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Studies Show Green Housing is a Solid Investment

Along with the stock market achieving record highs earlier this year, the housing market is showing its strongest performance in the past seven years. In New Hampshire, single family home sales have increased almost 8.5 percent, and condos 18 percent, when compared to the same time last year. As properties switch to new owners and people prepare their homes for sale, the value of sustainable building, technology, and labeling is an important consideration for everyone in the market.
A home is the most valuable investment most of us will ever make. Recent studies show that certifying your residence as sustainable can add 9 percent to its value. On a $300,000 property, that is $27,000. In their 2012 Values of Green Labels in the Californian Housing Market paper, Nils Kok and Matthew Kahn focused on homes in the Golden State that had achieved LEED for Homes or GreenPoint Rated status. These properties, close to transportation routes and shopping centers, were constructed with non-toxic building materials and contained water efficient features. The traditional rational for making a house green has been to conserve resources and save money. It now appears these homes will fetch more money when they are sold. In fact, the study demonstrates that the increased revenue made when a certified house sells is more than the savings that come from its environmentally conscious attributes. It seems that the peace of mind some consumers in California gain from owning a green home is worth an extra 9 percent even if they will not recover the extra money they paid with the savings the house will generate.

It is not just home owners who are excited by green building. Even when the $2500 to $3000 cost of LEED residential certification is factored in, the increased value achieved through official recognition is very attractive to investors. The Urban Land Institute and PWC’s recent 2013 paper, Emerging Trends in Real Estate 2013, focuses much of its efforts on real estate investment and says that green building is playing an increased role in both the residential and commercial markets. While they believe overall new development will be limited, they state that “trends point to more environmentally friendly, sustainable buildings and a more efficient use of space. Green developers continue to embrace this pursuit and to adapt and conform to new demands from consumers.”

Green homes are certainly in demand. McGraw Hill’s New and Remolded Green Homes: Transforming the Residential Marketplace projects a five-fold increase in new green home construction between 2011 and 2016. It also indicates the green home market accounts for an incredible $114 billion opportunity in the coming years. As the construction industry plans for the future, up to one-third of builders believe they will be dedicated to green building by 2016.

If an increased sales price and a higher demand for green homes is not enough to entice home owners to make their houses more sustainable, there are an ever growing number of government incentives designed to encourage green building practices.  In some instances, government agencies have gone further than providing incentives. The U.S. Department of Housing and Urban Development (HUD) has declared that those victims of Hurricane Sandy who receive money to rebuild must follow a green building standard.

While California may be leading the way, the rest of the country is not far behind in their green building interest. These initial studies have shown that increased demand for green homes is playing an important part in the current housing market. As government incentives and green home prices continue to increase, we will see green building become the mainstream way to build.

Matt Courtland is a real estate professional focused on the green home and commercial markets. His interest in saving money and resources through conservation and technology allows him to suggest simple and effective methods for making a  property more appealing to today's buyers or a new home more comfortable and efficient. Matt currently works for Keller Williams Coastal Realty and is required by law to give you their address and phone number so here they are: 501 Islington Street Portsmouth, NH; 603-610-8500.

3p Contributor

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