'Building green' is Energy Star ratings for buildings' energy use and it's U.S. Green Building Council's Leadership in Energy and Environmental Design (LEED) benchmark requirements for more sustainable and conservation-minded construction materials, designs and technology.
Building green is a holistic effort including energy conservation designs and sustainable materials and techniques, but it is also mindful of land use and preservation, building workforce housing close to jobs and including transportation choices.
Building green goes beyond sustainability to "surpassibility," ecological design that integrates itself with living processes, not just to reduce harm on the environment, but to revitalize and invigorate the natural habitat with responsible human interaction.
Sprouting new branches of definition in the evolutionary process of defining itself, green building isn't just building codes, development rules and planning strategies.
Building green is a movement that's gaining momentum, in part, because it isn't always easily defined, relegated to single set of standards, or pigeonholed as a trend.
However, the movement's freewheeling approach is having some value-based downsides in a housing market where uniform standards and guidelines are the norm for establishing property values.
That doesn't mean building green isn't here to stay.
It is.
What's driving the green trend is the growing concern over global climate change; ever higher energy prices; consumer demand for design, products and services that promote health and wellness; and greater proof green building does not have to cost significantly more to build. Even when it does cost more, inherent energy savings quickly offset those upfront costs, according to the Urban Land Institute, which recently convened a "Developing Green" conference in Pittsburg, PA.
Most green building, however, is a commercial effort.
"It's more on the commercial side where cost savings, capital improvements are all very much inherent in the appraisal process. On the residential side, it's still a pretty new thing," says Bell Consulting's Randall Bell, a real estate appraiser and realty economist from Laguna Beach, CA, who researches property value factors from a host of perspectives from locations to disasters.
ULI conference participant Shyam Kannan, director of research and development at RCLCo in Bethesda, Md., cited its home buyer preference survey which revealed only 10 percent of the respondents based their home purchasing decision on energy savings; 3 percent based their decision on the use of green materials in the construction.
"An overall lack of consumer demand for green housing has -- as yet -- kept the movement from gaining the same amount of traction in the residential sector as it currently has in the commercial sector," ULI reported as a consensus among conference participants.
Apparently, even the potential for greater property value hasn't swayed consumers in droves.
As long ago as the late 1990s, research by Rick Nevin, at ICF International determined for every $1 you save on your annual fuel bill, your home value will jump by $20 or more. That savings could be achieved by performing energy-efficient or "green" home improvements.
But there was a catch. A Catch 22.
- Appraisers said they didn't calculate energy improvements in terms of increased value because standards didn't exist to accurately measure increased value from energy-related upgrades.
- Standards didn't exist, because the data base of home owners with energy efficient home improvements was too small to consider during a typical home sale, refinance or home equity loan appraisal.
- Caught in the vicious circle, home owners weren't compelled to help increase the data base by completing more energy efficient home improvements because they couldn't enjoy any increased property value. Traditional, value-tested home improvements including kitchen and bath remodels, master bedroom suite redos, room additions and other popular alterations were simply a better deal.
Change has been slow.
"It's (green improvements) not visibly affirmable. If you walk into a home and see an extra bath, it's visible. With energy efficiency the only time you are cognizant of it is when you pay the bill. That's real, but it's not a selling point, said Ted Faravelli, Jr., a San Jose, CA-based expert witness, forensic real estate analyst and managing director for the California Association of Real Estate Appraisers.
Faced with rising fuel costs, home owners are more energy-saving conscious, and they make more energy efficient home improvements than ever, largely to save money, but without the added benefit of increased property value.
An appraiser can make an adjustment for major energy-related improvements, say solar panels, solar water heating and the like, but smaller home improvements that generate energy savings still do little to add to a property's value.
The Catch 22-Factor has kept consumer demand for green building relatively low, compared to the commercial effort. The residential sector constitutes a mere 2 percent of the green building industry, according to ULI.
"I think the trend, over time, will see more and more of that (residential green building) coming to the forefront. It's inevitable," says Bell.
During the conference, Kannan cited another of its surveys in which 91 percent of prospective buyers said they would pay extra for amenities related to health and fitness, and 41 percent said they would do so even if they could not recoup their costs.
Kannan described three groups of buyers most likely to propel the green home building industry:
- "Forest Greens" have little purchasing power, but buy for altruistic reasons.
- "Greenback Greens" are interested, but price sensitive and buy green versus non-green based on cost factors.
- "Healthy Green" are highly educated, more affluent "cultural creatives" who equate energy conservation with healthy living.
The "healthy greens," says Kannan, will drive the residential market for green building.
