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Analyzing whether or not green certified homes are worth more

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I’ve written several articles about  green homes as well as the steady growth of the green building industry and by far the most common question I get is; are green certified homes actually worth more than non certified comparable homes?

There is a statistic out there I’ve seen on sites such as Energy Star and RESNET that states for every $1 a home saves in energy cost, it’s value increases by $10-$20.   With average annual energy costs at about$1800 per household and green homes performing about 20-50% more efficient than standard, it stands to reason a green home would be worth anywhere from 2k to 20k or more in value.

Is That Translating in the Market Place?

The transparent and frank answer is, not yet.  I have looked at blogs from green builders, appraisers, and industry insiders.  I’ve studied market reports and read press about the phenomenal growth of the green building industry and there is definitely real market data the supports the value of green building and green home ownership.   The homes are performing and homeowners are reporting dramatic energy costs reductions. The average new construction green home sells much faster and green builders are not having to make the dramatic price reductions to get their product sold.  I recently created this report for a presentation at our local green building council luncheon about green home sales in the Nashville area.  This is a straight forward statistical study of our MLS active, pending, and closed data and it’s gratifying to know that we are performing consistently with national trends.

For all the Green Building Naysayers

It would be easy to use data like this to make the case for green building being a fad that doesn’t seem to be translating in to additional value.    However, the issue is more complex because the green building industry is hampered by a number of factors that aren’t related to lack luster consumer demand.

  • Many MLS’s  still do not have green search able features or the green builder certification. Here is the list of what we have added to the Middle TN MLS.  Having trackable data allowed me to create the above referenced report and will allow appraisers to find comps, measure demand, and growth.
  • Appraisers need to get educated on green building and all of the upgraded components that may not be as visible as say granite counter tops.  The appraisal institute is now offering some training and guides. Appraisal guidelines also need to be revisited as they offer very little adjustment for utility savings or longer life cycle building products.
  • Lenders (fannie and Freddie both) need to create energy efficient mortgages with some teeth.  The current energy efficient mortgages are rarely used due to lack of knowledge and lack luster incentives to consumers.  Often in the appraisal review process, the lender will over turn appraisals that have given credit for green features therefore further hampering growth.   I am excited that the Obama administration is so supportive of green building and green retrofitting but consumers need to be able to finance them.

With NAR reporting growing numbers of consumers with a desire to own more efficient homes, we should all be confident that the market is there.  It’s a chicken or egg question on what will swing the value pendulum in a more favorable direction. We can certainly participate in the conversation though.

Anna Altic – Village Real Estate Services. I’ve called Nashville home for the last 15 years and have been practicing (practice being the key word here) real estate for just over 6 years. In the fall of 2007, I went to a local German Festival that had a home tour, including a LEED certified property, and I instantly became enamored with the idea of eco friendly living (ok, so I’d had a little beer and the dual flush toilet rocked my world). I have since devoted much of my time and energies in to studying and espousing the benefits of better building technology within our local residential market and my proudest accomplishment thus far has been successfully leading the initiative to get over 25 green features added to our MLS search fields.

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25 Comments

25 Comments

  1. BawldGuy

    November 21, 2010 at 2:13 pm

    Of course it’s not translating. The so-called ‘green’ movement must first overcome all the BS they’ve been puttin’ out for so long. That said, there are some very smart people who’re doing just that. Once those who’re now telling the truth about ‘green’ become the standard, they’ll overcome the ‘save the planet’ whackos who’ve been poisoning the well for decades. Foolin’ me once is on them. Foolin’ me 1,287 times? Gimme a break.

    I met, belly to belly, for over an hour with one of the ‘green’ good guys last week. It’s my contention he’s in the distinct minority, but is very quietly becoming exceptionally popular — with paying customers — based upon his ability to communicate MARKET advantages of going ‘green’.

    Of course, the reasons he’s so popular, are twofold. First, he’s not perpetuating the laughable crappola his counterparts have been puttin’ out since the 60’s like carnival barkers. Second, and much more important? He’s successfully showing investors how saving the planet is horse pucky. He’s showing them that ‘green’ is synonymous with dead presidents.

    Like Grandma said, “The truth wins in the end.”

  2. Fred Griffin

    November 22, 2010 at 11:31 am

    Chad, aka BawldGuy, nailed it.

    The “Green Movement” is so stained by Chicken Littles and Profiteers, that no rational person can take it seriously.

    Al Gore flying his 757, then driving a few blocks in a motorcade to give a speech demanding that we stop using gasoline.

    The Ice Age that we were warned about in the 1970’s. The Global Warming outright Lie that has brought discredit to Scientists everywhere.

    The Wind Generators banned by John Kerry because they would affect his view of Nantucket, and the Solar Panels banned by Feinstein because of some Lizard in the desert.

    California is in the process of outlawing Wood-Burning Fireplaces, because they produce 4 tons of soot a day, or so we are told.

    Until we can distance ourselves from the Eco-Terrorists, the PETAs, the Global Warmers, and the Political Charlatans, “Green” will continue to bring up images of aging Hippies in a banged-up 1991 Toyota Camry covered with New Age bumper-stickers.

