How Much More is a Green Home Worth?

    We've heard a lot lately about "Green Homes" and how much consumers supposedly want them.  Sort of like hybrid automobiles.  Except that with hybrid cars,very few people have actually bought one.  The only people I know that have one, bought it with a government tax credit.  Otherwise no one that I've ever met has been willing to pay 10 to 20% more for a hybrid car.  So is it any different for homes?

   Apparently "Green" homes works better as a concept on the op ed pages than they do in reality.  According to a recent survey from the National Association of Homebuilders, prospective home buyers are unwilling to pay much more for a "green" home.

   "Although we are seeing significant interest in green building, cost effectiveness is clearly a key concern among home buyers,"  said NAHB Chairman Joe Robson, a home builder and developer in Tulsa, Okla. "Builders said that among buyers who are willing to pay more for green features, more than half - 57 percent - are unlikely to pay more than an additional two percent."  Only 11 percent of builders nationwide indicated that their customers ask about environmentally friendly features according to the survey.

   Any real estate broker in this part of the country could tell you that people are interested in what it will cost them to heat their new home.  We regularly list a homes past years energy consumption and it's not unusual for buyers to ask for several years history.  The NAHB survey confirms that overall, energy efficiency is the prime factor driving the green building movement.  "...when buyers prepare to sign on the dotted line, cost effectiveness clearly drives their decisions," said Robson. "We need to make sure our energy policies reflect that reality so that builders have the flexibility to use lot and site design, high efficiency heating....and other features to achieve the desired result at the right price."

   In other words, its not green features for the sake of being green, its cost and return on investment that will drive future building. Building homes from recycled materials for its own sake may be laudable and even desirable but by and large consumers won't pay for it.  Consumers will pay for items that will pay for themselves.

   Building "Green" for the sake of being "Green" may sound good in theory but it needs to be practical and able to prove itself just like any other aspect of a home.  Rational beings needs to see a direct benefit to what they are paying for.  Before politicians come up with programs to encourage developers to bring even more homes onto an already glutted market they should make sure they are encouraging what buyers actually want rather than what they think they know is best for those consumers.

Jim Cosgrove

Comments

[Selling a property]

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