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.
There’s not one simple approach to attracting buyers interested in high-performance homes, industry experts say. Much of it depends on location and customer demographics.
This is true for Beazer Homes, which constructs houses in dozens of markets. Customer demand for green features varies by climate zone, what’s popular in different regions, and affordability of products, says Beazer purchasing manager Brian Shanks. “There is not a specific green feature that makes sense in all markets,” he says. (Roll over the chart above for a breakdown of what consumers want in a green home.)
Green builders would be smart to devote at least some of their marketing efforts to older buyers, says researcher Suzanne Shelton, because saving money on energy resonates with this group more than any other demographic. South Carolina builder Todd Usher also has found this to be true.
“Our value proposition tends to attract baby boomers more than any other group,” he says. “They are perhaps building their last house and can appreciate the longer-term value of investing in features like solar.”
On the flip side, millennial buyers also are interested in sustainability, but most of them don’t expect—or can’t afford—to pay more for it, Shelton says. They expect builders to figure out how to offer high-performance homes without high price tags and they also love technology-related features. “If builders can figure out how to do starter homes that have green and tech features baked in at no extra cost to offer to this audience—that would be a home run,” she says.
Women often make the majority of home-buying decisions for a household so it makes sense to gear sustainable message to them. Female home buyers overwhelmingly talk about about the importance of the health and happiness of their family, says Shelton. “They are driven by their kids,” she says, particularly women in the Midwest and South. “So tell them this will be the coziest and most comfortable place for you and your family to crash on the couch and watch a movie.”
There is a subgroup of green-minded customers who are turned on by the technical aspects of a high-performance house. These "techies" are into home automation and controls including security systems, energy monitoring, and programmable thermostats. “They want comfort but they also want to see their energy consumption and costs at the touch of a finger,” says Shelton.
In terms of geography, different messages work better in some areas of the country than in others. For example, in the Southeast and other areas where coal is plentiful and cheap as a source of home heating and electricity, the cost of power is not a big concern. So instead of talking about energy efficiency, “we have several builders who are very successful promoting their houses from a quality perspective,” says Michelle Desiderio of Home Innovation Research Labs. But in the Northeast where energy bills are some of the highest in the country, builders should lead with the money-saving aspects of efficient homes, she adds.
Water conservation is top of mind for home buyers in drought-prone areas in the West and Southwest. In Hawaii, Desiderio has found that consumers are big on solar features and energy efficiency not only to save money but to delay building new power plants which would spoil the natural beauty of the islands.
Experts warn that talk of global warming, climate change, or even just saving the planet is a turnoff for many buyers except on the West Coast, where builders will find the most buyers who are driven to purchase a green home purely for environmental reasons. “They feel a responsibility to do the right thing, so your message to them should be ‘Be a good guy—buy this home,’” says Shelton.
But no matter where you sell or who your target market is, high-performance features can set you apart from the competition. "We haven't yet reached the tipping point where everybody can do this, so it's a way for builders to differentiate," says Desiderio. "I haven't come across a market yet that doesn't want this type of home at all."