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An Analysis of Professional Builder’s 2007 Green Building Survey
What do homebuilders really think about green? What effect has it had on the marketing and sales of their homes? Is it a fad, or will it define home construction techniques for years to come? The results of Professional Builder’s green building survey sheds light on answers to these multi-faceted questions.
Everyone is jumping on the green bandwagon these days, from Al Gore's "An Inconvenient Truth" winning an Oscar to the summer's Live Earth global warming concerts. Green, carbon footprint, sustainable design and environmentally friendly are words and concepts bandied about with ever increasing zeal and frequency. And the home building industry is far from being exempt.
California has proposed legislation attempting to establish a green building requirement in the state. Assembly Bill 1058 would require all home builders to build green by 2013. The proposed law would let home builders voluntarily build green for the first two years, followed by two years of builder feedback and possible revisions. Then the law would become mandatory.
Both NAHB and the U.S. Green Building Council (USGBC) are lobbying for national standards based on their own guidelines. There are programs such as Building America and Energy Star (both sponsored by the U.S. Department of Energy; Energy Star also partners with the Environment Protection Agency); the American Lung Association Health House; and several others from entities promoting their own green programs and guidelines on a national level — not to mention the myriad regional and local programs.
So just what does it mean to build green? The definition is in the eye of the beholder. How are builders responding to this nebulousness? Many have forged ahead with one of many current sets of green guidelines available; some are being guided by what makes sense to them, using a certain percentage of "green" materials (but again, who's defining green?), a certain degree of energy efficiency, indoor air quality, resource conservation, and sustainability, or a combination of all of the above.
But what do home builders really think about green? And how do they perceive its effect on their business? Is it flash in the pan, or will it define construction techniques in the industry for years to come? Our survey attempts to answer these multi-faceted questions. The results are enlightening, and sometimes surprising.
You can't build green until you know what it is. In response to the question "How does your company define green," 46 percent of respondents said that a green home is one that meets criteria established by a national certification program; 41 percent think it's a matter of having a certain percentage of building materials that are green used in the home; and 29 percent said the home should meet criteria established by a local green building program (responses overlapped).
What kind of builders feel this way? Among builders in our survey who build more than 10 homes a year, 53 percent said a home should meet criteria of a national certification program versus 40 percent of those who build one to 10 homes a year. For builders who build one to 10 homes a year, 48 percent said using a specific percentage of green materials should determine whether a home is defined green versus 30 percent of those who build more than 10 homes a year.
This might indicate that larger builders feel its wise to let a nationally recognized third party define green, versus a definition based on the builder's own opinion about the greenness of a home and the materials used, thus possibly reducing the risk of over promising a green result that can't be qualified.
Third-party certifications allow builders to avoid the sticky wick of defining for themselves which materials are truly green as well as what percentage of green materials makes a home green. Still, many builders — 41 percent of those in our survey — think this is best the way to measure green. So what standards do these builders apply in defining a green building material?
Among several choices, energy efficient tops the list at 89 percent. Renewable resources came in second, and recycled content third. Further down the list were whether the product was locally produced, the manufacturer's environmental policies and the number of points awarded by the USGBC's LEED program. (LEED standards have been used in commercial, industrial and multifamily buildings but its official certification program for new homes, LEED for Homes — currently in a pilot program — will launch later this year).
Of those respondents (41 percent) who said green should be determined by the percentage of green material used in the home, 44 percent think that percentage should be between 11 and 30 percent; 29 percent think it should be between 31 and 50 percent; and 24 percent think it should be above 50 percent.
Should there be some minimum standard of performance or sustainability before a builder can define and market a home as green? Yes, according to 87 percent of respondents. Nine percent weren't sure, and 5 percent said no. Interestingly, 38 percent of respondents said that either federal, state or local government should set these standards. That's not the majority — 61 percent think a trade association, an independent third party, or some other entity should have this responsibility — but it's a bit surprising that a sizeable number seem to think government intervention in this area is a good idea.
