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Chill Out: Will Michigan Appliance Rebates Attract Buyers?

Throughout the days of the home buyer tax credit, set to expire on April 30, the question has been: Will cash back encourage a person to buy a home?  Cynics have countered:  People would have bought anyway.

The same questions are now being asked about the latest round of rebates, this time on appliances like refrigerators, clothes washers, dishwashers, and water heaters.  Michigan‘s share of the program, $9.5 million, went into effect on February 10.  As of April 17th, only 25% of the funds have been reserved on household appliances and only 1% on approved furnaces and water heaters.  Will the rebates be enough to encourage Michigan shoppers to chill out with a new Energy Star-rated refrigerator or other qualifying appliance?

Dollars from the American Recovery and Reinvestment Act of 2009 ,which have stretched city and budgets, paid for public works projects, promoted energy saving upgrades, and funded the homebuyer tax credit, are now funding a new endeavor in Michigan and many other states.  Consumers who buy specific models of more energy efficient Energy Star-rated appliances will reap a cash rebate in return.  Program details and a list of qualifying models can be found at www.MIrebates.com.


The Cash for Appliances rebate plans vary by state, but the thinking is the same.  Older appliances cost consumers more to operate and produce high levels of greenhouse gas emissions.  When an appliance indentified with an Energy Star label replaces an older model, both the environment and the consumer benefit.   The new appliances are often more expensive than models which lack the label, so the rebate is an attempt to offset the great initial cost.


Michigan’s plan, a $9.5 million effort called Michigan Energy Efficient Appliance Rebate Program, was approved by the Department of Energy (DOE); $6.6 million is going toward rebates for washers, refrigerators, and dishwashers. Unlike some other stimulus bill programs administered by the Federal Government, the states developed the specifics of the appliance program and determined which appliances will qualify, the size of the rebate, and when the purchase must be made.  Some states designed their programs to offer a percentage off the purchase price, while other states like Michigan have a schedule of rebates which vary by appliance.  The DOE then approved the programs.


On the refrigerator/washer/dishwasher segment of the program, rebates vary from $25 – 100 for Michigan residents.  Buyers can either 1) purchase the appliance, apply for the rebate, and mail in the proof of purchase or 2) apply to reserve a rebate and then send in the documentation when purchased.  While residents can only claim one state rebate per appliance, they can receive multiple rebates if they buy other products, as well as collect rebates offered by appliance manufacturers.  The rebate will come back in the form of prepaid Visa cards.


Will the program be effective?  Figures compiled at www.energystar.gov  indicate that consumers who buy a houseful of Energy Star appliances can save $500 a year  Energy Star appliances that qualify are more expensive than their counterparts.  Virtually all newer appliances use less energy than in the past, but the Energy Star models are predicted to save even more per year.  Appliance maker Whirlpool notes on its website that the suggested prices for its line of Energy Star refrigerators is $649 (15 cubic foot) to $2,999 (22 cubic foot) vs. $529 (14 cubic foot) to $1,009 (22 cubic foot) for non-compliant models.  (Figures for all appliances are compiled at www.energystar.gov.)  The features in the various models differ, but cash strapped consumers may be more concerned with immediate out-of-pocket costs than long term energy savings.


By all indications, Cash for Appliances programs have been popular in many states like the Cash for Clunker program before it.  Those in states that offer 10% or 15 % rebates ran out of rebate money within a few days.  In Michigan, where unemployment is high, and the value of the rebates relatively low, the pot of rebate money may last much longer as the stakes are not high enough.


Though the monetary return is not great enough to prod a consumer to buy a $2,000 refrigerator on a whim, the incentive is good for those in the market.  Especially since appliance manufacturers are sweetening the deal with sales pricing or additional rebates, the consumer has a chance to upgrade an older appliance and help the environment.  The program is also a good way to encourage consumers to start thinking green when appliance shopping.  Hopefully, appliance manufacturers will find a way to economically afford to offer only energy efficient products.

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Looking for a home for those new appliances?  Whether you are buying or selling your home, the Bouma Group can help you with your real estate needs in Ann Arbor, as well as keep you up to date about Washtenaw County and Ann Arbor neighborhoods.  Visit our website at www.bouma.com and check out our Condo Hotline to get a handle on the Ann Arbor condo market.



Posted Saturday, April 24, 2010 by Martin Bouma
Tags: ann arbor real estate, michigan appliance rebates