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Study: Buyers Pay More for Green Homes

Monday, November 2, 2015

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A new study suggests that homebuyers are willing to pay more for a home if that home includes green design features.

The study, “What is Green Worth? Unveiling High-Performance Home Premiums in Washington, D.C.,” says that buyers spent 3.46 percent more on a home in the nation’s capital if it had green features than on those without.

“This study, one of the first of its kind, employed an appraiser-led technique to value green features in homes and it produced a credible set of quantifiable results” said Sandra Adomatis, SRA, LEED Green Associate, founder of Adomatis Appraisal Service and author of the report. “These findings are critical to support the growing movement to properly value high-performance homes.”

Method

The Institute for Market Transformation—which co-published the study along with the DC Department of Energy & Environment and Adomatis—looked at six elements of green building defined by the U.S. Department of Environmental Protection. Those include site, water, energy, indoor air quality, materials and operations/maintenance.

©iStock.com / Feverpitched

In the study, researched found that buyers spent 3.46 percent more on a home that has green features than they do on a comperable home in the Washington, DC, market.

Data for the study included 40 total sales in seven different areas within the District between February 2013 and June 2015. Eight of those included the sale of green or high-performance homes, while 32 were not listed as high-performance.

The study acknowledged that the number is small because multiple listing service data does not reflect the true number of green homes in the district. Previous research found that, between 2008 and 2013, only 27 unique, certified high-performance units were listed in the multiple list service—only 14.8 percent of the expected certified homes on the market, the study says.

The authors paired each of the eight certified homes with three or more non-certified homes. This resulted in a dataset of 32 paired sales, or 64 total homes.

Analysis

The analysis found that 29 of those 32 pairs indicated a premium for green design. Three of the pairs were inconclusive. Of those, 19 had sale premiums of 2 percent to 5 percent higher than non-certified homes.

©iStock.com / SasPartout

Although some of the homes listed as green had certification or green features, such as a PV system, other green details were scant, the study said.

Six of the eight high-performance homes had third-party certifications from LEED, which is offered through the U.S. Green Building Council. However, the study notes that the multiple listing service data indicated both of the non-certified homes were LEED certified. Other descriptions of green data were “scant,” the study said.

Three of those also had solar photvoltaic (PV) systems, but one of those was a common-area system not owned by the unit, the report said. None of the listings had energy reports or other green reports attached.

In general, the study said, a higher level of LEED certification corresponds to a higher cost to build. However, most buyers are not knowledgeable in the LEED point system, and so the study said it did not factor into a buyer’s decision to buy.

As a word of caution, the authors noted that the study is limited to homes of a specific geographic location, and that the data only would be applicable to other locations with similar demographics.

   

Tagged categories: Green design; LEED; Market research; Solar energy; U.S. Department of Energy

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