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Green Homes: Starting to Take Root Again

All this week, we will be introducing one of the five mid-to-long-term opportunities we believe will be the key areas for business growth over the next few years. Today is #2 – The ‘green’ initiative in new construction and  existing home sales. – The KCM Crew

Earlier in the last decade, the real estate industry started on the path to understanding the importance many consumers put on ‘green’ building. Then we got caught up in the surge in business in the middle of the decade and of course the collapse of the market later. The industry became more concerned about the ‘green’ in the bank rather than the ‘green’ in housing. However, as the housing market is beginning to stabilize, we are again seeing a movement back to environmentally motivated buying decisions by many.

The Opportunity

According to Mainstream Green, completed by Ogilvy & Mather in April 2011, 82% of consumers are influenced by green product offerings:

  • 16% of Americans identify as Super Greens. These are people whose everyday behavior is modified to ensure that their impact on the environment is lessened in one way or another.
  • 66% identify as Upper & Middle Greens. These are consumers who are following the green movement, as opposed to leading it, but green influences their purchasing decisions so long as it doesn’t cost too much.

Why do home buyers want ‘green’? The Green Building Capitalist probably states the reasons most simply:

“People who buy green homes can’t easily be lumped into one category. They buy for different reasons. A family may find a green home appealing because they want their kids to grow up in a healthy home without allergens and toxins. Empty-nesters may be attracted to the cheaper utility bills. Environmentalists focus on the sustainability aspect. For most, it is a combination of all of the above.” 

In a recent paper, The Values of Green Labels, it was reported that the desire to buy a ‘green’ home is:

“… positively correlated to the environmental ideology of the area, as measured by the rate of registration of hybrid vehicles…this correlation suggests that some homeowners may attribute value to intangible qualities associated with owning a green home, such as pride or perceived status.”

If you often see a Prius in your marketplace, it could be a good indicator that ‘green’ homes will also be popular.

Why Act Now?

A Yahoo! study, Home Horizons 2012, reported that a ‘green’ home is becoming more and more important to the buying public:

“Unlike bullish years gone by, the so-called American dream home isn’t a supersized McMansion – it is a ‘green’, energy-efficient home built with ‘sustainable’ materials that yield a lower carbon footprint. Or, more often, it is a home remodeled with energy-efficient appliances and eco-friendly home products… there is a growing consensus that the dream home must be more energy efficient.”

The study went on to report:

  • 50% of people consider green/energy efficient appliances/materials are a requirement of their dream home – it is more popular than perennial favorites such as “building a custom home” (38%); “water views” (38%) and “mountain views” (32%);
  • 60% of those in the market say that green/energy-efficient appliances are amenities they’d like to have in their next home;
  • 27% of those in the market say that looking for a greener, more energy-efficient home is a significant reason they want a new home.
  • For about one in four of those surveyed in the Home Horizons study, living in a more energy-efficient home is a major reason why they plan to move.

In an article last month in the Wall Street Journal, they reported on the future opportunity in green new construction:

“Green sales are increasing. In 2011, these homes made up 17% of residential starts by value, up from 9% in 2010, according to the latest McGraw-Hill survey of members of the National Association of Home Builders trade group. That figure is expected to hit between 22% and 25% in 2013.”

We believe that the same desire for a ‘green’ home will be seen in existing home sales also.

The 5 Things You Must Do to work this demographic.

  1. Learn what the term ‘green’ actually means in the real estate market and how to communicate its attributes to a buyer
  2. Realize that an existing home with energy efficient appliances and other such amenities is more desirable to this demographic
  3. Read The Values of Green Labels to get a better understanding of its impact on housing (both from a dollar value and from a ‘pride or perceived status’ value)
  4. Realize that there are also some mortgaging advantages to ‘green’ building.
  5. Consider getting NAR’s Green Designation

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2 replies
  1. Karen Highland
    Karen Highland says:

    Thanks very much for doing the research and posting these facts. Truthfully, we have been overlooking the green aspect of real estate, but you’ve convinced me to do my research and add it to my areas of knowledge. Thanks.

  2. Valuehomes.ca
    Valuehomes.ca says:

    Thanks very much for doing the research and posting these facts. Truthfully, we have been overlooking the green aspect of real estate, but you’ve convinced me to do my research and add it to my areas of knowledge…


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