1. On the Economies of Energy Labels in the Housing Market Dirk Brounen and Nils Kok 3 December 2009

2. Energy Performance of Buildings Directive (January 2003) “Member states shall ensure that, when buildings are constructed, sold or rented out, an energy performance certificate is made available by the owner to the prospective buyer or tenant”

3. Our laboratory Population: 16.5 mln Homes: 7.2 mln Ownership: 55% Temperature:50 ºF (35 ºF– 68 ºF) Price: €230.000 Net mortgage: €800/month Gas bill: €105/month Electricity bill:€53/month

4. Our data Sample:175,875 sales Period:Jan08 – Sep09 Housing datadwelling characteristics NVM age, size, type, location, maintenance level, insulation, heating EPC datacertification SenterNovem category (A-G) Location dataneighborhood characteristics CBS density, home values, time-on-the market Politicselection voting Ministry IA 6 digit postal code results

5. Summary statistics (table 1)

7. The questions We analyze two things: The adoption process Who adopts? At which pace? Why? The effects of labels on the sale process On speed of sale On pricing Why?

8. The adoption process / rates

9. The adoption process / logit (table 2)

12. The adoption process / conclusions Adoption rates are: Falling over time Driven by: dwelling type dwelling age dwelling size interior maintenance location (low density, high values) ideals (voting green) and not by: heating system or insulation

13. The questions We analyze two things: The adoption process Who adopts? At which pace? Why? The effects of labels on the sale process On speed of sale On pricing Why?

14. The effects / price (table 4) ……….

15. The effects / price (appendix B)

16. The questions, one more thing… We will analyze a third thing soon: The adoption process Who adopts? At which pace? Why? The effects of labels on the sale process On speed of sale On pricing Why? The real energy usage (gas and electricity) for all individual dwellings What drives energy use? How strong is the link between EPC and usage? Is energy use capitalized? (for labeled versus non-labeled dwellings) Does energy usage drive adoption rates?

17. Energy use / stats

18. Conclusions We find that energy labels are adopted: slow by high-end owners of relatively young homes in competitive markets that are also more likely to vote green during elections We also find that the energy label does not effect the speed of sale but green labeled homes are sold at a premium of 2.45% also when controlling for quality The link to real energy use is next… dbrounen@rsm.nl