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Snapshot of the Green Home Industry
Why Green Homes?
According to the U.S. Green Building Council's (USGBC) 2008 LEED for Homes Reference Guide:
"The environmental impact of the residential sector is significant. There are more than 120 million homes in the United States, and about 2 million new homes are constructed each year. According to the U.S. Department of Energy, the residential sector accounts for 22% of the total energy consumed in the nation and 74% of the water. Levels of indoor air pollutants can often be four to five times higher than outdoor levels. The residential sector also contributes 21% of U.S. carbon dioxide emissions. The considerable impact on the environment created by homes necessitates a shift toward more sustainable residences.
Green homebuilding addresses these issues by promoting the design and construction of homes that have much higher performance levels than homes built to the minimum building codes. Generally, green homes are healthier, more comfortable, more durable, and more energy efficient and have much smaller environmental footprint than conventional homes.
Breakthroughs in building science, technology, and operations are now available to designers, builders, operators and owners who want to build green and maximize both economic and environmental performance. Green homes rely upon established, proven design features and technologies that do not have a significantly large cost.
In fact, many green measures, particularly those that involve energy and water efficiency, will reduce long-term costs. Often these reductions in operating costs will more than offset the additional up-front costs of a green home. The homebuilding industry is beginning to recognize the value of healthy homes and environmentally responsible projects."
Although certifications are necessary to officially designate a home green, everyone can have greener homes and lives. A home's green features are what make it more efficient and environmentally friendly or greener. A resource efficient green home is one that?compared with a standard home—uses less energy, water, and natural resources; creates less waste; and is healthier for its inhabitants. Homes can be built green or existing properties can undergo green renovations.
Why have green homes proliferated in some areas and not in others?
The number of green homes in a given area depends on where local government, home builders, and consumers are in their green education and adoption. If green organizations, such as the USGBC and Green Drinks, are emerging in your area it is likely that green home awareness and education will increase with all parties influencing the home industry.
With increasing amounts of state and local governments encouraging or even mandating green design and construction, it is anticipated that homes with green certifications and green features will increase dramatically. This trend is supported by numerous homeowner and builder incentives from the federal level. Even if you do not have an abundance of green homes in your community now, you probably will soon when green building awareness increases and more builders develop green homes. In the coming years, more state and local governments will be taking additional action. Please see "What is the government's impact on sustainable housing stock?" below.
Are certified green home programs growing and in demand?
Several national green home certification programs are gaining momentum. Of the total new residential permits issued across the country, the percentage of homes qualifying for ENERGY STAR® and other green home certification programs are steadily increasing.
- According to the U.S. Environmental Protection Agency (EPA), in 2008, nearly 17 percent of all home permits issued qualified under the ENERGY STAR® program (this is up from 12 percent in 2007). Though final statistics are not yet available, the EPA estimates that figure will be approximately 20 percent for 2009.
- According to the EPA nearly 1,000,000 homes have qualified under the ENERGY STAR® program
- Started in 2007, USGBC's LEED® for Homes currently has over 4,000 certified units and over 19,200 registered units
- Started in early 2009, NAHB's Green Building Program currently has over 800 green homes certified by the NAHB Research Center, and over 600 homes have pre-drywall inspections scheduled
- Local and regional green building programs, such as Built Green, EarthCraft House, Earth Advantage, and numerous municipal programs have significantly contributed to the supply of certified green homes in the marketplace.
It's clear that green programs are emerging in all regions, not just areas like the Pacific Northwest, California, Colorado and Austin, Texas, which are considered early adopters of green. Whether it's in the form of new building codes, local green building programs or green MLSs, there is evidence across the country--in the Northeast region and cities such as Chicago, Atlanta, Dallas, Houston, and Phoenix--that the green movement is gaining momentum.
When the construction industry and the housing markets improve, anticipate a rapid increase in the number of homes with national, regional or local green certifications.
How do certified green homes compare in terms of market performance?
In areas with a history of certified green home transactions and a statistically significant number of them, there is substantial evidence indicating that certified green homes sell for higher prices and more quickly than their competition.
In the May 2009 Certified Home Performance study, conducted by the Earth Advantage Institute and with the assistance of brokers, appraisers, and university professors, there is a sale price premium and marketing time advantage for homes that have a third-party green certification. The study's abstract says:
"The author documents that certified homes in the Seattle metro area sold at a price premium of 9.6% when compared to noncertified counterparts, based on a sample of 68 certified homes. In the Portland metro area, certified homes sold at a price premium ranging between 3% and 5%. In addition, the certified homes stayed on the market for 18 days less than noncertified homes. These results are based on a sample of 92 certified homes and comparable properties approved by a project appraiser."
Similar statistics comparing certified green homes to non-certified homes have emerged in Atlanta, Georgia (see "Results and Review"). As the green home movement gathers momentum and more cities see an increase in certified green homes and homes with green features, future studies from communities across the country likely will reveal a preference for certified green homes. Eventually most cities and municipalities will make the green home of today standard practice as building codes and regulations are modified.
What is the government?s impact on green housing stock?
The government's influence on green homes is significant. There are numerous green incentives and tax credits for consumers and home builders from the federal government and from several states. The latest stimulus package, for example, includes weatherization money and additional funding for existing green programs. At the local level, government commitment to green policies, incentives, and credits varies greatly from area to area.
According to McGraw Hill Construction's Green Outlook 2009, "In the last three years, the proliferation of green building policies, standards, legislation, and programs at the state and location level has been astounding." It also says:
- At the state level, there were policies in only 13 states in 2005, but by October of 2008, this number had nearly tripled to where 31 states had policies on the books
- Local governments have increased at similar rates — nearly tripling from 57 localities in 20 states to 156 localities in 35 states
- This shift is an indicator that the government and public are more invested in making green building part of their long-term plans. As a result tracking future trends in government regulations will be essential in order to understand the market fully.
Most of these policies have been adopted for public buildings, with some cities even requiring a third-party green certification. Now such policies are being applied to residential properties in some cities. That means that residential builders going through a permitting process must include sustainable elements in their design or even comply with a green home certification before gaining approval.
On January 12, 2010, the California Building Standards Commission unanimously adopted the first-in-the-nation mandatory Green Building Standards Code (CALGREEN), requiring that all new buildings in the state be more energy efficient and environmentally responsible. The new code will take effect January 1, 2011 and includes all new residential structures.
Whether you embrace green principles or not, the green home industry is on the verge of major growth.
Will your MLS system be prepared?
Author: Al Medina
