Example House

In showing the sample house, we did not have an accurate construction cost for the same house that the energy analysis was completed for. We averaged the additional cost to build a 1485 sq ft and a 2842 sq ft house in conjunction with the energy calculation comparisons for a 1845 sq ft house. We used the energy savings of $29 per month for the 1845 sq ft home and averaged the construction cost of $4,000.

In addition to the direct energy savings each month, there are other factors that will reduce the cost.

1. Loose fill insulations are known to sag or loss their thickness with age. The high heat in the Southwest will breakdown the “binders” in the fiberglass and cause it to get brittle and sag. This will lower the R-value with time. It is estimated that over a 20-year period, the insulation will lose 25% of its insulating capacity. This is a rate of 1.3% per year. As the frame house gets older it will take more and more energy to heat or cool the same house.
2. It is expected that energy cost will rise over time. Even though some energy companies state that their energy cost are fixed until the year 2008, the bill you pay can still go up. You bill is made up of many factors, energy costs, administration, distribution, etc. Company expenses will rise each year and this cost has to be covered through some means. We made a conservative estimate that energy cost could rise 1% per year. It should be noted that in San Diego, electric costs went up over 50% in one year. Although this is not common, it is expected that energy will be a prime problem in the coming years.
3. Another item that affects the out of pocket cash, is taxes. When the additional cost of construction is added to the mortgage, there will be more interest paid. Interest paid on you mortgage is tax deductible. The reduction in taxes will lower the direct cash for each year. It would seem to make sense to increase your mortgage by $27 per month and you get the tax reduction as opposed to paying $29 a month to the utility companies for increased energy usage that is not tax deductible. In our example we used an income level that would be taxed in the 15% federal income tax bracket. If you are in the 28% tax bracket the savings would be even greater.
4. When the home is built with a better material that has a long and effective life, the appraised value of the home should go up in the amount of the added cost. In our example, the $4,000 added construction cost would increase the value of the home by $4,000. As the cost of the added mortgage is covered by utility savings, the increase of value in the home is a direct profit to the homeowner. The homeowner’s equity will grow as the mortgage balance is paid off and as the home appreciates. An appreciation value was based upon 2.4% per year. This is conservative based upon the past 10-20 years history.

The overall effect of this sample house is that the owner will pay the same down payment and the same closing costs but he will save $75 the first year of home ownership.

At the end of the 30-year mortgage period, the homeowner will have saved over $6,000 in out of pocket costs and have increased his house equity by over $6,800. That is a $13,000 advantage for owning a KC Panel house.

Some people may say that they are not going to live in the house for 30 years and so they will not see all of the advantage. It is true that most people only live in one house for 5-6 years. The owner will still save money the first year and increase equity although not as much in the beginning as the latter part of the mortgage period.

A KC Panel house is still less expensive to own even for a short period of time.

In addition to the cost savings, there are the comfort items.

1. The house is structurally stronger. The house will resist damage caused by ground movement, normal shifting, earthquakes and other objects such as trees driven by the wind, etc. One of our KC Panel houses had a car run into the wall. There was minor damage caused, all was corrected in one day. In a normal frame house the car would have driven right into the living room, putting the occupants at risk.
2. Because of the high-density foam and solid walls the home does not transmit as much noise from the outside to the inside of the home. This provides more peace and emotional comfort for the occupants.
3. The foam is a Class 1 fire rated product. This means that it can burn, but must have outside heat source to make it burn. If a fire is started in the home, there are 3 advantages to KC Panels.
4. The wall material will burn more slowly – causing less damage and allowing more time for the occupants to get out.
5. Because the house is more air tight, less air will be available to fuel the fire. This will slow the burn process causing less damage and allowing more time for the occupants to get out.
6. Two university tests have shown that burning foam is less “toxic” than burning wood and insulation. Most people in a house fire are overcome with the fumes sooner than with the fire. The less “toxic” fumes should allow more time for the occupants to escape before they are overcome.
7. and openings that allow insects to enter the home. Most KC Panel homeowners experience Because the home is tighter and has less air infiltration, it also has less cracks fewer insects inside of their homes than with standard construction.
8. Because the outside walls are solid and continuous, you can hang a picture anywhere. You do not need to hunt for a stud.
9. In a standard home, some of the 2x material will dry, bow and twist. This causes the walls to be un-even and often caused the drywall nails to pop out. While most of this is corrected prior to the homeowner moving into the house, there is still some of this that occurs after move-in date. The KC Panels are straight and solid. They do not twist or move with time.