There is no doubt green building has picked up at a rapid pace in the last few years, with the share of new energy-efficient, single-family home sales jumping dramatically from 2% in 2005 to 23% in 2013, according to the U.S. Green Building Council (USGBC). The USGBC estimates that by 2016, green single-family homes will represent 26% to 33% of the market.
Three-fourths of the home building companies featured on our Builder 100 list in 2014 built homes that reached green standards, and the green building sector is even outpacing that of conventional construction. But, a new study from the Institute for Market Transformation (IMT) reveals just how much impact green building has on home sale prices and builders’ profits.
The study, conducted by IMT and The District of Columbia’s Department of Energy and Environment (DOEE), analyzedWashington, D.C., homes and found that high-performance homes marketed with green features sell for a mean premium of 3.46% compared to homes without green features.
“Home sellers, Realtors, and appraisers who are not factoring in energy efficiency when selling a home are leaving money on the table,” said IMT executive director Cliff Majersik in a news release.
The study paired eight high-performance homes with three non-high performance homes across seven ZIP codes in the District, and found that 19 of the 32 paired sales had green premiums of 2% to 5%. The mean green premium was 3.46%, while the median green premium was 2.91%.
American households spend around $230 billion each year on energy, and the presence of energy-efficient features such as solar panels, high-performance windows, and green lighting lower the cost of utility bills for owners at a small cost for builders. According to data cited in the study, the green cost premium is 5.7% for builders and developers of new homes where green projects represent 30% or more of total projects, and 8% for those where green projects account for less than 30% of total construction.
Prior research from IMT also found that homeowners of energy-efficient homes are 32% less likely to default on their mortgages.
For the full results and methodology, read the complete IMT study here.
Senior Director, Coldwell Banker New Homes Division
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