R-2000 Is It Worth It?

Before making any purchase decision, a consumer usually asks, "Is it worth it? Am I getting good value for my money? Is this a good deal?" Buying a house is a major investment - probably the biggest single investment we ever make. It obviously represents a major financial decision but it is also one with implications for security, comfort, health and quality of life.

An R-2000 home may cost a little more than a conventionally built house. This fact sheet is meant to allow a consumer to fully consider the benefits provided by an R-2000 home in order to properly answer the question "An R-2000 home - Is it worth it?"

What is an R-2000 home?

Image R-2000 homes are conceivably the most energy-efficient, environmentally responsible homes available in today’s real estate marketplace.

Every R-2000 home is designed, built, tested and certified to meet exacting technical standards that exceed current Canadian building codes. A unique blend of technology and craftsmanship, R-2000 homes offer significant energy savings, health and comfort advantages, and are more friendly to the environment.

R-2000 Logo R-2000 homes offer significant energy savings, health and comfort advantages, and are more friendly to the environment.

R-2000 homes feature

  • a whole-house, continous ventilation system;
  • more environmentally friendly materials and equipment;
  • advanced heating and cooling systems;
  • energy-efficient appliances and lighting;
  • energy efficient windows and doors;
  • a “tight” building envelope to reduce drafts and heat loss; and
  • high levels of insulation.

R-2000 houses can only be constructed by specially trained builders, builders who are typically amongst the best in their field. This usually means that the house is not only energy-efficient, but better-built as well.

What are the benefits?

There are many benefits to owning an R-2000 home:

  • better air quality
  • more environmentally friendly
  • less noise and less dust
  • fewer drafts and cold spots
  • more comfortable
  • lower energy bills

Some are easily quantified in dollars and cents, while others are not. Energy savings, for example, can be readily determined. An R-2000 home can cut your energy bills by as much as 50 per cent over a conventionally-built house. The resale value of an R-2000 home is usually higher. Also some banks offer special mortgage rates, further reducing the operating costs of owning a home.

EC_3 Other benefits are not easily measured financially, but nonetheless can have significant value. For example, better air quality usually means healthier living conditions. Some people with respiratory problems have experienced marked improvement after moving into an R-2000 home. Other benefits such as improved comfort, less noise, less dust and fewer drafts are often mentioned by satisfied R-2000 homeowners. Many appreciate that their R-2000 home is better-built. Finally, the fact that a new R-2000 home is easier on the environment is a benefit that accrues to all of us.

How Much Does it Cost?

An R-2000 home usually costs two to six per cent more than a comparable, conventionally built house. Depending on how the purchase is financed, this can result in a higher down payment and/or mortgage payments.

Is it worth it?

Based on survey results, most of the current R-2000 homeowners say “yes”. But only you, the buyer, can properly answer this question. Keep in mind that not all the benefits of R-2000 living can be measured in dollars and cents. For some people, families with small children and those who suffer from allergies and asthma, for example, the superior air quality of an R-2000 home may be considered priceless.

But choosing R-2000 can make good financial sense, too.

A simple way is to compare costs and benefits. If you can put a common value to the costs and benefits outlined here, the answer to that question could be easily calculated. You could simply list the costs and the benefits that are important to you, assign a value to each one, and compare the results. You then could make your decision accordingly.


Costs Value
2-6% extra on purchase price $ ?

Benefits
Energy Savings $ ?
Healthier indoor air $ ?
Increased comfort $ ?
Increased resale value $ ?

CB-3

Of course it is not easy to assign values to some intangible benefits. It also can be difficult to compare up-front, so-called capital costs, with energy savings that accumulate over the life of the house. Therefore, such a simple analysis may not be sufficient.

Another way to answer this question is to look at the cash flow implications of buying an R-2000 home. In many cases, an R-2000 home can actually save money, right from the start.

The reason is simple. A home’s purchase price is just one of the costs of ownership. The other is the operating cost — the cost of financing, maintenance, property taxes and energy.

By comparing the annual operating costs of an R-2000 home versus a conventional home, you can measure the cash flow differences. The following worksheet shows you how to figure this out for the first year of ownership. Just follow the sample calculation shown. You can easily extend this comparison over a longer period by estimating future energy savings and mortgage rates.

To fill out the worksheet, ask your builder for the cost of the R-2000 upgrade (line 2 - we estimated this at $4,000 for the example). Your builder should also be able to estimate your annual energy costs (heating + cooling + hot water) and the approximate savings. For our example, we have conservatively assumed the energy costs to be 30 per cent lower for an R-2000 home.

Experience has shown that property taxes (line 9) will be the same for both houses.

Now add up the columns and find out what living in an R-2000 home will really cost you.

Using the comparisons can help you decide on an R-2000 home. The final decision, of course, will be yours to make, whether it’s for the benefits or the cash flow savings. So for one of the most important decisions you may ever make — consider R-2000. You may be pleasantly surprised.

WORKSHEET CASH FLOW COMPARISON - click here for an interactive version.

Sample Calculation Your Calculation
Conventional
Home
R-2000
Home
Conventional
Home
R-2000
Home
1. Base Price:
$150,000
$150,000 ___________ ____________
2. Cost of R-2000 Upgrade:
$ 0
$ 4,000 ___________ ____________
3. Total price (line 1 + line 2):
$150,000
$154,000 ___________ ____________
4. Down Payment: *
$ 37,500
$ 37,500 ___________ ____________
5. Mortgage amount (line 3 minus line 4):
$112,500
$116,500 ___________ ____________
6. Mortgage Rate: **
8.5%
8.25% ___________ ____________
7. Annual Mortgage Payments:
$ 10,871
$ 11,023 ___________ ____________
8. Annual energy costs (estimate):
$ 1,500
$ 1,050 ___________ ____________
9. Property Taxes:
$ 2,000
$ 2,000 ___________ ____________
10. Total Annual Payment (add lines 7, 8 and 9):
$ 14,371
$ 14,073 ___________ ____________
* Note that the amount of the downpayment may proportionately increase for the R-2000 home. In this example the amounts are the same.
** In this example a 0.25 per cent discount on the mortgage rate has been assumed. This is available at some banks, including the Bank of Montreal, for the first 5 year term on the first mortgage for a new R-2000 home.

Published under the authority of the Minister of Natural Resources Canada
Minister of Supply and Services Canada 1994
Cat. no. M92-81/2-1994
ISBN 0-662-61156-1