Chinese astrology may say that this is the year of the fire dog, but new research from McGraw-Hill Construction suggests that 2006 is actually the year of the green home builder. Harvey Bernstein, vice president of industry analytics and alliance for McGraw-Hill Construction, says that 2006 is the tipping point for green building to go mainstream. “In this year of ‘06, we expect that we'll see a transition where there will be a majority of builders building green,” he says. “… It's just a matter of when in 2006 it will happen.”
Initial results from the McGraw-Hill Construction survey were released at the NAHB's green building conference last month, with the full report due out in May. Responses from 363 NAHB members revealed that in 2005, green builders' ranks swelled by 20 percent. That number is expected to surge by at least another 30 percent by the close of 2006.
Once that statistical threshold is crossed, Bernstein suspects that green building will take market share even more rapidly. He predicts that by 2010, green building will make up 5 percent to 10 percent of all residential construction activity, accounting for a value between $19 and $38 billion. In 2005, 2 percent of starts were green, and the market share totaled $7.4 billion.
The top reason most builders—92 percent—are considering going green is because “it's the right thing to do,” Bernstein says. Increases in energy costs and utility rebates; growing consumer demand; superior home performance; changes in codes and regulations; and a more competitive advantage were additional factors.
But survey respondents expressed concern over its viability. Eight-two percent identified starting costs as the leading obstacle to green building while 79 percent worried about the willingness of consumers to pay more for a green home.
Bernstein says a green commitment adds around 8 percent to the construction costs. However, that estimate assumes that the home has nothing, not even basic energy features. He says in reality, most builders already include products like Energy Star appliances in their homes, so the more accurate cost is roughly 3 percent to 5 percent more.
Nico Sarelli, a spokesperson for Sutton Hill Homes, a small builder in White Plains, N.Y., says that the company switched to using only green construction materials because builders started to demand it. He says smaller builders are reacting more quickly to this changing consumer preference than bigger regional and national players. “They are used to doing it the old-fashion way,” he explains. “But you've got to keep up with the times.” NAHB's Consumer Preference Survey 2003-2004 reported that 62 percent of respondents said they would pay between $5,000 to $10,000 extra for a home that would save them $1,000 annually in utility costs.