Are They Right for You?
An Earthship home is made from natural and unrecycled materials and is powered by solar. These homes are intended to be “off the grid” with little or no reliance on public utilities and fossil fuels. This type of home was developed by Michael Reynolds of Taos, New Mexico; the term “Earthship” is his registered trademark.
According to Wikipedia, an Earthship home has to incorporate the following six principles:
- Thermal/Solar heating and cooling
- Solar and/or wind electricity
- contained sewage treatment
- building with natural and recycled materials
- Water harvesting
- Food production
The La Plata County building department in Durango Colorado will permit Earthship homes; however they need to be designed by an architect or engineer in order to be permitted. The county wants to be certain that the structure is safe for occupancy.
Most homes that are referred to as Earthship homes do not meet 100% of the requirements; many owners and real estate agents refer to or market a home with two or more of the requirements as an “Earthship”. Typically, homes fall short of being a true Earthship because they are not designed to harvest/collect water, do not have a greywater system, and /or are not 100% reliant on solar energy.
The major challenge when buying or selling Earthship homes is the difficulty securing financing. Lenders are reluctant to provide financing on homes with limited marketability because they will be more challenging to sell in the event of a foreclosure. There is no financing available for a true Earthship home from FHA, USDA, VA, or conforming conventional sources; so a buyer cannot obtain financing with a 30 year fixed loan with less than 20% down. Some local banks will provide short-term fixed financing that converts into an adjustable loan with a large down-payment.
The other challenge with true Earthship homes is determining value. Real estate appraisers primarily rely on the recent sales of nearby similar homes to determine the value of the property being appraised. Because there are very few of these homes and very few sales; it makes the valuation process difficult and results in a value that is very subjective. Lenders want the appraiser to provide four closed nearby sales of similar homes/properties.
If a home meets some of the Earthship requirements, but is primarily standard construction, connected to the power grid, and has a well or central water; financing from all lending sources may be available because they will be considered primarily a traditional home, which has appeal to a large percentage of buyers.
When considering buying or constructing an Earthship home, you should weigh the desirability and benefits of this type of construction against the limited marketability and inability to secure the most competitive financing.
