Sustainability 1: Buying Home With Sustainable Features: Consumer Preferences

After buying a home with solar panels and other green goodies, Diego Villar has become the envy of his foursome.

“I golf every Sunday. The people I golf with thought I was crazy at first, but now they’re talking about getting solar panels themselves,” Villar said.

Villar lives with his wife and twin toddlers in the Chicago suburb of LaGrange. Sustainability “factored in a lot” during the search for a new home, Villar said. Going green was a matter of principle — “I’ve always been pro-green” — but also a matter of money and comfort.

Villar’s home is nearly 3,600 square feet, yet he spends 30 percent less for electricity and 40 percent less for natural gas than he spent when living in a 2,000-squarefoot- condo — all thanks to energy-efficient design and construction.

Built by Bright Leaf Homes in LaGrange, the house’s sustainable components include (besides solar panels) staggered studs that allow for a continuous blanket of insulation, smart fans with humidity indicators that sense when to turn themselves on and off and a tankless water heater.

“I wish we would have done even more,” Villar said. “I’d love to get to a point where I buy another house and have a roof garden.”

Not everyone is as all in with sustainability — a.k.a. going green — as Villar. Only nine percent of REALTORS® find consumers are “very interested in sustainability,” according to a new REALTORS® and Sustainability report published in April by the NATIONAL ASSOCIATION OF REALTORS® (NAR).

While that’s a distinct minority, 51 percent of REALTORS ® surveyed in the report find consumers are “somewhat interested” in sustainability. A green stampede? No. But it does indicate that most homebuyers have sustainability on their radar when looking for a place to live.

Sustainability is a conservation-based approach to supporting the permanent economic, environmental and social health of communities as they grow and evolve. Energy efficiency is a key component as it reduces reliance on fossil fuels, cuts carbon emissions and trims utility bills. Another pillar is walkable development, which not only addresses the fossil fuel/carbon emissions conundrum, but also lowers transportation costs.

Measuring demand for sustainability can be tricky because homebuyers don’t usually say they want “sustainability” even though they value features consistent with sustainability, said Daniel Geddis, a broker’s assistant with One Mission Realty in San Diego and a REALTOR ® with NAR’s Green Designation.

“They’re not thinking about it in those terms, but it’s what they want,” he said.

In sharing their perception of consumer preferences related to sustainability, REALTORS® said that a comfortable living space is by far the most wanted home feature with 71 percent saying clients consider it very important and 24 percent saying clients consider it somewhat important.

Other responses include:

• Commuting costs — 18 percent very important; 40 percent somewhat important.
• Efficient lighting — 12 percent very important; 38 percent somewhat important.
• Smart/connected home — 8 percent very important; 32 percent somewhat important.
• Green community features (bike lanes, green spaces, etc.) — 8 percent very important; 29 percent somewhat important.
• Landscaping for water conservation — 8 percent very important; 24 percent somewhat important.
• Renewable energy systems — 3 percent very important; 20 percent somewhat important.

Home builders and remodelers expect sustainability to become an increasingly prevalent feature in construction, according to the “Green and Healthier Homes” study published in 2015 by the National Association of Home Builders (NAHB).

The study found that more than half of home builders (54 percent) used green practices and products in 16 percent or more of their new homes while 39 percent of remodelers used green practices and products in at least 16 percent of their work.

Nearly all home builders (81 percent) said they will utilize green practices and products in at least 16 percent of the homes they build by 2020 — with 51 percent going green in at least 60 percent of their projects.

Three-quarters of remodelers (74 percent) said that at least 16 percent of their work will involve green practices and products by 2020 — with 36 percent going green in more than 60 percent of their work.

Nearly all home builders (81 percent) said they will utilize green practices and products in at least 16 percent of the homes they build by 2020 — with 51 percent going green in at least 60 percent of their projects.

Three-quarters of remodelers (74 percent) said that at least 16 percent of their work will involve green practices and products by 2020 — with 36 percent going green in more than 60 percent of their work.

While green homes can cost less to operate, they can cost more to build, which builders and remodelers named as the chief challenge to the growth of the green real estate market.

Three-quarters of home builders and remodelers reported building green has an incremental cost of 5 percent or more over traditional construction. However, a solid majority reported that customers are willing to pay more for green features.

The study found the greatest demand for green homes comes from consumers aged 55 plus, not millennials as might be expected. One possible takeaway is that greater familiarity with home features leads to a greater emphasis on home performance. As sustainability-minded millennials become home owners, they could generate even greater green demand in the future.

When asked to name the green benefits customers care about most, home builders and remodelers said energy efficiency was mentioned most frequently by every age group — 18-35 (70 percent), 36-54 (81 percent) and 55 plus (81 percent). Healthier indoor living environments and durability/resilience were either second or third depending on the group.

Five of the six green products and practices considered most important by home builders and remodelers involve energy efficiency. Properly sized and installed HVAC systems topped the list. Durable materials were number two followed by highly efficient HVAC/water heating systems, code-exceeding insulation, energy efficient appliances and code-exceeding windows. Other green products and practices listed were increased moisture control/ventilation, water-conserving appliances, efficient lighting and water-conserving plumbing fixtures.

A study by the nonprofit Demand Institute in New York suggests builders and remodelers are playing catchup with the demand for green homes. “The Housing Satisfaction Gap” looked at 52 different housing characteristics — everything from updated kitchens to more storage — and found that energy efficiency was the biggest unmet housing desire among those surveyed.

The 2014 study found that 71 percent of households described energy efficiency as very important, but only 35 percent described their home as energy efficient.

As a result, consumers are looking for ways to be more efficient — 76 percent said they planned to do something to make their home more energy efficient in the next three years, according to the study.

“Energy performance ties in well with ... meeting demand for healthy and comfortable homes, demonstrating a person’s values and improving month-to-month affordability,” said Doug Miller, a senior associate with the Rocky Mountain Institute (RMI), a nonprofit based in Basalt, Colo., that promotes energy efficiency and renewable energy.

While monthly savings can amount to $100 or more, consumers are more focused on comfort and health, Miller said. The bulk of energy performance improvements — be they high-performance HVAC systems, tighter building envelopes or increased levels of insulation — contribute to comfort and health by maintaining desired temperatures, dampening outside noise and/or reducing moisture problems that aggravate asthma and allergy symptoms, Miller said.

Current demand for sustainability comes against a backdrop of stable energy prices. “Buyers haven’t felt the pain point of energy costs yet,” said Rick Thompson, a REALTOR®, an NAR Green Designee and co-owner of Bright Leaf Homes. When energy costs do reach their pain point, look for sustainability to become an even bigger factor in home construction and home buying.