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More Builders Go Green

comments (0) June 10th, 2014 in Blogs
ScottG Scott Gibson, contributing writer

Increased buyer interest in green building is helping to make it a more important part of the housing market, according to a new report by McGraw Hill Construction.

The number of builders of single-family homes who said that more than 90% of their projects are green grew from 12% in a 2011 to 19% this year and is projected to rise to 38% by 2018. The percentage of builders who said less than 16% of their projects were green shrank proportionally, from 63% in 2011 to 38% in the most recent study. That number should fall to 16% by 2018.

"These findings demonstrate that among home builders, and increasingly among single family remodelers, green is becoming the standard way to build," the report says. "This wider adoption of green may help push the single family home market to become even greener in the future, with homes increasingly needing to be green to be competitive."

By 2016, the report continues, green single-family homes will represent between one-quarter and one-third of the market, "translating to a $80 billion to $101 billion opportunity based on current forecasts."

In multifamily building, the number of builders making more than 90% of their projects green was much lower than on the single-family side, remaining at a flat 6% between 2011 and 2013 and projected to grow to an estimated 18% by 2018. Those making less than 16% of their projects green dropped from 69% in 2011 to 46% in 2013. That was expected to decline to 21% by next year.

The authors of the report conclude that while more multifamily builders are becoming experienced with green practices, they are not choosing to specialize in it.

The report is based on an online survey of 116 single-family home builders, developers, and remodelers, along with 38 multifamily builders, developers, and remodelers. The survey was conducted over a four-month period, from December 2013 to March 2014.

A "green" home was defined as "one that incorporates environmentally sensitive site planning; resource efficiency; energy and water efficiency; improved indoor air quality; and homeowner education or projects that would comply with the ICC 700 National Green Building Standard or other credible rating system."

A variety of factors aiding the move to green

Builders and developers said the three most important factors in their adoption of green-building strategies were increasing energy costs, changes in codes and regulations, and wider availability and lower prices for green-building products.

Builders also found that more buyers were willing to pay higher prices for a green home in 2013 than in 2011. The percentage of single-family builders who said customers would pay more grew from 61% in 2011 to 73% in 2013. On the remodeling side, that grew from 66% to 79%.

The number of builders incorporating renewable-energy systems into their projects also is on the rise. In 2013, 8% of builders surveyed said they included renewables on all of the projects; this is expected to grow to 20% by 2016. The proportion of builders offering renewables as an option was 34% in 2013 but expected to increase to 40% by 2016.

One source of frustration for both homeowners and builders has been that green features aren't always recognized by real-estate appraisers or lenders, and that may be slow to change. The report says appraisers now have better tools at their disposal, but it adds that a relatively small number of multiple listing services--185 of the country's nearly 850 total--provide fields where information about green-building features can be added.

One Florida banker was quoted as saying that many appraisers show limited interest in making green features part of their reports.

There are many other details available in the 64-page report, which can be downloaded for free. If you don't already have an account with McGraw Hill, you'll have to create one to get access to the report.

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