Now we have an idea of some ways builders define green. The question is whether or not it is important enough a phenomenon to change how they build their homes. Of all the builders who answered the question, 67 percent strongly or somewhat disagreed with the statement "Green building is a fad." There was no great difference between those who build one to 10 homes a year (64 percent) and those who build more than 10 homes a year (71 percent); nor was there a big difference between those who only build custom homes (65 percent), production homes (74 percent), or a combination of both (69 percent). Of those who don't see green building as a fad, 83 percent believe green building has had some positive effect on their sales; and 83 percent also said that green building is extremely important to their market strategy.
Among builders who build between 91 and 100 percent single family, 69 percent somewhat or strongly disagree with the idea that green building is a fad. Builders who build strictly multifamily made up only three percent of our survey respondents. Seventy five percent of them somewhat or strongly disagree that green building is a fad.
How important are environmental goals when a builder is planning a new residential development? It is extremely or somewhat important, said 81 percent of our respondents. Of those who strongly disagree that green building is a fad, 92 percent said environmental goals are somewhat or extremely important to them in planning new residential developments.
When planning a new residential development today versus five years ago, we asked to what extent if any has the importance of environmental goals changed. It is much more or at least somewhat more important today than five years ago for 86 percent.
A quarter of all respondents said green building is extremely important to their market strategy, and 45 percent said it was somewhat important. Seventy two percent of those who build one to 10 homes a year felt it was extremely or somewhat important, while 66 percent of those who build more than 10 homes a year did. There's no huge difference between those who build exclusively custom homes, production homes or a mix of both — all hover around 70 percent.
"Green building has had an effect on homes sales," according to 48 percent of respondents. A quarter said it has moderately improved sales; 18 percent said it increased traffic; and 11 percent said it closed sales that might have gotten away. Three percent said it dramatically improved sales. Fifty-two percent said positioning their homes as green has had no effect on sales at all. Contrast this with builders who said green building is extremely important to their market strategy; 40 percent said green has moderately improved sales, 32 percent said it has increased traffic, 21 percent said it has closed sales that otherwise would have been lost, and 11 percent said sales have dramatically improved. And 17 percent said it had no effect on sales whatsoever. The perceived expense of building green and its effect on sales
A whopping 92 percent of builders believe green building increases the overall cost of a home. Of this group, the largest percentage — 38 percent — said it increases the cost by 6 to 10 percent. Forty-one percent of builders for whom green building is important (somewhat or extremely) to their market strategy that believe green building increases the cost of a home said green building only increases the cost by 3 to 5 percent; 34 percent of this particular group said the increase is between 6 to 10 percent; and 21 percent said the increase is 11 to 20 percent. No one in this group thought green building increased the cost of a home by more than 20 percent.
There is a bit of a disconnect here: More than half of builders said green building is not a fad, and 70 percent said green building is important to their marketing strategy, but 52 percent of surveyed builders said that green building has had no effect on their sales (though it was noted that this drops to 17 percent for builders who said green is extremely important to their market strategy). Furthermore, 92 percent of respondents said green building increases the overall price of the home. Only 29 percent of builders said buyers are extremely or somewhat willing to pay more for green features in their home; an almost equal number, 30 percent, said buyers are somewhat or completely unwilling to pay more for green features. It would seem that builders are hedging their bets that buyers will soon have a change of heart and be more willing to buy what they perceive as a green home and pay more for it. Otherwise, their actions don't fit their glum expectations of their buyers.
For those who said green building is extremely important to their marketing strategy, 53 percent define a green home as one that meets criteria of a national certification program. No doubt these designations play heavily in their marketing strategy ("We are a LEED-certified builder, Energy Star builder, etc.") and have a certain cache. Only 40 percent say the criteria of local programs define a green home for them. Of course, depending on the program and the market, the local certifications may not be as familiar to buyers as the national ones.
