energy will require that new water heaters meet a higher energy factor rating, regardless of whether it uses gas, electricity or oil – a change that will impact not only homeowners, but manufacturers and sellers alike. This change will impact some homeowners differently though, ultimately depending on their water heater’s fuel source. And similar to replacing an air conditioner, there could be some hidden costs if the new unit doesn’t fit the allotted space properly.

Are these changes good for California? Do you think these changes will burden lower-income homeowners? What are your thoughts? We’d like to hear from you!

  • I am sure the manufactures of air conditioners and their lobby paid off a lot of politicians to get these laws past. More corrupt bought off government officials trying to screw over the public.

  • Tom A

    While I have to agree that, yes, these changes are “good” for California, I certainly don’t believe the change will help many Californians besides those selling the new units…. Sound like a lot of money to me — money which many people cannot spare.

  • RE_Insider

    I received this email from one of our readers and she asked me to share it with you:

    Factoring in the draconian AB32 regs in CA, these costs are prohibitive. How many Americans will be forced to go without any heat/air when they don’t have the resources to replace their entire systems? More “unintended” consequences from big government overreach.

    Helen Najar

    Realtor | Consultant

    Remax R.E. Specialists

  • RE_Insider

    Another comment from one of our readers Jim: I am all for living greener and higher efficiency products. The problem with these changes that are requirements, not options, again force up the price of housing and at times, it does not take much to tip the scales between affordable and not affordable. I think the opposite should apply. If new construction demands that these new SEER levels are met, there should be a financial incentive to the Buyer for the installation of these new, required fixtures. Lets’ face it, the whole purpose of higher efficiency products are to protect the environment and use fewer fuels, be they gas, propane, electric or oil. I know higher efficiency products may be costlier to produce but the other side of the coin is less fuels are consumed, leading to lesser acquisition costs to the supplier AND of course reduced profits. Isn’t that what it always gets down to? Once again, what appears to be in the best interest of the public, happens to be PAID for by you guessed it, John Q. Public.