Home buyers do like and want green homes and communities once they see and experience them. It's just that green is hardly the most important item on their home buying agenda, especially since many of them lack a clear idea of what “green” means. Moreover, without a good grasp of green, most buyers are unwilling to pay more for it, according to RCLCO Real Estate Advisors' Measuring the Market for Green Development study.
However, there are ways to sell buyers on green without shoving the environmental benefits down their throats, says RCLCO vice president Shyam Kannan. And there are encouraging signs that some buyers are willing to pay more for green homes and communities—once they see them and understand what these communities and homes can mean for their quality of life. But just how much more remains an unanswered question.
Despite the unknowns, one thing is clear: Green features can prove to be a deciding factor in a purchase decision, says Kannan. “So if it becomes a question of gaining market share or volume or pace, why wouldn't that translate into dollars?” he asks.
GREEN COMMUNITIES WORK Although there is a paucity of hard data on how much of a premium, if any, green amenities can command, there are a number of examples of green developments that have succeeded largely on the merits of their “green-ness.”
One such community is Issaquah Highlands near Seattle.
It wasn't easy planning a green, or sustainable, community in the mid-1990s, even in the famously environmentally conscious Pacific Northwest, says Judd Kirk, who was CEO of Port Blakely Communities when it first began to develop Issaquah Highlands. Retired, he now holds the title of CEO emeritus and serves as a senior advisor to the company.
“We were kind of a voice in the wilderness at the time,” he says. “It was a gamble; we were really out there in those days.”
But the bet paid off. “Not only in premiums, but also in terms of volume and absorption,” Kirk says. “We have the same issues everybody else has, some foreclosures and short sales, but much fewer, and we have rebounded faster. I think the values have held up better than other communities.”
The community started selling slowly on purpose in the late 1990s. The first phase of 600 homes was relatively small, as a new interchange needed to be completed before more lots would come online. “We didn't want to sell out and then go dark,” says Kirk. Once the interchange opened in 2003, there were 250 lot sales. The next year, it climbed to 600. “For years, we were not the highest-selling community, but for two or three years in a row we were,” says Kirk.