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Home-Grown Green: Green Building in the Residential Market

Home-Grown Green: Green Building in the Residential Market

By Donna Laquidara-Carr, Ph.D., LEED AP

Single family home builders are commonly using many green products and practices, especially energy saving ones, but only one third (33 percent) are committed to building green homes. This is the finding of the latest study on green home building from Dodge Data & Analytics, published in the Green Single Family and Multifamily Homes 2020 SmartMarket Brief, in partnership with the National Association of Home Builders (NAHB).

The study reveals a complicated picture about the amount of green building activity currently occurring in the single-family home market. On the one hand, when provided with a stringent, performance-based definition that a green home “incorporates strategies in design and construction that increase energy, water and resource efficiency, indoor environmental quality and minimize environmental impacts on site and/or is certified by a third-party green rating system,” only 33 percent report that this definition applies to 50 percent or more of the homes they build, and 42 percent state that they do no green building projects at all. On the surface, this seems to suggest that the overall commitment to green building among home builders is still somewhat limited.

However, the study also demonstrates that many home builders are in fact using a wide variety of green building products and practices on the majority of their projects. The most prominent investments are those that make homes more energy efficient. Use of LED lighting, energy-efficient appliances and right-sized HVAC systems is very common, with over 70 percent of home builders using each of these in half or more of the homes they construct. In addition, over half of the builders use five other energy-efficient products and practices in the majority of their home projects. This includes windows and insulation that exceed code requirements, a focus on air tightness, and even blower door testing to confirm the tightness of the envelope before they finish the home.

And energy efficiency is not the only green area in which builders are actively engaged. Most builders also employ different water-efficiency products and practices in their homes, from water conserving fixtures and appliances, to efficient plumbing techniques and tankless water heaters. All four of these are used by more than 50 percent of builders on half or more of their home projects. Water conserving strategies inside the home, though, are far more commonly used than those outside the home, such as rainwater collection and reuse, or drip irrigation.

The findings also demonstrate that most builders are invested in building homes that conserve material resources, through their frequent use of durable materials, prefabricated components and minimizing construction waste. They are also widely employing products and practices that improve indoor air quality like direct outdoor ventilation of bathroom fans, kitchen exhausts and clothes dryers, duct insulation and using low VOC materials.

So when it comes to wide consideration of energy and water efficiency, conserving material resources and improving indoor environmental quality, most builders are engaged in ways to improve their homes, even if nearly half of them report that they are doing no green homes.

However, the findings on those dedicated to green building overall do suggest ongoing potential for the share of green to continue to grow in the home building market. The study looked at the top drivers for encouraging more green building, and increased home buyer demand emerged quite strongly as the top factor, ranked among the top three drivers by 66 percent. Conversely, the lack of home buyer demand along with concerns about the price premium to build green, were the top obstacles reported in the study.

Several of the findings in the study suggest ways that the industry can increase homeowner interest in green building and overcome the issue of the price premium. One requires choosing the right market to focus on. The highest percentage of home builders reported that buyers seeking to either upscale or downsize are the most likely to be willing to pay a green premium for a home – so targeting these markets could be useful. And for these two markets, the top features to emphasize are lower operating costs and greater comfort/better occupant experience, according to those with experience selling green homes to these consumers.

Other factors that are currently underutilized in the market to create interest in green are reflecting green features in MLS listings. While most see these features reflected at least sometimes, only 16 percent report that they are always or frequently reflected. Seeing these features reflected more consistently could help encourage demand, making homeowners more aware of what to look for when they consider different properties.

With the green premium, it is no surprise that home builders believe that the most effective terms to use to describe green features are operating efficiency, long-term utility cost savings and quality construction, with high performance also ranked relatively high. And 70 percent believe that consumers will pay more for a green home. However, most builders believe that consumers are influenced in their buying decisions by cost and the length of time to achieve a return on their investment, counterbalanced by the high influence of performance and quality in their home buying decisions. Shifting the conversation toward long-term cost savings can help, but so can emphasizing the performance and quality of the home. This likely means continuing to focus on energy efficiency, but also calling attention to green home amenities like greater comfort/better occupant experience and healthier indoor environments, and emphasizing the degree to which green homes can deliver these desirable commodities.

So what does this all mean? It demonstrates that there is a commitment to improving home performance in the residential market, but that there is also room for growth. Green strategies that may particularly help drive consumer demand include energy efficiency and improved indoor environmental quality, and those involved in home projects need to consider how they can contribute to performance in these areas in the most cost-effective manner possible to help drive more consumer interest in green homes in general.

Donna Laquidara-Carr, Ph.D., LEED AP, is Industry Insights research director, Dodge Data & Analytics (www.construction.com). Dodge Data & Analytics is North America’s leading provider of analytics and software-based workflow integration solutions for the construction industry. Building product manufacturers, architects, engineers, contractors, and service providers leverage Dodge to identify and pursue unseen growth opportunities and execute on those opportunities for enhanced business performance.