eepete
Platinum Member
The whole business of payback on an expenditure is a very tricky area. In the 2006 mindset during the building boom, a 3 year payback was generally accepted as the most people would tolerate. Everyone who was discussing options on what to put in our new house used that figure. I suspect that was driven by how long some thought they would be there, the available funds, and a bizarre self referential feedback that if everyone thought 3 years was the right payback period, and you spent more money and had an 8 year payback period, that no one else would pay for that if you sold. So everyone got into a 3 year payback mindset. I often wonder if people trapped in their home in this market are regretting some of their payback period choices.
The extra costs of spay foam insulation and geothermal heat pumps both had around an 8 year payback. We were cautioned that if we had to sell, we might not get that money back and it might not show up in an appraisal. Other decisions such as 6" walls, better grade windows, generator transfer switch and the like had similar trade off considerations. We even had all the toilets put on their own separate line to avoid "shower shock" when someone flushes. Plumber and trades people said we'd never see that money again yet when you tell people about it they all wish their house had that. So you have a perception in the building trades that it's all about resale and holding value, and cool features (like the toilets) never get a chance because no one will take a risk. Next thing you know we're all living in a Wally World low price is all that matters mentality. We hate the quality but love the price :laughing:.
And now we are seeing a number of payback period trade offs that are at 10 to 20 years. The solar PV arrays are one of them. Our metal seam roof was also in that range, but building/sales/Realtor trades said "you'll get your money back on that". Opting for these long payback periods is risky because no one know what prices will be in 15 years. It's risky because no one knows what would have happened if you cheaped out and invested the extra $$s you put in your house. Contrast that with near zero uncertainty with the 3 year payback, and mild uncertainty with 8 year paybacks.
My point here is that the further out the payback, the more the homeowner is taking some risk. So all attempts to criticize or justify these long term paybacks are generally speaking pretty shaky and not worth getting worked up about. No one can win an argument based on what the world will look like in 15 years.
A final observation: People on this forum tend to lament the decline in quality of things in the world. A lot of young pups I run into are of a mindset where they are willing to pay more for quality and sustainability. They also have a concept of hidden cost or cost down the road that I didn't see a decade or two ago. They know, for example, that in the long run the $250 water heater will be more expensive than the $400 one with good insulation and a smart controller. Many of them would rather have a small living space well done than a large one that's K-Mart Quality. Many of them will try the solar PV panels, better insulation, and a hybrid car as part of this "Pay more, get less, but be better off in the long run" mindset.
I don't want to get into a argument of what's right or wrong on this, but each generation has changing values on what's important. Longer payoff periods are under consideration by many. Paying more for quality is under consideration. The fact that many people are taking a broader view of payback time seems to me to be good. Some will be right, some will be wrong, but we will all win because solutions will be explored that would never see the light of day if they were subjected to simply lowest cost wins analysis.
Pete
The extra costs of spay foam insulation and geothermal heat pumps both had around an 8 year payback. We were cautioned that if we had to sell, we might not get that money back and it might not show up in an appraisal. Other decisions such as 6" walls, better grade windows, generator transfer switch and the like had similar trade off considerations. We even had all the toilets put on their own separate line to avoid "shower shock" when someone flushes. Plumber and trades people said we'd never see that money again yet when you tell people about it they all wish their house had that. So you have a perception in the building trades that it's all about resale and holding value, and cool features (like the toilets) never get a chance because no one will take a risk. Next thing you know we're all living in a Wally World low price is all that matters mentality. We hate the quality but love the price :laughing:.
And now we are seeing a number of payback period trade offs that are at 10 to 20 years. The solar PV arrays are one of them. Our metal seam roof was also in that range, but building/sales/Realtor trades said "you'll get your money back on that". Opting for these long payback periods is risky because no one know what prices will be in 15 years. It's risky because no one knows what would have happened if you cheaped out and invested the extra $$s you put in your house. Contrast that with near zero uncertainty with the 3 year payback, and mild uncertainty with 8 year paybacks.
My point here is that the further out the payback, the more the homeowner is taking some risk. So all attempts to criticize or justify these long term paybacks are generally speaking pretty shaky and not worth getting worked up about. No one can win an argument based on what the world will look like in 15 years.
A final observation: People on this forum tend to lament the decline in quality of things in the world. A lot of young pups I run into are of a mindset where they are willing to pay more for quality and sustainability. They also have a concept of hidden cost or cost down the road that I didn't see a decade or two ago. They know, for example, that in the long run the $250 water heater will be more expensive than the $400 one with good insulation and a smart controller. Many of them would rather have a small living space well done than a large one that's K-Mart Quality. Many of them will try the solar PV panels, better insulation, and a hybrid car as part of this "Pay more, get less, but be better off in the long run" mindset.
I don't want to get into a argument of what's right or wrong on this, but each generation has changing values on what's important. Longer payoff periods are under consideration by many. Paying more for quality is under consideration. The fact that many people are taking a broader view of payback time seems to me to be good. Some will be right, some will be wrong, but we will all win because solutions will be explored that would never see the light of day if they were subjected to simply lowest cost wins analysis.
Pete
