When viewed as an investment, the addition of insulation to your home adds more value per dollar invested than any other home improvement you can undertake. Home improvements tend to be more of a lifestyle decision than investment decision because the improvements seldom add as much value as they cost. Insulation is an investment that pays benefits far into the future.
The Kiplinger Letter recently predicted "the cost of fuel and electricity will soar". It seems clear that energy costs will continue to increase, possibly 50% to 100% in the Midwest over the next ten years, according to Kiplinger. Your utility costs are destined to increase every year far into the future.
The investment in insulation stays with the house forever or, in investment terms the "principle" is safe. There is no place on earth where you can receive return on investment exceeding 15% with zero risk of principle loss. Add to the equation that utility costs will go up every year and the "dividend" of cost savings increases annually far into the future. A risk free investment paying an ever increasing dividend of 15% or more would be a Ponzi scheme on Wall Street. On Main Street it is insulation!
The 16% number that we are illustrating on the first example is a conservative point of beginning for the purposes of this discussion. Real savings can be dramatically higher depending on the variables involved. Example two: an old-two story farm house with no wall insulation sitting out in the open with no shelter from the winter winds will see significantly greater performance improvements than a small ranch in a city neighborhood that just has poor insulation. Examples on the spreadsheet illustrate the significant return on investment including the current government tax credit available.
Your Savings - Reduce Utility Costs by 50%
Because of lifestyle habits, and all the other variables involved it is impossible to precisely predict what your ultimate savings might be, but with the addition of the maximum practical insulation and attention to other energy robbing details it is not impossible to reduce utility costs by 50% or more.
The investment in energy efficiency will add market value to your home over time. The recent melt down of the financial markets and destruction of the housing and mortgage markets will result in a "new normal" when things finally sort out. There is no question that mortgage underwriting standards will be more stringent going forward and one of the changes will be a return to the lenders assessing total monthly cost of home ownership, including utilities, as a percentage of family income in determining affordability of the customer. High utility costs will be a negative while low costs will improve affordability. A $100.00/month difference in overall occupancy costs could make the difference of loan approval for many families.
Well insulated and energy efficient homes will command a higher market price in the future all other things being equal.