Environmentally friendly residential real estate has been around for a long time, but it was confined to a niche market of custom and small niche builders. With the success of former Vice President Al Gore's movie "Inconvenient Truth", the public eye is again turning to the environment. That includes homebuyers of residential real estate.
With this increase of "green" public interest, many giants within the home construction industry are now building environmentally friendly homes, but they have encountered a paradox — homebuyers want green residential real estate, but they do not wish to pay the upfront cost of having it. With the serious slowdown in new home sales, residential real estate builders are caught in the middle of the issue. It is easier for them to persuade a potential buyer to upgrade to granite countertops than to pay the upfront costs for solar panels or an energy-efficient furnace. Thus, the residential real estate builders are trying to balance between what they see as their "social obligation" to the environment and the obligation they owe their shareholders.
Jeffrey Mezger, CEO of KB Home (one of the nation's largest homebuilders), underscores this sentiment. He points out that homebuilders cannot give away their profits. They would not be in business for long, if they did.
Some environmentally friendly features being built into some residential real estate are:
• Wood that is harvested in an environmentally friendly manner, using the Forest Stewardship Council guidelines. This can add $3,500 in cost to a $700,000 home, according to a BusinessWeek article in its February 12, 2007, issue.
• Environmentally friendly bamboo can be used for flooring.
• Front loading washers use 60 percent less water and electricity than top loading washers, though most homebuyers of residential real estate purchase such appliances themselves.
• Solar panels pay for themselves within a matter of years, but homebuilders are finding them a hard sell. The upfront costs are about $25,000 on average.
• Satellite-controlled sprinkler systems for the lawn conserves a lot more water than conventional systems.
• Decks can be made of recycled materials.
Though such features add to the upfront price of residential real estate, which most current buyers are not willing to pay, the installation of solar-electric panels by homeowners is on the rise. According to the Solar Energy Industry Association, use of solar panels increased last year by 75 percent. This 8,512 increase, however, represents only a fraction of the one million new homes sold across the nation in 2006.
Help for environmentally friendly residential real estate may be coming shortly from three separate sources — federal, state and local governments. It is expected that the federal and state governments will soon make subsidies available to homeowners who install solar panels. The subsidies could cut the upfront costs by half. Additionally, the building codes of many local governments are much more environmentally friendly than in the past, forcing homebuilders to include green features in their new residential real estate.
Another plus for green residential real estate are the firms that supply the construction industry. Many now offer environmentally friendly products to the homebuilding industry in volume prices, making the use of green products more cost competitive. These efforts on the part of suppliers has decreased energy consumption in new residential real estate by 30 percent per square foot since 1970.
With all of these sources encouraging environmentally friendly residential real estate, green features may soon be standard in all new homes at a fraction of current costs.
With this increase of "green" public interest, many giants within the home construction industry are now building environmentally friendly homes, but they have encountered a paradox — homebuyers want green residential real estate, but they do not wish to pay the upfront cost of having it. With the serious slowdown in new home sales, residential real estate builders are caught in the middle of the issue. It is easier for them to persuade a potential buyer to upgrade to granite countertops than to pay the upfront costs for solar panels or an energy-efficient furnace. Thus, the residential real estate builders are trying to balance between what they see as their "social obligation" to the environment and the obligation they owe their shareholders.
Jeffrey Mezger, CEO of KB Home (one of the nation's largest homebuilders), underscores this sentiment. He points out that homebuilders cannot give away their profits. They would not be in business for long, if they did.
Some environmentally friendly features being built into some residential real estate are:
• Wood that is harvested in an environmentally friendly manner, using the Forest Stewardship Council guidelines. This can add $3,500 in cost to a $700,000 home, according to a BusinessWeek article in its February 12, 2007, issue.
• Environmentally friendly bamboo can be used for flooring.
• Front loading washers use 60 percent less water and electricity than top loading washers, though most homebuyers of residential real estate purchase such appliances themselves.
• Solar panels pay for themselves within a matter of years, but homebuilders are finding them a hard sell. The upfront costs are about $25,000 on average.
• Satellite-controlled sprinkler systems for the lawn conserves a lot more water than conventional systems.
• Decks can be made of recycled materials.
Though such features add to the upfront price of residential real estate, which most current buyers are not willing to pay, the installation of solar-electric panels by homeowners is on the rise. According to the Solar Energy Industry Association, use of solar panels increased last year by 75 percent. This 8,512 increase, however, represents only a fraction of the one million new homes sold across the nation in 2006.
Help for environmentally friendly residential real estate may be coming shortly from three separate sources — federal, state and local governments. It is expected that the federal and state governments will soon make subsidies available to homeowners who install solar panels. The subsidies could cut the upfront costs by half. Additionally, the building codes of many local governments are much more environmentally friendly than in the past, forcing homebuilders to include green features in their new residential real estate.
Another plus for green residential real estate are the firms that supply the construction industry. Many now offer environmentally friendly products to the homebuilding industry in volume prices, making the use of green products more cost competitive. These efforts on the part of suppliers has decreased energy consumption in new residential real estate by 30 percent per square foot since 1970.
With all of these sources encouraging environmentally friendly residential real estate, green features may soon be standard in all new homes at a fraction of current costs.
SHARE
