Studies Show Green Homes Sell For More

As home prices and sales nationwide continue to limp along amidst a fragile economic recovery, many homebuilders and sellers remain glum about the prospects for future sales growth. But a recent study by the Earth Advantage Institute shows that sellers of green homes have little to worry about.

According to the study, existing homes that have been certified green by a third party sold for 30% more on average than their uncertified counterparts. New green homes sold for 8% more than regular homes.

The U.S. Green Building Council’s LEED for Homes certification is the most well-known of such third party certifiers, but green homes can also be certified by Energy Star, Earth Advantage, and EarthCraft House.

Portland, Oregon-based Earth Advantage Institute are a nonprofit organization dedicated to sustainable building practices.

This is the fourth year that the institute has conducted the study, and while it has found significant premiums for green home prices every year, this year’s findings showed the most robust margin.

Other studies show similarly encouraging results. A report by Atlanta-area realtor Carson Matthews shows that green homes in Atlanta sold faster and closer to the asking price. Certified homes were on the market for an average of only 97 days, compared to 123 days for traditionally built homes.

Josh Wynne, a green home-builder based in Florida, compares the premium asked on green homes to the cachet of buying a luxury brand car over a similarly equipped conventional car. But “clients are naturally skeptical of green building,” he cautions. “If you’re disingenuous or sell green as an upgrade like a granite counter,” buyers won’t bite.

In other words, today’s buyers don’t look for green features merely as a flourish – they want to be assured that green homes will save them money in the long run.

Garbett Homes, a green home builder based out of Salt Lake City, promises energy savings of 60 to 80% on its solar and geothermal power equipped homes. Garbett homes boast electric bills averaging only $5 a month and natural gas bills of only $7 a month.

Rene Oehlerking, marketing director at Garbett, says they wanted to offer green energy solutions at a price point that first-time homebuyers could afford. Consequently, Garbett’s homes cost on average only $14,000 more than traditionally built comparable homes.

But convincing potentials buyers of the value in green homes is only half the battle. In the current housing climate, appraisers are unlikely to assess green homes to their full premium value.

GreenStreet Development, a sustainability design consultant, has developed a guide to assist appraisers in making meaningful distinctions between traditionally built homes and homes with green features. Philip Beere, founder and president of GreenStreet Development, gives the example of a home in Tempe, Arizona that was first appraised at $140,000 but was re-assessed by an appraiser more experienced in green homes at $200,000 – or $15,000 above the asking price.

Of course, long term energy savings are the most quantifiable justification for spending a premium on a green home, and any homeowner who has paid a utility bill lately could tell you that.

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