The decision to offer homes that are high-performance, energy-efficient, non-toxic, sustainable--whatever the preferred term--involves many considerations and builders must weigh expenses and impediments against potential benefits. Of course, green building techniques and products reduce a home’s environmental impact as well as owners’ operational costs, but what do they do for a builder’s bottom line? In this special package, BUILDER presents a cost versus benefit analysis exploring the economics of green home building.

It’s true that better built houses take more time to plan and execute and sometimes require skilled labor and subs. This presents a big problem in hot markets, where a lack of qualified workers has led to labor shortages. Plus, correct installation is crucial for the smooth operation of many high-performance systems. “If a green product is not installed correctly it most likely won’t do its job,” says building scientist Carl Seville.

The Payoff: Fewer Callbacks

Green homes incorporate best practices, so there's a strong correlation between high-performance construction and reduced customer complaints. In one study, Harvard University's Energy Technology Innovation Policy research group surveyed builders who participated in the DOE's Building America program and found that participants experienced an average of 5 percent to 10 percent fewer callbacks. “One participating builder reported a 50-fold reduction in the incidence of pipe freezing, a 50 percent reduction in drywall cracking, and a 60 percent decline in callbacks," Harvard researchers state.

Beazer Homes' Brian Shanks noticed the same payoff when the company switched to building all Energy Star-certified homes in 2009. "It's helped us construct a better barrier to the elements," the purchasing manager explains, “and at the end of the day, from the warranty side, we've seen great benefits."

Todd Usher of Addison Homes, spends more than $4,000 each on sealed, conditioned crawlspaces. He places mechanical systems there to optimize their operation and humidity control. Clients like having a clean, accessible crawlspace for storage, and Usher likes the way it cuts down on flooring issues such as cupping and warping. "It's a significant cost, but we feel pretty strongly in the benefit," he says.

Residential developer Austin Trautman agrees, saying that low-maintenance construction sells in his market. “Durability is a big deal in Phoenix, and our houses take care of themselves," he says.

Phoenix-based developer Austin Trautman of Vali Homes says the biggest challenge with his first net-zero prototype house was getting the HVAC installers to understand the concept of mini splits and energy recovery ventilation. “It’s actually a simpler system with straightforward installation,” he says, “but they just couldn’t figure it out.” 

Subs who don’t meet standards at Addison Homes, a South Carolina home building firm, are quickly dropped despite a severe labor shortage in the area. The company also refuses to pay more for quality workmanship—instead it’s expected of all subs. “As our volume has ticked up we’ve been able to convey that a little easier,” says Addison’s owner Todd Usher.

The good news is that once a sub learns how to install a new product as quickly as the old one, labor costs come down, says Cliff Majersik, executive director of the Institute for Market Transformation. “Once you know how to do it, an energy-efficient house can even be less expensive to build.” Plumbing is a good example: Installing dual-flush toilets and tankless water heaters can be tricky the first time around, but once the plumber understands the system, less piping can be used and material costs go down. 

To avoid problems on site, many builders hire a Home Energy Rating System (HERS) or other green building professional to consult on a house before starting construction. “HERS raters can provide value added at the front end,” Majersik explains. Michelle Desiderio of Home Innovation Research Labs suggests working with a national or local green building program to take uncertainty out of a job. “Verification becomes a quality assurance process,” she explains. “It means there will always be an additional set of eyes on the house.” National Green Building Standard raters come to each jobsite at least twice—once before the drywall is installed and once after construction is complete.

In addition, manufacturers are a good source for low-cost or even free training sessions. KB Home works with its suppliers to offer training for subs on how to install new products and technologies, says Tom DiPrima, executive vice president for the company’s Southern California division. During construction of its recently completed Double ZeroHouse, KB offered its HVAC partner on-site instruction for installing the home’s PowerPipe heat exchanger that recovers energy from waste hot water. After the training, the HVAC company changed its projected installation time for PowerPipe from 20 to two man hours, reducing the cost from close to $1,000 to just $100 or $200, DiPrima says.