Last month, I attended the annual Pacific Coast Builder’s Congress (PCBC) in San Francisco, the largest regional builder’s trade show in the country, attracting more than 30,000 people each year. The program featured an all-day “Green Forum” featuring leading green home builders, market researchers and home energy experts from around the country. More than 150 people attended the session. Remarkable for me was the level of enthusiasm and commitment to green homebuilding from skilled and successful builders. This movement is getting ready to explode onto the homebuilding scene in the next five years, and here’s ten reasons why:
Reason #1: Visible Growth
The commercial and institutional green building market continues to grow at more than 50 percent per year, based on new project LEED-NC registrations. The U.S. Green Building Council’s LEED-NC green building rating system registered more than 1,000 projects last year, totaling more than 130 million sq.ft. of space. I predict that the total number of LEED registered projects will increase more than four-fold through the end of the decade, continuing to increase at more than 25 percent per year. The number of LEED certified projects will exceed 500 by the end of 2006, according to my projections. This means that homeowners everywhere will continue to see more information about green buildings in their cities and towns; this will translate into significantly increased activity in the home energy markets, both for new homes and conservation retrofits. And, in fact, the amount of press coverage given to green buildings in the first half of 2006 already exceeds that for all of last year.
Reason #2: Monetary incentives
The new federal energy bill (Energy Policy and Conservation Act of 2005), with increased incentives for residential solar systems, along with prolonged oil prices above $70 per barrel and gas prices above $8 to $10 per million Btu ($0.80 to $1.00 per therm), have changed the psychology of the consumer and the business for the first time in a generation, since the oil price shocks of the 1970s. And green homebuilders get a $2000 tax credit per unit for green homes.
Reason #3: Energy Efficiency
Over time, increasing fuel prices will translate into higher electricity and gas prices for residential applications and more interest on the part of homebuyers and homeowners in investing in conservation. For example, market studies in 2003 for the King-Snohomish Master Builders Association (Seattle area) have shown a willingness by homebuyers to pay 1% more, about $2,500 on a $250,000 new home, for a home energy package.
Reason #4: Having a Green Edge
Builders need an edge in selling homes with higher interest rates and lower affordability. Homebuyers are getting more choosy, new and existing homes are on the market longer than any time in the past five years. Energy-efficient new homes, condos and apartments offer the benefit of saving on future utility costs and showing a concern for such issues as global warming and environmental protection.
Reason #5: Conservation
A growing body of successful green home developments with a strong focus on solar and conservation features, in all major growth regions, including Florida, California and the rest of the Sunbelt, will give developers confidence in their ability to deliver a high-performance green development on a conventional budget.
Reason #6: LEED-H Certification
The LEED for Homes program, now in its pilot phase (with 125 builders and more than 600 new homes participating), expects to roll out in a version 2.0 in 2007. Given the success of the LEED for New Construction (LEED-NC) program and the growing recognition of the LEED brand name, LEED-H should begin to affect the residential market in significant numbers by 2008. Other local programs such as homebuilders’ associations’ “Built Green” (in seven states now) and certain local utilities’ programs, as well as the National Association of Home Builders (NAHB) voluntary certification program should also keep the new home energy-conservation market growing rapidly.
Reason #7: Consumer Readiness
Related green buying habits should begin to affect the home buying and retrofitting market. Look at the Lifestyles of Health and Sustainability (LOHAS) market, estimated at 30% of the population (and 65% women), and its impact on organic foods, hybrid vehicles, ecotourism and organic cotton markets, just to name a few. If home energy conservation can be marketed as more of a consumer product than a technical product, it can also benefit from these trends.
Reason #8: Standards are Catching Up
More cities will begin to require green buildings from standard commercial projects, especially those with major infrastructure impacts. These requirements and policy directions will spill over into the homebuilding market over the next half-decade. Builders will respond with green homes to avoid local mandates, at the very least.
Reason #9: Energy Savings
Look for Energy Star to marry up with LEED for Homes to promote energy-efficient and zero-net-energy, or “carbon neutral” buildings. We will begin seeing buildings routinely cut energy use to 50% or more below current state standards through integrated design and innovative technological approaches.
Reason #10: Peer Pressure
As public companies, the ten major homebuilders (with more than 30% of the market for new homes) will have to accept the burden of more socially responsible activities (which I’ll call “the Wal-Mart Burden”), to get projects permitted, built and sold, as well as to attract top talent to keep growing their revenues and profits. Look for the corporate governance and socially responsible investing movements to being to influence how large homebuilders plan, design and market their homes.
All told, these ten factors will revolutionize the practice of green homebuilding. Now is the time for architects, engineers, building designers and product salespeople to start gearing up for this “sea change” in the building world.
An earlier version of this column appeared in the July 2006 issue of Home Energy Magazine, www.homeenergy.org.
About the Author: Senior Editor Jerry Yudelson chairs the U.S. Green Building Council’s Greenbuild international conference and expo, the world’s largest green building gathering. This year’s show will be held in Denver, November 15-17, 2006. Jerry is also a LEED trainer for the USGBC and Sustainability Director at Interface Engineering. He is the author of The Insider’s Guide to Marketing Green Buildings (available at www.igreenbuild.com).