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Green Homes: A Hot Trend Among Homebuilders

Adam D. Lustig

Following the increase of green buildings in the commercial real estate sector, green homes have become a hot trend among homebuilders. According to the “Green Multifamily & Single Family Homes: Growth in a Recovering Market” report released by McGraw Hill Construction, which surveys members of the National Association of Home Builders:

  • 62% of firms building new single family homes report that they are doing more than 15% of their projects green. By 2018, 84% of them expect this level of green activity.
  • 54% of firms building new multifamily projects report that they are doing more than 15% of their projects green. There is also growth expected, with 79% reporting the same level of activity anticipated by 2018.
  • In the single family market, 19% of firms build more than 90% of their projects green. By 2018, that percentage is expected to double (to 38%).

Increased Consumer Demand is Driving Factor Behind Growth In Green Home Construction

That is a dramatic shift in the single family market. What has led to that shift? According to Harvey Bernstein, Vice President, Industry Insights and Alliances for McGraw Hill Construction, “Greater consumer interest in green homes has contributed to the ongoing growth, leading us to anticipate that by 2016, the green single family housing market alone will represent approximately 26% to 33% of the market, translating to an $80 billion to $101 billion opportunity based on current forecasts.” With the demand for the new homes relatively flat, homebuilders will be positioning themselves to take advantage of that opportunity.

One such homebuilder is DJK Custom Homes out of Chicago. DJK is building an eco-smart home in Naperville, Illinois. According to Kevin Kittilsen, Vice President of DJK, “The DJK eco-smart home in Naperville is the first of its kind in the area… We designed this home to be healthy, efficient and sustainable. We really had five core areas in mind: nature, resource efficiency, energy efficiency, water efficiency and indoor air quality.” The home is pending LEED Platinum and NAHB Emerald level green certification.

According to the Florida Green Building Coalition website, GuildQuality, a leading provider of customer satisfaction surveying for the residential building industry, recently conducted a national survey of homeowners who purchased a National Green Building Standard certified green home built within the past three years. The study, commissioned by the National Association of Home Builders, aimed to uncover how green homeowners feel after purchasing their home; primarily focusing on their overall satisfaction and whether they would recommend purchasing a green home to others.

Key findings of the study reveal:

  • 94% would recommend a green home to a friend.
  • 92% would purchase another green home.
  • 71% of respondents believe that green homes are, overall, of higher quality.
  • 55% knew their home may have cost more than a non-green home, but believed the benefits outweighed the cost.
  • 90% were satisfied knowing they “did the right thing” in buying a green home.

Homeowners also provided their feedback on what influenced their decision to purchase a green home, and the sustainable features they value most. According to respondents, low utility bills, energy efficiency and better insulation topped the list of the green-related aspects that most satisfied homeowners.

Ultimately, consumer demand for and interest in green homes will be a key factor in the increase in green home construction. Homeowners desire to live in more environmentally friendly and energy efficient homes, and at least in one study have expressed a willingness to pay more for those benefits. However, homebuilders need to determine how much more consumers are willing and able to pay for those benefits.

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