What’s the Cost of Converting a Home from Natural Gas to All-Electric?

In recent columns, I have promoted the idea of eliminating natural gas and converting one’s home to all-electric, using heat pumps for heating & cooling and installing a heat pump water heater. I have also promoted induction cooktops as an alternative to gas or standard electric cooktops.

One reader asked me to provide information on the cost of making the conversion to all-electric, so I have done some research and can also speak from personal experience.

First, I asked Bill Lucas-Brown of Helio Home Inc., who installed the heat pump mini-split system at Golden Real Estate’s former office on South Golden Road as well as in our storefront in downtown Golden.

I asked Bill for a rough estimate of the cost of making a typical 2,000 sq. ft. home all-electric, and he responded with the following numbers and comments.

Note that rebates and tax incentives are available from the state, feds, utilities, and local municipalities that typically range from 15 to 30 percent off total cost. The following are costs without those rebates.  Click here to view Helio Home’s web page about the rebates and tax credits available under the Inflation Reduction Act.

  • Air source heat pump for heating and cooling your home, $22,000
  • Heat pump water heater, $4,000 
  • Insulation and air sealing work to improve efficiency, $5,000
  • Ventilation system for indoor air quality, $4,000
  • 10kW solar system PV, $30,000
  • Electric panel upgrade, if needed, $4,000
  • Electric vehicle charger, $1,500

That said, Helio Home’s average job is around $50,000. With rebates, figure $35,000 to $43,000. You can get a proposal on the company’s website www.heliohome.io.

Sadly, there are few vendors who are experienced and competent in heat pumps for heating and cooling homes. Heat pump water heaters are less of a challenge, because they are sold by Lowe’s and Home Depot, and you just need a plumber to install them and an electrician to pull a 240-Volt circuit to it. I bought a 50-gallon heat pump water heater in 2021 for $1,200 (on sale – prices are higher now) and was able to do the electrical work myself because of a nearby 240V circuit that was no longer in use. The self-employed plumber I used charged just $500, and I got a $400 rebate from Xcel Energy, so the cost was less than the figure quoted above. The federal rebate taking effect in January under the IRA makes such a purchase almost free.

You may find it more practical to leave your gas forced air furnace in place and install a ductless mini-split system. A compressor (similar to an A/C compressor) is installed outside your home, and two coolant lines are run to wall-mounted units in different rooms of your house. This works best in a one-story home. These same wall units provide both heating and cooling, because that’s how heat pumps work — they are like an air conditioner that works in two directions, moving heat out of your home in the summer and into your home in the winter. As the name suggests, they don’t create heat, they move heat, and they do it more efficiently than baseboard electric heating or heating generated by burning natural gas (or propane).

Instead of wall-mounted mini-splits, you can install a ceiling-mounted “cassette” which functions the same way. That’s what Helio Home installed in our downtown storefront, and it works just as well. (Come by our office and I’ll show it to you.) I have also seen a wall-mounted cassette which has a picture frame on it. When the heat pump is operating, the picture moves out a couple inches from the wall to allow the movement of air.

As for an EV charger, the biggest variable is the cost of bringing a 240V circuit to your garage, which depends on the distance between the garage and your breaker panel. I spent less that $300 for that, again from a self-employed electrician.

Tesla vehicles have the charger built into the car, so you only need a 240V outlet (similar to the outlet for your clothes dryer) to plug the provided cord into. Don’t buy the Tesla Wall Connector — it’s totally unnecessary for home use. Just use the charging cord with a 240V head.

Other EVs may require you to purchase a Level 2 charging station, which I did when I had a Chevy Volt. By googling “Level 2 EV chargers,” I found prices as low as $200 (Home Depot, 16 amp model), and several under $500. So your real cost depends on what your electrician charges.  Here’s an idea: If you have an electric dryer outlet available close to your garage, you could adapt that circuit for your EV at minimal cost.

Another use of natural gas that you’re probably using is for cooking and grilling. You’ll really love induction cooking if you try it, because it is so much faster. Buy a countertop unit for under $100 and play with it. For grilling, we love the George Foreman electric grill we purchased for $100.

Above all, pay attention to the tax credits and rebates that take effect on Jan. 1, 2023, under the Inflation Reduction Act. They make going all-electric more realistic.

Follow-up on Last Week’s Post About Property Tax and Sales Tax

I did a lot of research for last week’s column about property taxes in incorporated vs. unincorporated areas, but I should have done more research about sales taxes.

Instead of researching sales taxes in various counties, including Jefferson, I simply said that “I don’t know of” any county-wide sales taxes.  Oops!

I am well aware of the 1/2 percent Jefferson County sales tax which has funded our wonderfully extensive open space parks.

