Builder KB Home Copies Cars' 'MPG' With 'EPG' Energy Guide
February 14 2011 - 12:30AM
Dow Jones News
One of the nation's largest home builders is borrowing from
another beleagured industry--automotive--to help sell homes.
KB Home (KBH) this week is rolling out an Energy Performance
Guide, dubbed the "EPG." Modeled after a car's MPG, which tells
buyers how many miles can be driven on a gallon of gas, EPG
estimates a home's monthly utility payments. The EPG scale, on
which a lower score means higher energy efficiency and lower bills,
will be posted in all model homes and a certificate will be
presented to the buyer upon purchase.
The rating, which Los Angeles-based KB Home says is the first of
its kind for a national builder, is the latest idea from companies
competing to one-up each other with environmentally friendly
features.
Last month, KB Home partnered with Martha Stewart Living
Omnimedia Inc. (MSO) to unveil a Florida concept home that includes
solar panels on the roof, kitchen composting bins and a
rainwater-collection system. Meritage Homes Corp. (MTH) recently
opened six new energy-efficient communities that it says can
decrease monthly utility usage by up to 67%. Beazer Homes USA Inc.
(BZH) is adding features to conserve water and energy and improve
air quality.
For years, green houses were too pricey to be mass produced, and
it is only in the last few years that builders have been able to
tap green technology. While companies excitedly tout these green
offerings, consumers haven't shown great interest. Buyers have long
been more concerned about location and price and unwilling to pay
extra for features with values that may be hard to understand.
"I will build whatever the market demands," said Eric Lipar,
chief executive of LGI Homes, a Texas-based builder. "It's not what
the public wants."
KB Home, however, thinks its EPG initiative will help it stand
out in a crowded market, albeit one where new home buyers are few
and far between these days. "It's going to be a game changer in our
industry, and when I say industry, it's new and resale," said Chief
Executive Jeff Mezger.
The concept is simple: Tell buyers now how much to expect with
utility bills instead of their being surprised later. Under the EPG
scale, new homes are rated, on average, about 100, while resale
homes come in around 130. KB Homes score an average 82, making them
48% more energy efficient than the typical resale home, the company
says. A third party will calculate the ranking for each home using
local utility rates and average power usage.
But given consumers' practices with MPG stickers--the public's
affection for gas-guzzling vehicles makes them seem more like
window dressing--one has to wonder if buyers will pay attention.
Mezger pointed out that those buyers knew up front what they were
purchasing.
Meanwhile, Wall Street will likely need convincing of the value.
"We really like KB Home's stock, but we don't think being green is
a primary reason to buy one of their homes," said Robert Wetenhall
Jr., a home-builder analyst with RBC Capital Markets.
An undeterred Mezger said KB Home is already at work on its next
green initiatives. "Stay tuned," he said.
-By Dawn Wotapka, Dow Jones Newswires; 212-416-2193;
dawn.wotapka@dowjones.com;
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