Estimation of change in house sales prices in the United States after heat pump adoption

Abstract

Electrifying most fossil-fuel-burning applications provides a pathway to achieving cost-effective deep decarbonization of the economy. Heat pumps offer a feasible and energy-efficient way to electrify space heating. Here, we show a positive house price premium associated with air source heat pump installations across 23 states in the United States. Residences with an air source heat pump enjoy a 4.3–7.1% (or US$10,400–17,000) price premium on average. Residents who are environmentally conscious, middle class and live in regions with mild climate are more likely to pay a larger price premium. We find that estimated price premiums are larger than the calculated total social benefits of switching to heat pumps. Policymakers could provide information about the estimated price premium to influence the adoption of heat pumps.

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Fig. 1: The distribution of air source heat pumps by county level in the United States in 2018.
Fig. 2: Contemporaneous energy efficiency and building upgrades correlated with air source heat pump adoption.
Fig. 3: The heterogeneity of the price premium induced by air source heat pumps.
Fig. 4: Comparing the price premium with the cost and benefit of replacing a traditional HVAC system with an air source heat pump.

Data availability

Individual property data were provided by Zillow through the Zillow Transaction and Assessment Database (ZTRAX). More information on accessing the data can be found at https://www.zillow.com/research/ztrax/. The data are proprietary and are not publicly available under a non-disclosure agreement with Zillow. Interested readers can submit a request to Zillow for approval to obtain the data. Other data used for this analysis are available from the publicly available sources cited or from the authors upon reasonable request. Source data are provided with this paper.

Code availability

The custom code of the data processing and analysis is deposited and managed on GitHub (https://github.com/willshen21/heat-pump-house-price-premium).

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Acknowledgements

The results and opinions are those of the authors and do not reflect the position of Zillow Group. Funding for this research was provided by the Alfred P. Sloan Foundation. We thank A. Albertini, Y. Niu, T. Deetjen, T. Schmidt, E. Wilson and seminar participants at the Center for Global Sustainability for helpful comments during the preparation of this paper.

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X.S., P.L. and Y.Q. designed the study and planned the analysis. X.S. conducted the data analysis and drafted the paper. P.L., Y.Q. and P.V. edited the paper. P.V. provided initial calculations on private and social benefits. All authors offered revision suggestions and contributed to the interpretation of the findings.

Corresponding author

Correspondence to Yueming (Lucy) Qiu.

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Shen, X., Liu, P., Qiu, Y. et al. Estimation of change in house sales prices in the United States after heat pump adoption. Nat Energy (2020). https://doi.org/10.1038/s41560-020-00706-4

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