After 10 years studying Americans’ thoughts on environmental and energy issues, researcher Suzanne Shelton has found that many home builders often make big mistakes when marketing their high-performance homes. Below, the president of Knoxville, Tenn.–based Shelton Group talks with BUILDER senior editor Jennifer Goodman about the green features Americans want—and don’t want—in a home.
What do consumers think about high-performance housing?
They don’t. “High performance” is one of those terms that builders and their advisers have gotten really comfortable with, and, unfortunately, it’s begun working its way into consumer-facing marketing materials. Here’s why that’s unfortunate: Last fall in our ninth annual Energy Pulse study, we asked Americans if they could confidently and correctly explain the term “high-performance home” to a friend. Eighty-four percent of the American population said, “No.”
We must stop using this term unless we’re going to really make the effort (i.e., support with marketing dollars) to make it meaningful to consumers. I love it and happen to think it’s a much better way of communicating the value proposition of a more efficient, sustainable home, but when 84 percent of the population tells us they don’t get it, it’s a great indicator that we’re just talking to ourselves on this one.
What is the best way to market the green features of a home?
Americans care more about comfort, their health, keeping their family safe, resale value, and lower utility bills than they do about “green.” So that’s another term builders should stop using. For years, we tested the term “energy-efficient home” against “green home,” and “energy-efficient home” so handily clobbered “green home” year over year that we stopped testing it. “Efficient” is something they can make sense of. “Green” sounds squishy. But make no mistake: consumers care about many of the benefits of a green home, they just aren’t turned on by the term. So builders should talk about the health benefits (keeping allergens and toxins out of the house), the comfort benefits, and controlling energy costs. They also should talk about resale value. We see that as the No. 1 barrier to Americans truly embracing efficient homes. They believe they’ll pay more for it without getting their money back when they sell it, yet they believe they’ll get their money back for aesthetic awesomeness (granite countertops, hardwood floors, etc.).
A recent UC Berkeley/UCLA study of 1.6 million home transactions found that green labeling improved selling price. Controlling for all other factors, such as location, school district, crime rate, time period of sale, views, and amenities, researchers found that the 4,321 certified energy-efficient homes sold at an average price premium of 9 percent. Builders should start using this fact as part of their pitch to help Americans really embrace the value of a better built, more efficient home.
Can builders profit by offering energy-efficient features?
More than 80 percent of prospective home buyers tell us year after year that, all other things being equal, energy efficiency would impact their home selection. In other words, they are not going to pay a huge price premium or sacrifice the school district they want, but if they’ve checked that box, the argument that the home will be more comfortable, healthier, and less expensive to operate is a great pitch. So, that really just tells you that builders should be able to sell these homes.
Profiting from high-performance housing means really understanding building science so they can offset more expensive items (like spray foam insulation) with reductions in other materials (like wider framing). Groups like the BASF Center for Building Excellence exist to help builders do exactly that—they’ll review plans and point out those kinds of trade-offs so the builder winds up with a high-performance home that he or she can sell and make a profit on.
Can green features make a home more attractive to buyers, even if it raises the price?
The price question is tricky. The consumer segment we call True Believers—about a quarter of the population—has really bought into the idea of more sustainable, efficient, healthier homes. They see it not only as something good for them and their families, but as a way they can do their part to make the world/environment a bit better. They tend to be on the affluent side and consistently tell us they would pay a price premium for a home with sustainable, efficient features. Our guess is the most you can get is a 5 percent to 10 percent price premium, keeping in mind that we’re all wonderful people in the future and we have a habit of saying one thing and doing another.
Bottom line, though, a home with a little solar, rainwater reclamation, LEDs, a tight building envelope, and Energy Star-labeled products will be very attractive to this consumer segment, and once they’ve seen that possibility, they’ll be hard pressed to convince themselves to buy a different home that doesn’t feature all of that. The one caveat is that the home also has to be very attractive. Because True Believers skew more affluent, they like—and expect to have—beautiful things.
Shelton Group is an advertising firm that is entirely focused on motivating mainstream consumers to make sustainable choices. The firm tracks consumers’ attitudes, beliefs, and behaviors through four annual, proprietary studies: Utility Pulse, Eco Pulse, Green Living Pulse, and Energy Pulse.