What value does green have for home buyers? We asked builders in our survey how important certain green features are to their customers. Builders said energy efficiency was somewhat or extremely important to 97 percent of their buyers; indoor air quality was selected by 83 percent; sustainability by 56 percent; and resource conservation by 54 percent. Energy efficiency's high ranking may reflect the fact that buyers can more easily understand and appreciate the benefits of building green when it allows them to heat and cool their homes more cost effectively. Homes that can demonstrate a measurable energy cost savings over time can be more easily sold at a higher price, with the expectation the monthly utility cost savings could exceed the additional cost of the home in the long run.
Builders who market green no doubt understand this connection: All survey respondents (100 percent ) for whom green building is somewhat or extremely important to their market strategy said energy efficiency is somewhat or extremely important to their home buyers. No one in this particular group said it is a neutral or unimportant factor. The numbers were nearly similar — 98 percent — for builders who said green building was only somewhat important. But it's 91 percent — still extremely high — for builders for whom green building is a neutral factor, somewhat or not at all important to their market strategy. Even builders who don't see green as part of their market strategy recognize the importance of energy efficiency to their buyers.
The importance of indoor air quality may represent a perceived health benefit to buyers — an opportunity to avoid harmful chemicals, mold and other airborne particulates in a home that can make them and their families ill. Among those for whom green building is extremely important to their market strategy, 88 percent thought IAQ was somewhat or extremely important to their buyers. For those to whom green market strategy was somewhat important, the importance (somewhat and extremely) of IAQ was 90 percent. Among those who said green building has a positive effect on sales, 90 percent said IAQ is somewhat or extremely important to their home buyers.
When builders use a green certification program to define their homes as green, which ones are they likely to use?
Energy Star is the program used by 62 percent of builders in our survey. NAHB's green guidelines (it's not specified if builders are referring to the NAHB's Model Green Guidelines or a local program that uses the guidelines as its foundation) have been used by 32 percent, according to the survey. The USGBC's LEED certification has been used by 19 percent.
Some builders may hesitate to commit to a particular third-party green building program for fear it would be too complicated and restrictive in practical use.
Builders are most familiar with the green building programs offered by Energy Star, NAHB and LEED. Most have never heard of Green Globes, Environments for Living or Building America.
We asked builders in our survey to rate the green building programs they have used in terms of ease of use and relative stringency and flexibility. Federally sponsored programs such as Building America and Energy Star were said to be somewhat or extremely easy to use by 39 percent of builders who have used them; 43 percent said these programs were somewhat or extremely stringent; and 20 percent said they were somewhat or extremely flexible.
Using the same criteria, 30 percent of builders who have used NAHB's green guidelines said there's some degree of ease of use; 33 percent said they have a degree of stringency, and 25 percent said they are in some way flexible in their requirements. Among the eight types of programs specified, LEED ranked least in terms of ease of use — only 13 percent of builders rated the program that way; 67 percent said it was somewhat or extremely stringent, and only 18 percent said it was somewhat or extremely flexible.
The perception of LEED's program seems to coincide with how the USGBC has positioned it. "There are a lot of builders out there who are just thinking about going green, and quite frankly I think LEED-H would be a fairly big leap for them," said Jay Hall, acting program manager for LEED for Homes in the July 2006 issue of Custom Builder, PB's sister publication.
Though there are homes that have participated in the LEED for Homes pilot program and have been certified through it, it should be noted again that LEED-H will not launch officially until later this year. The perceived stringency of LEED may be based somewhat on the requirements of its other programs.
The American Lung Association Health House rates near the bottom both in terms of usage and familiarity by builders in our survey. But IAQ rated highly —- second only to energy efficiency — as the element of green building in which most buyers are interested. If builders were more aware of the program and its focus on IAQ, the program might be weighted as more popular, though its rigorous requirements might still prohibit its wide use.
After all has been said and done, there is still no universally agreed upon definition for green. It's a many splendored thing, multiply defined, and embraced as a valued target for building homes today and possibly for many years to come.
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