    Oops, gotta go… my wife just dropped one of those new Mercury Vapor “Green” Light Bulbs, and I will have to call the EPA guys in space suits to clean it up. 😉

  3. BawldGuy

    November 22, 2010 at 11:35 am

    Who’s Chad? 🙂

  4. Agent for Movoto

    November 22, 2010 at 4:09 pm

    Great article – about time someone took a hard statistical look at this stuff. I think that eventually green homes will be the obvious choice – there’s just too much cheap, foreclosed, non-green merchandise crowding the market right now.

  5. Fred Griffin

    November 23, 2010 at 3:19 pm

    Hey Jeffrey! My bad…

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Austin

Austin tops the list of best places to buy a home

When looking to buy a home, taking the long view is important before making such a huge investment – where are the best places to make that commitment?

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Looking at the bigger picture

(REALUOSO.COM) – Let us first express that although we are completely biased about Texas (we’re headquartered here, I personally grew up here), the data is not – Texas is the best. That’s a scientific fact. There’s a running joke in Austin that if there is a list of “best places to [anything],” we’re on it, and the joke causes eye rolls instead of humility (we’re sore winners and sore losers in this town).

That said, SelfStorage.com dug into the data and determined that the top 12 places to buy a home are currently Texas and North Carolina (and Portland, I guess you’re okay too or whatever).

They examined the nerdiest of numbers from the compound annual growth rate in inflation-adjusted GDP to cost premium, affordability, taxes, job growth, and housing availability.

“Buying a house is a big decision and a big commitment,” the company notes. “Although U.S. home prices have risen in the long term, the last decade has shown that path is sometimes full of twists, turns, dizzying heights and steep, abrupt falls. Today, home prices are stabilizing and increasing in most areas of the U.S.”

Click here to continue reading the list of the 12 best places to buy a home…

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Housing News

Average age of houses on the rise, so is it now better or worse to buy new?

With aging housing in America, are first-time buyers better off buying new or existing homes? The average age of a home is rising, as is the price of new housing, so a shift could be upon us.

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aging housing inventory

The average home age is higher than ever

(REALUOSO.COM) – In a survey from the Department of Housing and Urban Development American Housing Survey (AHS), the median age of homes in the United States was 35 years old. In Texas, homes are a bit younger with the median age between 19 – 29 years. The northeast has the oldest homes, with the median age between 50 – 61 years. In 1985, the median age of a home was only 23 years.

With more houses around 40 years old, the National Association of Realtors asserts that homeowners will have to undertake remodeling and renovation projects before selling unless the home is sold as-is, in which case the buyer will be responsible to update their new residence. Even homeowners who aren’t selling will need to consider remodeling for structural and aesthetic reasons.

Prices of new homes on the rise

Newer homes cost more than they used to. The price differential between new homes and older homes has increased from 10 percent traditionally to around 37 percent in 2014. This is due to rising construction costs, scarcity of lots, and a low inventory of new homes that doesn’t meet the demand.

Click here to continue reading this story…

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Housing News

Are Realtors the real loser in the fight between Zillow Group and Move, Inc.?

The last year has been one of dramatic and rapid change in the real estate tech sector, but Realtors are vulnerable, and we’re worried.

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Why Realtors are vulnerable to these rapid changes

(REALUOSO.COM) – Corporate warfare demands headlines in every industry, but in the real estate tech sector, a storm has been brewing for years, which in the last year has come to a head. Zillow Group and Move, Inc. (which is owned by News Corp. and operates ListHub, Realtor.com, TopProducer, and other brands) have been competing for a decade now, and the race has appeared to be an aggressive yet polite boxing match. Last year, the gloves came off, and now, they’ve drawn swords and appear to want blood.

Note: We’ll let you decide which company plays which role in the image above.

So how then, does any of this make Realtors the victims of this sword fight? Let’s get everyone up to speed, and then we’ll discuss.

1. Zillow poaches top talent, Move/NAR sues

It all started last year when the gloves came off – Move’s Chief Strategy Officer (who was also Realtor.com’s President), Errol Samuelson jumped ship and joined Zillow on the same day he phoned in his resignation without notice. He left under questionable circumstances, which has led to a lengthy legal battle (wherein Move and NAR have sued Zillow and Samuelson over allegations of breach of contract, breach of fiduciary duty, and misappropriation of trade secrets), with the most recent motion being for contempt, which a judge granted to Move/NAR after the mysterious “Samuelson Memo” surfaced.

Salt was added to the wound when Move awarded Samuelson’s job to Move veteran, Curt Beardsley, who days after Samuelson left, also defected to Zillow. This too led to a lawsuit, with allegations including breach of contract, violation of corporations code, illegal dumping of stocks, and Move has sought restitution. These charges are extremely serious, but demanded slightly less attention than the ongoing lawsuit against Samuelson.

2. Two major media brands emerge

Last fall, the News Corp. acquisition of Move, Inc. was given the green light by the feds, and this month, Zillow finalized their acquisition of Trulia.

…Click here to continue reading this story…

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