Why Building Green Is Worth the Investment

The 2020 Green Single Family and Multifamily Homes SmartMarket Brief, released before the onset of the COVID-19 crisis, found that most single-family builders (86%), single-family remodelers (72%) and multifamily builders/remodelers (74%) agree that building green costs more than building a traditional home, with the majority reporting a 5%-10% premium. These responses are similar to those reported in the 2017 SmartMarket Brief.

Even the majority of green builders agree there is a cost premium, although the percentage who find that it does not cost more to build green (12%) is three times more than those with low green involvement (4%). These data indicate that — once builders conquer the learning curve, have teams that are comfortable with and experienced in green building practices, and realize economies of scale where possible — green building can be done cost effectively.

Although some green homes may come with a cost premium, single-family builders and remodelers both perceive that owners of green homes experience value from their homes that typically outweighs any additional original cost. About 70% believe that customers will also pay more for these homes and nearly half think they will pay 5% or more, enabling builders to recoup the additional initial costs some encounter when building green.

[caption id="attachment_18058" align="alignright" width="212"] Chart source: Dodge Data & Analytics, Green Single Family and Multifamily Homes 2020[/caption]

More than half of single-family builders and remodelers cited greater comfort and a better occupant experience as ways to add value that recoup the initial investment; improved health and well-being was also cited by 43% of builders and 59% of remodelers. These findings parallel those reporting that techniques supporting healthier indoor living environments are among the top practices to improve green home performance.

The housing sector is likely to be a key factor in rebuilding of the economy from the impacts of COVID-19. After the extended period most of the country has spent homebound this spring, homes focused on comfort and health may hold added appeal for home buyers. Green builders are positioned to meet that demand.

Jerud Martin, co-owner of Urban NW Homes, has been building healthier homes for more than a decade. Since the onset of the coronavirus, his firm has seen an explosion in inquiries about these types of strategies.

"We have seen an increased demand for HVAC technology that promotes healthy indoor air," he stated. "Extremely efficient furnace systems with HRV [heat recovery ventilation] and HEPA filters have been our standard for quite some time, when we help clients with respiratory illnesses or allergies. Now we are getting more requests for ductless heat pump systems, combined with HRV and 'Air Scrubber' technology, where we minimize the duct work, recover some energy used to condition the indoor air and treat fresh air so it has the ability to neutralize allergens and kill bacteria on solid surfaces, such as counters and door handles in our homes."

[caption id="attachment_18060" align="aligncenter" width="505"] Chart source: Dodge Data & Analytics, Green Single Family and Multifamily Homes 2020[/caption]

The report — the latest in a series of studies conducted by Dodge Data & Analysis, in partnership with NAHB — also contains results on builders' pre-coronavirus perspectives on green-building market activity, green-home marketing, drivers and obstacles for green building, and the use of green products and practices. The full report is available for free; download at nahb.org/smr.