Understanding housing market responses to stringent energy codes
Name
Real Estate Economics - 2025 - Muzio - Understanding housing market responses to stringent energy codes.pdf
Size
1.1 MB
Format
Adobe PDF
Checksum (MD5)
e2476eddb65872656303da53d551668e
Author(s)
Muzio, Maria Jimena
Niu, Dongxiao
Steil, Justin
Zheng, Siqi
Date Issued
March 16, 2025
Journal
Real Estate Economics
Publisher
Wiley
Citation
Muzio, M. J., Niu, D., Steil, J., & Zheng, S. (2025). Understanding housing market responses to stringent energy codes. Real Estate Economics, 53, 676–700.
Version
Final published version
Abstract
Increased energy efficiency in buildings is essential to reducing carbon emissions and addressing climate change. Massachusetts' Green Communities Act of 2008, aiming for a 50% reduction in carbon emissions by 2030 and net-zero by 2050, mandates the Stretch Energy Code for eligibility for state funding. This code requires new residential constructions to meet stringent Home Energy Rating System (HERS) Index scores. While these requirements benefit the environment, they may increase construction costs, affecting housing production and affordability. Using the staggered municipal adoption of the Stretch Energy Code to tease out causal relationships, we analyze the effects of the Stretch Energy Code on housing quantity and price across municipalities in Massachusetts. The results indicate that more energy-efficient single-family properties command a sales price premium of 4.0%, and the Stretch Energy Code adoption is associated with a decrease in the quantity of new single-family housing starts. Approximately 45.5% of the price increase is due to higher willingness to pay for energy-efficient homes, with the remainder attributed to reduced housing supply. Our article is particularly relevant as policymakers seek to balance the objectives and address the tensions between “E” and “S” in their “ESG” policy packages.
MIT Department
Massachusetts Institute of Technology. Department of Urban Studies and Planning
Massachusetts Institute of Technology. Center for Real Estate
Terms of Use
Creative Commons Attribution-Noncommercial
Persistent DSpace Link
DOI of Published Version
https://doi.org/10.1111/1540-6229.12530
