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The True Cost of a Home: How Green Trends Might Save the Housing Market

| Saturday December 20th, 2008 | 0 Comments

green-home.jpgThere’s a paradigm shift going on in the US real estate sector. Yet will home owners justify paying extra for green building if the economic situation continues to deteriorate?
The US homeowner population has been silently suffering for years now. Numbers from the Center for Housing Policy show that between 1996 and 2006, homeowners have been spending an increasing portion of their income on housing (the current crisis notwithstanding). A household would typically spend 21.5 percent of its total income on housing in 1996 and this had risen to 26.2 percent in 2006. Nearly a sixth of homeowners were far worse off, spending more than 50 percent of their disposable income on their homes in 2006. Another harrowing fact: housing expenses went up 64.9 percent over the ten year period, while homeowner incomes increased by only 36.3 percent.
It makes you wonder how sustainable the sustainable building wave will prove to be. “In order to avoid repeating the dire situation so many home owners are in today, it is critical that our thinking evolve around home costs,” said Michelle Kaufmann, founder and chairman of Michelle Kaufmann Designs, an architecture firm specializing in sustainable designs. Kaufmann’s recently published white paper “Redefining Cost: A Beacon of Hope Shines through Housing Market Gloom” (PDF link). The study hones in on the current troubles in the US housing industry outlining why it is imperative to consider cost structures in a changed perspective.


“Sticker price and mortgage payments are only one part of the equation. Once we start to equate monthly costs with the true costs of a home, the positive impact will reverberate among home owners who will be less likely to find themselves living in homes they cannot afford and more likely to choose green homes which are often more affordable in the long-term,” says Kaufmann.
So, what is the true cost of a home? Kaufmann makes the case for housing valuations that go beyond cost per square foot, the many factors tied to the monthly cost of owning and operating a home, including property taxes, insurance premiums, utility bills, and the cost of maintenance. She makes a comparison between the monthly costs of a green home and a comparable conventional home. And demonstrates the financial benefits of green home ownership–despite the premium attached to its sticker price.
The main difference between the spending pattern in a green home and the expenses of a regular household boils down to resource consumption. Another big expense item is waste treatment. And the time it takes to build a green home is 50%-75% less compared to building a conventional building, Kaufmann says. But that’s based on the usage of her own products only. Kaufmann runs a full service design/build architectural firm which has designed an impressive portfolio of seven prefab modular configurations. The prepackaged green solutions are building blocks to create eco-friendly homes and multi-family developments which bear such ephemerous names as Glidehouse, Sunset Breezehouse, Sidebreeze, mkLotus, mkLoftTM, mkSolaire, and mkHearth–as well as custom homes and larger multi-family and community developments.
“Because green home building embodies the principles of financial and environmental sustainability, today’s chaotic state of affairs is just what is needed to catapult green homes into the mainstream market,” says Kaufmann. “Judged on its monthly cost, a green home will likely prove the most economical purchase a home buyer can make.” Other US real estate developers corroborate this. Ed Burr, a Jacksonville developer who has in recent months launched a GreenPointe Holdings LLC, says that he paid a 15% premium on his 100% zero carbon offices. But then, the facility is going to be a lot cheaper to maintain than a conventional building. Rooftop air conditioning is low on energy use, climate neutral carpets line the floors, the bathrooms have been fitted with double flushing toilets which cut on water bills, appliances in the kitchen are Energy Star rated and the lighting is done with energy saving compact fluorescents. Bur is embarking on the development of economically feasible eco communities throughout the Southeast and Texas, collaborating with public/private partnerships for infrastructure.
A living example of a community which uses only a fraction of the power that regular communities use is Beddington Zero Energy Development, or BedZED, a London community. BedZED, designed by Bill Dunster Architects and developed by Peabody Trust and the BioRegional Development Group, has been around since 2002. The community provides work space and living facilities for 100 people. The heating requirements of BedZED homes are around 10 percent of those of a regular home. Can you believe it? Water usage is cut down by 50 percent. Yet all the residents live normal, comfortable lifestyles.
So there’s something to be said for green pioneering in the face of adverse circumstances. Construction of green homes in the US is on the rise. So far this year, green building has risen to 6 percent compared to 2 percent in 2005, according to a report by McGraw-Hill Construction entitled In “The Green Consumer: Driving Demand for Green in Homes. The increase represents $5 billion in market value. Future projections are that by 2010, 10 percent of the building sector will have adopted ecological principles. That’s a handsome $60 billion worth of real estate.


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