Centex Homes Thinking Outside the Box

An optimist believes we live in the best of all possible worlds. A pessimist fears this is true.
- Murphy's Laws

At the October 2000 Energy Efficient Building Association's national conference in Denver, Randy Luther shared insightful information with a packed house. As Centex Homes' national vice president of construction technology, he described how Centex Homes is supporting the incorporation of energy efficiency within the 56 to 58 major markets where they build.

Centex's support includes technology transfer to help any of Centex's divisions design and build with an energy package that allows them to guarantee comfort and energy bills. To date, 10 divisions are in various stages of developing and providing those guarantees.

Ed Von Thoma, Centex's purchasing manager in its Minneapolis division, followed Randy with a presentation detailing how Centex changed its building materials and systems in Minneapolis. The pair set the bar fairly high for production builders nationwide. Key points from Randy's presentations are summarized below; those from Ed Von Thoma are included in this month's "Systems Thinking" article, elsewhere in this magazine. (To order a complete copy of their presentation notes, contact Maria Finley at E-Star Colorado: mariaf@colohfa.org.)

"Yes, buyers are still primarily shopping for location, floor plan and builder reputation," said Luther. "But once they get past all that and start looking at your features, energy efficiency can become a strong selling point. "Energy-efficient homes should be built using an appropriate blend of products and techniques that provide superior energy efficiency and offer tangible value to the builder and the homebuyer," said Luther.

Luther focused on the following components that he believes are the keys to any energy-efficient home: the thermal envelope, windows, HVAC, controlled ventilation, control of air leaks through the building envelope and the position of a home on the lot.

"How can building energy-efficient homes impact a builder?" asked Luther. "It creates a competitive advantage in the marketplace, offers a potential increase in profits, and demonstrates a responsible concern for our environment.

"What would motivate a home buyer to purchase an energy-efficient home? You should point out that it will reduce their monthly expenses, can get potential buyers better financing terms, and typically provides a payback of three to five years. It also gives them a quantifiable resale advantage-as long as appraisers are in the loop-and demonstrates a responsible concern for our environment."

Compared to what?

Luther pointed out that energy efficiency is often a mushy label. Are we comparing to the buyer's last home? To the Model Energy Code? To one of the many utility programs around the country?

"When it comes to utility programs, we've seen them all. You've got the `Good Cents' program and what you could call the `Bad Cents' and 'Ain't Got No Sense' programs," he said. Luther sees the need for a consistently recognized and easily understood standard of performance against which homes can be measured and compared. His answer? "For builders today, the Home Energy Rating System is the best way to quantify, identify and sell energy efficiency. HERS is a standardized rating system that is recognized across the U.S. It is performance driven versus prescriptive. HERS facilitates climatespecific design. But anywhere you build, a HERS score of 80 meets the Model Energy Code, and 86 provides a definitive benchmark that indicates a home 30 percent more efficient than the Model Energy Code."

"Builders need to partner with someone who both knows the basic principles of energy efficient building and who can help them," said Luther. "Then you need to gather some data on how your houses are working now. After that, you modify your specs to meet your new goals. But once you change your specs, you have to be sure they're being built that way, so you inspect for conformance and measure the results. Then you market this distinctive competency."

Centex's key partner is Building Science Corporation, a consulting firm whose fees are paid by the U.S. Department of Energy through the Building America program. Product partners include Green Fiber for cellulose insulation and Certainteed for fiberglass. The EPA's Energy Star is also a partner; currently, 10 of Centex's divisions are or will soon meet the HERS score of 86, qualifying those homes for the Energy Star threshold.

Centex's guarantees

How can a builder guarantee energy consumption, let alone comfort? Systems thinking. You build a tight, well-insulated shell with windows designed for the climate (e.g., good low-e windows here) and a well-designed HVAC system. Your HVAC equipment sizing is based on calculations and factors in building orientation. Your ductwork layout is based on calculated heating loads and delivery constraints (e.g., special needs of bedrooms over garages). You have the homes and ductwork tested for leaks, to assure you get what you have designed and are paying for. Then you can feel comfortable guaranteeing comfort. The guaranteed heating bill concept worked well back in Charlotte, N.C., during the 1980s. As currently set up, the guarantee only applies to the home's initial buyer, ending after two years or when the home is sold, whichever comes first. Each guarantee relates directly to projected energy consumption. That consumption factors in the home's size, the local climate and the standardized energy package used in that market area. If homes end up with documented higher consumption than was calculated, owners are refunded 100 percent of the extra consumption. (Note: with any guaranteed heating/cooling bill program, a simple mathematical formula must be able to "normalize" for colder or warmer weather and unanticipated increases in utility rates.)

Last summer, Centex started offering its twin guarantee under the Performance Plus Program label in several divisions around the country. With this winter's rocketing natural gas prices and volatility in California's energy markets, Luther believes the program's launch could draw some serious interest from potential buyers.

What does it cost?

During 2000, the average price of a Centex home was $190,000. Upgrading homes to a HERS score of 86 requires systems thinking and varies a lot by climate and code jurisdiction.

"One division working with Building Science Corporation actually saved a little money doing the upgrades, but the cost for some divisions approaches $3,500 in some of their larger models," Luther said. "It all depends on the climate and the level of efficiency from which you start your upgrade program."

To make sure it wasn't passing up good opportunities to save energy, Centex built a number of homes with alternative framing systems: insulated concrete forms (ICF), structural insulated panels and autoclaved, aerated concrete blocks. They performed well. In fact, average heating and cooling bills for six ICF houses built in the Dallas area were 30 percent lower than those for identical framed houses. But the extra costs were high.

"The alternative systems cost about $3 extra per square foot, and we can't justify that extra expense based on the energy savings," said Luther. He believes those costs could probably be cut in half with serious production-type thinking and building, but indicated Centex won't be making that effort in the near future. However, in some locations with the need for unusual strength or sound buffering, an ICF home's total benefits might justify the cost bump today.

Critical strategy

"You have to fine tune each component of the building envelope and the HVAC system so that the components work as one system," said Luther. "This maximizes performance and minimizes cost."

Systems thinking: what a concept. (For more on this, see the "House As A System" feature elsewhere in this magazine.)

Here in Denver, Justin Jones with Centex reports that they're starting down this path by getting their homes in Longmont energy-rated through E-Star. (Note: Longmont offers a $75 reduction in the permit fee when an energy rating is used to prove compliance with the city's energy code.) And Centex is about to take a hard look at trying to work with Building Science Corporation through the Building America program.

"After Longmont made its energy standards more strict, I began to look into E-Star," said Jones. "As I learned more about the program, I realized that maybe it was time for Centex to look for ways to upgrade energy efficiency in our future developments. Our marketing people now feel we can get some value out of higher energy efficiency. We need to lay the groundwork now, so that when consumers start asking for energy efficiency we'll be ready to do it smart."

Steve Andrews consults with builders for E-Star Colorado and writes on energy issues (sbandrews@att.net). E-Star (www.e-star.com), is a nonprofit home energy rating system that works with both new and existing homes statewide.

2008 Built Green Colorado

Home Builders Association of Metro Denver, 9033 E. Easter Place, Suite 200, Centennial, CO 80112
(303) 778-1400 fax: (303) 733-9440  info@builtgreen.org

Last Updated: 10/05/2007