Do You Know Your Total Home Ownership Cost?

The total home ownership cost is rarely taken into account when a home is being built or purchased, especially a high-performing home. Kerry Langley with Project TCO (Total Cost of Ownership) has a tool to change that. Kerry has been in the mortgage banking world for over 30 years and has negotiated over $1 billion in loans. Several years ago Kerry was challenged to help sell homes certified with an energy efficient high-performance program in Atlanta, GA called EarthCraft. That work is now Project TCO. And fast forward to today.

TCO and Pearl Certification Develop Joint Plan to Assist Home Buyers

With a mission to advance the high-performing homes industry, TCO and Pearl Certification announced they have developed a joint plan to assist prospective homebuyers with $1 billion in high-performance U.S. home loans by 2025. Homeowners can combine the savings created by the TCO-flex program with new builder rebates and tax credits introduced by the Inflation Reduction Act to fund a new high-performance home. Announced at the International Builders Show and in a Feb 8, 2023 press release.

What is EarthCraft?

EarthCraft is a green building certification program for high-performance homes that emerged as a joint venture between the Southface Energy Institute and the Greater Atlanta Home Builders Association. In 2008, during the economic crisis that affected Atlanta and the entire nation, EarthCraft faced the challenge of selling a thousand high-performance homes priced between $400,000 to $600,000 that were sitting on the market. Although the program had successfully promoted the concept of high-performance homes to the building community in Atlanta, the housing market had stalled. To help the builders sell these homes, the EarthCraft team turned to Kerry for assistance.

What is Project TCO?

Project TCO is an initiative founded by Kerry Langley, which stands for Total Cost of Ownership. Kerry defines a project as “an individual or collaborative enterprise that is carefully planned and designed to achieve a particular aim.” She describes TCO as the total cost associated with buying and owning a home, encompassing not only the typical mortgage expenses such as interest, closing costs, and fees, but also utilities, maintenance and repairs, and other operating costs. Despite the fact that our financial systems do not account for all the costs involved in home ownership, understanding the total cost of owning a home is crucial for both buyers and sellers, as it allows for accurate comparison between properties. In Kerry’s own words, Project TCO is “my thing.”

How Many of Us Consider the Total Cost of Home Ownership?

Many individuals fail to account for the operating costs associated with their homes, whether they own or rent them. The Total Cost of Ownership takes various factors into account, depending on whether the home is rented or owned. This tool’s flexibility allows for customization to suit nearly any situation.

Initially, when Kerry joined EarthCraft in 2008, he, like most people, believed that a house was simply a house, and one could make it better by adding hardwood floors and granite countertops. While this may improve a home’s appearance, it does not transform it into a high-performance home. The EarthCraft team persistently emphasized to Kerry that Total Cost of Ownership was the key to success. They invited him to their Home Builder Training classes, where he learned that a high-performance home is one in which all components that affect its performance are combined holistically to achieve the most sensible performance outcome. This definition resonated with Kerry, who realized that even the slightest details contribute to a high-performance or green home and require attention and understanding.

“If you can make that much of a difference changing the performance of a house by looking at it holistically, why if not the solution to look at the financial side holistically.” Kerry

Essentially, Kerry’s program examines every component that can affect the financial aspect of owning a home. He replaces traditional conversations surrounding the purchase price, mortgage payment, and down payment with Total Cost of Ownership (TCO), which factors in the optimization of performance and mortgage structure. With the TCO tool, numerous iterations can be run quickly to determine the best cost combination for the desired outcome. Why not finance a better house if you’re building one? It’s an impressive concept.

This holistic financial approach offers benefits to home buyers or residents, builders, and real estate entities. However, action cannot be taken until someone is presented with the idea and acts upon it, so the dream must continue to be sold.

“Most of what makes a green house green is common sense and quality building practices.”

Press Release with Pearl Certification