A couple readers did some research for me, and I got the following list of sales taxes in other counties. I’m not including Denver and Broomfield counties because those are city sales taxes and there are no unincorporated areas (that I know of) in those two city/counties.

Reader Gary Justus wrote that all metro counties except one have a county-wide sales tax, according to https://colorado.ttr.services:

  • Jefferson County – 0.50%
  • Adams County – 0.75%.
  • Douglas County – 1.00%
  • Arapahoe County – 0.25%
  • Boulder County – 0.985%
  • Clear Creek County – 2.65%
  • Elbert County – 1.00%
  • Gilpin County (none)

Most counties beyond the metro area do, in fact, have sales taxes, some of them substantial, such at Pitkin County (3.6%), San Juan County (6.5%), and Jackson & Lake Counties (4% each).

Colorado Department of Revenue Publication 1002 spells out the sales taxes which it collects for local jurisdictions. Some, like Golden, aren’t listed, because they collect their own sales taxes.

Just Listed: Fabulous Solar-Powered Green Mountain Home

You’ll enjoy an Xcel Energy bill of $45 per month, including gas, during the summer and still under $100 per month in the winter thanks to this home’s roof-mounted solar photovoltaic system. The address is 14165 W. Bates Ave., in Hutchinson’s Green Mountain Village, which is south of Yale Avenue and north of Bear Creek Lake Park in Lakewood. It has 3 bedrooms, 3½ baths, plus a 14’x16’ loft that could be converted into a 4th bedroom with en suite bathroom. It has 2,957 finished square feet plus an unfinished basement. This home is beautifully landscaped and updated inside, with hardwood floors on both levels, a gourmet kitchen, and a fabulous backyard with a free-standing Sunsetter retractable awning — great for entertaining! The walk-in closet in the master suite is a gem, which you’ll get to see in the narrated video tour below and at www.JeffcoSolarHomes.com. Open house is this Saturday, Nov. 5th, 11 to 1.

Sales Taxes May Be Lower, but Property Taxes Are Usually Higher in Unincorporated Areas

It’s a common misconception that taxes are lower in unincorporated areas of each county, but that only applies to sales tax. I don’t know of any unincorporated area where property taxes are lower than they are in incorporated cities and towns.

Moreover, newer subdivisions in unincorporated areas typically have “metropolitan tax districts” that were created by the developer to pay for infrastructure — streets, gutters, sidewalks, water and sewer mains, etc. — which can make property taxes quite a bit higher than in the older areas of incorporated cities and towns.

Compare, for example, the mill levy for the City of Golden with the multiple mill levies in unincorporated areas of Jefferson County.

In Jeffco’s oldest incorporated city, Golden, the city’s mill levy is only 12.34 mills.  (The total mill levy for Golden is 85.389, the rest being for county government and for Jeffco Public Schools.)

In those homes which are not in the City of Golden but have Golden addresses, the mill levies to provide the same services (police, fire, parks, water and sewer infrastructure, etc.) are always higher. A good example is Mesa View Estates, the 1980s neighborhood behind the Jeffco Fairgrounds. Homes in that neighborhood have mill levies from four tax jurisdictions to provide the same services that are included in the City of Golden’s single mill levy.

Those four mill levies are: water & sanitation (6.786 mills); parks & recreation (6.829 mills); County sheriff (2.46 mills); and fire protection (13.196 mills). That’s a total of 29.271 mills, or over 2⅓ times what the City of Golden collects to provide the same services.

Thus, a $1 million home in the City of Golden would have an annual property tax bill of $5,934, whereas a $1 million home in Mesa View Estates would have an annual property tax bill of $7,042.

It’s even worse for homes in the Table Rock subdivision north of Golden but with Golden addresses. There the mill levy for police, fire, parks and water totals 18.447 (less than in Mesa View Estates), but there’s a levy of 31 mills by the Table Rock Metropolitan District, raising the annual property tax bill to $8,513.

There are many newer subdivisions with metropolitan tax districts which charge 50 or more mills, making the property tax bills that much higher. The most extreme example I have found is the Vauxmont Metropolitan Tax District serving Candelas in northern Arvada.  Its mill levy is 77.93, making the annual tax bill for a $1 million home $12,142. Again, compare that to the $5,934 tax bill for a $1 million home in the City of Golden.

Candelas, however, is in the City of Arvada, not unincorporated Jeffco.  Older sections of Arvada, such as Scenic Heights, do not have metropolitan tax districts, but they do have separate mill levies for fire protection and for parks and recreation districts. Similarly, Lakewood wasn’t incorporated until 1969, by which time there were multiple fire, water and parks districts already charging a mill levy. Still, the total mill levy in both Arvada and Lakewood — minus any metropolitan tax districts — is under 100 mills. Virtually all unincorporated areas of the county have total mill levies that are above 100.

