Housing market capitalization of thermal integrity

The extent to which housing markets capitalize investments in energy efficiency is important to observe. The uncertainty now associated with this process can lead households to allocate resources inefficiently in the production of thermal comfort, by substituting more fuel inputs for less capital. From a policy perspective, the end result of this is the continued construction of units in the housing stock with sub-optimal levels of energy efficiency. This study is a cross-sectional analysis of houses constructed through the Energy Efficient Housing Demonstration Program of the Minnesota Housing Finance Agency. Values of investments in energy efficiency are derived from a hedonic regression which includes a vector of thermal integrity factors as an independent variable.