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Green Building News

Interest in Green Building is On the Rise

One-third of single-family builders say that most of their new homes can be called ‘green’

Builders' interest in green building is on the rise. A new report on U.S. building practices finds a growing interest in green building among builders of both single-family and multifamily homes.
Image Credit: NAHB / Dodge Data & Analytics

More U.S. builders are climbing aboard the green bandwagon.

A new survey from the National Association of Home Builders and Dodge Data & Analytics shows that interest in building both single-family and multifamily projects to green standards has climbed slightly in the last two years and is headed toward wider adoption over the next five years.

An increasing number of builders expect more than 90% of their projects will be “green” in the years ahead. But the report also shows that net-zero construction and renewable energy packages are still small market players.

One-third of all single-family builders say that they have a high level of involvement in green building — 19% of them listing more than 90% of their projects as green and 14% reporting that between 61% and 90% of their projects are green. That “high level of involvement” number is expected to rise to 44% of all single-family builders by 2022, with 31% expected to count 90% of their projects as green.

On the multifamily side, interest was even higher. According to the report, 29% of those responding said more than 90% of their projects were green, with another 7% claiming between 61% and 90% of their projects met green standards. By 2022, the proportion of multifamily builders with a “high involvement” in green projects was expected to hit 47%, the report said, a full 40% dedicated to projects of that type.

The online survey was conducted between December 2016 and April 2017 and included a total of 342 respondents — 231 single-family builders or developers, 63 single-family remodelers, and 48 firms specializing in multifamily projects.

“Green” didn’t necessarily mean projects that conform to any particular third-party certification program. The report defines it this way: “Home builders, remodeling/renovation and land development that incorporate environmentally sensitive site planning, resource efficiency, energy and water efficiency, improved indoor environmental quality and homeowner education, or projects that would comply with ICC 700 National Green Building Standard or other credible rating systems.”

The report notes that the trend toward green building has been growing consistently since 2006 and is now “a strong market with vigorous growth expected in the future.”

Builders report that green building still costs more

Single-family builders and remodelers still believe that green building is more expensive than conventional construction, but the number of builders sharing that belief appears to be dropping.

On the new building side, 24% said the added costs of green building would top 10%, while 35% of all single-family remodelers felt that way. While that’s still significant, it represents a decline from the survey results of two years ago, when 35% of new home builders and 47% of remodelers had that perception.

The number of builders who think that cost differences are insignificant (or none) is very small, just 2% for both new-home builders and remodelers.

“The most common perception of builders and remodelers is that green building tends to cost between 5% and 10% more, although more than one-third of remodelers report costs higher than 10% compared with less than one-quarter of builders,” the report says.

Among multifamily builders, 19% report incremental costs of more than 10%, a decline from 27% reported in 2014. The bulk of builders estimated that their added costs were between 1% and 10%, with a full 12% reporting no added costs or only insignificant cost increases.

Will customers pay for green features? Most builders said yes (71% of single-family builders and 66% of single-family remodelers), but there’s also been a 5-point bump in the number of single-family builders who say that buyers won’t pay any more for green features.

The trend was more striking on the multifamily side: In 2014, 19% of builders said customers would not pay for green features, a fraction that has now risen to 30%.

Fewer builders say that green homes are easier to sell. The proportion was 47% among single-family builders in 2014 but only 34% this year.

Why? Green buildings are no longer the market standout they used to be. “Expectations about the energy performance of new homes have become higher,” the report says. “Advantages of other aspects of a green home, such as improved indoor environmental quality, may need to be emphasized in marketing efforts.”

Other findings

Here are some other highlights of the report:

1. What sells. In convincing potential buyers of the benefits of green building, marketing language is everything. The most effective phrases were “long-term utility cost savings” and “operating efficiency.” The least effective: “durable construction” and “sustainable.”

2. What prevents more green building. The most significant obstacles to a greater commitment to green building among single-family builders, in order, were customers not willing to pay additional costs, appraisers not understanding the long-term value of green building, and high first costs. Among multifamily builders, the biggest impediment was higher first costs, followed by consumers unwilling to pay more.

3. Most important features. Among single-family builders, energy efficiency, healthy indoor living environment, and durable/resilient design were the three top practices for improving the performance of green buildings. The least important were a reduced carbon footprint and lower development impact.

4. Renewables. Renewable energy options have made a limited dent in the market. Just 9% of single-family and 8% of multifamily builders incorporate renewables in all of their projects. On the single-family side, two-thirds of all builders (66%) either do not offer any renewable energy systems or offer them only when requested to do so by owners. Three-quarters of multifamily builders reported the same practice. However, the number of builders offering renewables in the next three years was expected to grow. Ground-source heat exchange and solar photovoltaics were the two technologies expected to see the widest acceptance by single-family builders in the next two years.

5. Net-zero. Most builders haven’t ventured into net-zero energy construction. This year, 71% said they had never built a net-zero or near net-zero home (an 8-point decline since 2015). By 2019, 44% of builder said they expected to build that type of home. The findings “suggest a growing market for this approach to building homes,” the report said, based mostly on higher customer demand and the competitive advantages of making net-zero homes available.


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