Denver’s mill levy of 74.618 mills is even lower than Golden’s, although there are some metropolitan tax districts within Denver, such as Westerly Creek in Central Park (formerly Stapleton), which charges 60.867 additional mills.

As a side note, I sit on the Rules & Regulations Committee of our MLS and have suggested, without success so far, that listings in REcolorado include the mill levy instead of, or in addition to, the dollar amount of property taxes.

Sales taxes can only be levied by incorporated cities and towns and by state-constituted districts such as RTD and SCFD. I’m not aware of any county-level sales taxes. If you buy a truck or car worth, say, $100,000, you could easily save $3,000 in sales tax by registering it in an unincorporated area of the county, but that may not be enough to compensate for the additional property taxes you will be paying.

By the way, property tax is also levied as “ownership” tax on that $100,000 truck or car.

How Are Property Taxes Calculated in Colorado?

Property taxes are charged through a mill levy. Each “mill” (from the Latin word for thousand) is a tax of one dollar for each thousand dollars of your home’s assessed valuation.

In Colorado, the assessed value of residential real estate is currently calculated at 6.95% of the home’s full valuation. Thus, if the county assessor determines that your home is worth $1 million, its assessed valuation would be $69,500, and the mill levy for each taxing jurisdiction would be applied to that lower value, A mill levy of 100 mills would thus produce a property tax bill of $6,950 (which is 100 x 69.5)

The Colorado constitution requires county assessors to determine what each property could have sold for on June 30th of each even-numbered year (2020, 2022, 2024, etc.) and apply mill levies to 6.95% of that full valuation for the following two tax years.

Wire Fraud Can Rob Home Buyers of Their Life Savings

An October article for Bloomberg BusinessWeek describes an increasingly common cyber crime perpetrated against home buyers.

Since most title companies want the money for closings wired to their bank accounts, scammers have mastered the art of impersonating real estate agents, loan officers and escrow agents and sending highly credible emails providing the wrong wiring instructions for buyers’ down payments. These down payments can often be in the hundreds of thousands of dollars, and if the authorities aren’t notified of the deception within minutes, those wired funds are typically out of the country and not recoverable.

That’s why all buyers should be suspicious of any email containing wiring instructions and always call the title company to get the correct wiring instructions verbally. And don’t call the number for the title company that’s in the suspicious email! Look up the phone number or get it from your paperwork.

Wire fraud is so common that one of my favorite title companies, First Integrity Title, has a wire fraud warning instead of music on hold when you call them. After several times on hold with them, it can become pretty annoying, but that just shows how important they consider the warning to be, because too many home buyers have lost their life savings and the home that they were about to close on.

Evidence Is Mounting that Gas Stoves Are Hazardous to One’s Health

A study published last week in the journal Environmental Science & Technology found at least 12 hazardous air pollutants, including benzene, a carcinogenic, are being emitted by virtually all gas ranges.  The study, limited to California, included 159 stoves in 16 counties. It found benzene emitted from 99% of the sampled stoves. Here’s a link for that study.

Although the study did not include other gas appliances such as forced air furnaces and water heaters, it makes sense that the same pollutants are being emitted from those and other gas appliances, too.

Gas appliances are also a source of carbon monoxide, a poisonous gas, and carbon dioxide, a greenhouse gas, which is also unhealthy in high concentrations.

This report adds another reason why homeowners should consider abandoning natural gas (or propane) and moving toward having all-electric homes, especially now that there are widely available and efficient heat pump HVAC systems, heat pump water heaters, and induction cooktops. Rita and I have used all three of these appliances plus an electric grill, which we love.

How Does This October’s Real Estate Market Compare to Last October’s Market?

We all know that the Denver metro real estate market has changed dramatically this year, so I thought it would be interesting to compare the first 16 days of October with the same 16 days of October 2021. Here’s what I found.

I pulled the real estate sold listings on REcolorado, Denver’s MLS, for both years, limited to the area within 18 miles of downtown Denver, which roughly includes the area within the C-470/E-470 beltway, but does not include the city of Boulder.

Yes, the market has slowed, but the median sold price jumped from $450,000 for the first 16 days of October 2021 to $550,000 for the same period this year — a 22.2% increase. However, the number of closings plummeted from 2,411 during that period in 2021 to 1,650 this year, a 31.6% decline.

The ratio of sold price to original listing price dropped from 100.82% last year to 99.94% this year, and the median days before going under contract increased from 5 days last October to 16 days this year.

What effect did this year’s increase in interest rates have? During October 1-16, 2021, 18.1% of the closings were cash. During the same period this year, cash closings rose only to 18.25% — hardly any impact, it seems.

