My Magic Eight Ball’s Green Forecasts for 2011

Yes this is Completely Founded in Science and Logic

I consulted my handy eight ball in preparation for this article to see what the outlook for green homes is in our rather complicated and wildly vacillating world of real estate.  Alas, I got a favorable answer which sent me to Dr. Google to find some legitimate statistics and/or analysis that might support my eight ball’s rather bold assertion.

First of all, the NAR has recently published some data both publicly and to it members about the average American home size decreasing.   I am even seeing articles and blogs entitled the death of the McMansion.  There seem to be some shifts in market demographics to drive this trend indefinitely.  The over 55 population is according to census data about 25%  of the American population and is expected to rise within a growing population in the coming years.  This is expected to translate in buyers who no longer want/need large homes.  Generation Y buyers who will continue to enter the market have been raised more energy conscious and are looking to buy what they need.  I have also seen articles about the rise in building costs, difficulty in acquiring jumbo loans, and a desire to live more close to urban hubs where homes are generally smaller all being a factor in this trend.

This is an important factor in green real estate because one of the fundamental design principles to green building is building smaller more functional homes with universal design features.  Both NAHB and US Census data also seem to support this trend.  In addition Better Homes and Gardens did a survey in December and found that the top three home improvement projects included home offices, laundry rooms, and storage (i,e function over form).   Combined living, dining, kitchen with built in technology such as wiring for technology also tend to be on the top of consumers list as well integration of outdoor space has also become important.  All of which are a part of the more functional and flexible design principles found in green building.

In addition, EcoBroker in their newsletter featured an article from Jim Simcoe(consultant to investors in green real estate) entitled  Green Real Estate Predictions for 2011.   He made some very well thought out points that also seem to support what NAR and NAHB are saying.   Here are some highlights:

• Return on Investment will continue to become easier to measure with case studies and real data on savings.   Meaning the hype part of energy efficiency should continue to translate in to real value which in turn should increase demand.
• As green building features grow in popularity, better and more cost effective green building products continue enter the market allowing builders to  build greener at comparable if not cheaper prices than their less green counterparts. This should translate in to more green housing in a larger variety of price points.
• According to Simco roughly 40% of the consumer base (i.e. buyers and renters) understood the value of paying more for a greener home with regards to overall costs to maintain and operate the home being less, with added comfort.   This awareness is predicted to double in the near future.

All of this is obviously favorable for my core message and continues to be consistent with what I’m finding on a small scale with growth of green consumers in my business.  However, even if you aren’t a “green” Realtor, understanding where your consumer base is trending in the future is a fundamental in creating longevity in this industry.  In addition, as consumers become more tech savvy and able to do research for themselves this means we are forced to be even more knowledgeable and forward thinking to better provide them solid data on how the largest single investment they will ever make may fair 5  or even 25 years from now.