Anecdotally, I have observed that higher priced homes are selling more readily in this slower market, so I checked to see what percent of closings were $1 million or higher. During October 1-16, 2021, 6.51% of closings were over $1 million, but that rose significantly this October to 9.94% — and those million-dollar-plus homes sold quicker, with a median days before going under contract of 12, compared to 17 days for homes under $1 million.

There are many more unsold (that is, active) listings now than there were last October — 5,996 compared to 4,386 last year — and fewer pending listings — 3,310 compared to 4,913 last October. A consistent characteristic of the seller’s market was that there were more homes under contract at any given time than there were for sale, which was frustrating for buyers who would see “for sale” signs in front of homes, more than half of which were not, in fact, available to purchase because they were under contract.

Price reductions continue to be quite common in today’s real estate market. Of those nearly 6,000 listings currently active within that 18-mile radius of downtown Denver, over 1,000 per week are reducing their listing prices. As a result, we’re seeing a surge of low-ball offers for listings in all price ranges, as buyers know that homes are not selling for their asking prices and might go for far less.

Just this week, I know of one listing that was on the market for 100 days, starting at $685,000 (a price that was justified by prior sales of comparable homes), reducing its listing price over time to $589,000. The seller finally threw in the towel and sold it to a quick-closing cash investor for under $500,000. That’s an extreme example, but it’s says a lot about the market we are in now.

That example also provides another lesson about the market, because it was an unrenovated home. It had an unimproved kitchen and unimproved bathrooms and nothing flashy or exciting to catch buyers’ attention. My observation has been that homes which are unimproved or otherwise “plain” are sitting on the market and selling only after serious price reductions, whereas homes that are newer or beautifully updated are selling quickly and even attracting a bidding war.

The reason is simple, as I see it: Buyers are simply not inspired to “pull the trigger” at this time, especially if they need to borrow money. It takes a lot to get an offer from them.

This Might Be a Good Time to Do Some Renovation on Your Home

Normally, I would advise a prospective seller not to renovate their home to make it more appealing to buyers, because statistics have shown that you don’t recover 100% of what you spend on improvements. The only exception to that is cosmetic improvements which eliminate eyesores, such as peeling paint, floor damage, or anything that draws immediate negative attention on the part of visitors. Those repairs are worth it.

My other frequent advice is to make improvements which make you happy, albeit with an eye to what would look good to prospective buyers. Would you like a new kitchen or bathroom? Renovate it now, don’t wait to do it when you are ready to sell and want the home to have greater market appeal.

Since you don’t recover 100% of what you spend, do it now so that you can enjoy it, satisfying yourself that it will also help the home sell when the time comes.

Because the market is cooling and interest rates are so high, it might be a good time for sellers to hold back and make those little or bigger improvements that would make life better. Maybe you will want to sell next year or maybe you won’t, but meanwhile, you’ll enjoy your home more.

My broker associates and I would be happy to visit with you in your home and discuss those little and bigger improvements that suit your needs but would also make your home more attractive when the time comes to sell. We won’t be trying to convince you to sell, so feel free to request such a visit. We can also recommend vendors/contractors to make those improvements you decide on.

Price Reduced on Central Park Condo Listed by Chuck Brown

Now priced at $325,000

This 2-bed/1-bath condominium at 2608 Syracuse Street #101, Denver, is ready for a new owner. This is a ground floor unit with lots of natural light from the south-facing windows and is in a prime location close to open space and shopping. Updates include new paint, carpet, hardwood flooring, kitchen appliances and water heater.  Included is a 1-car detached garage. View the video tour at www.DenverCondo.online, narrated by listing agent Chuck Brown, then call your agent or Chuck at 303-885-7855 to arrange a private showing.

https://youtu.be/ho13UcHc8i8

Price Reduced on Wheat Ridge Ranch with Finished Basement

Now listed at $825,000

This home at 3740 Tabor Court has a newly renovated interior with all new stainless steel appliances, quartz countertops, oak hardwood floors, and custom tiled bathrooms. The main level has a primary bedroom with a 3/4 bath and two other bedrooms with double closets and a full bath in the adjoining hallway. The basement has a family room large enough for a game room or home theater, plus a large bedroom and full bathroom. All 4 bedrooms have new carpeting. The new furnace and A/C will keep you comfortable year-round. The wood deck and concrete patio are perfect for entertaining. There’s a fenced yard and RV parking, too! View a video walk-through, narrated by Jim Smith, at www.ApplewoodHome.info, then come to the open house Sunday, Oct. 23rd, 11am to 1pm. Or call listing agent David Dlugasch at 303-908-4835 to set a showing.

https://youtu.be/mnkKN3FEYis