The confluence of a stagnant housing market and consumer desire to save money is creating a green home building boom that could be worth up to $114 billion by 2016, according to a new report from McGraw Hill Construction.
Green homes represented $17 billion, or 17 percent of the overall construction market in 2011. This figure is double 2008’s 8-percent market share (valued at $10 billion) and has been a “bright spot in an otherwise dismal market.” But green building’s market share is expected to sharply rise to 29-38 percent across a five-year forecast for overall residential construction – potentially an $87-114 billion opportunity.
416 National Association of Home Builders builder and remodeler member companies were surveyed in Q4 2011 on their green building practices to compile the report, “New and Remodeled Green Homes: Transforming the Residential Marketplace,” which focused on single-family home building and remodeling.
According to the report, the two key factors driving market growth are the facts that green homes are seen as higher quality, and that they save consumers money on utility bills. “Home that are not only green, but also offer the combination of higher quality and better value have a major competitive edge over traditional homes,” said Harvey Bernstein, vice president of industry insights and alliances at McGraw-Hill.
The report shows that green building projects are largely value-driven for consumers. Two-thirds of builders and remodelers say consumer request green projects to lower energy use and save money, 80 percent say energy efficiency measures are “pervasive” in the market, and more than half consider durable materials one of the most important features in homes today.
Greater environmental value brings greater monetary value for buyers, according to McGraw-Hill. 46 percent of builders with more than $1 million in revenue said green building features make it easier to market homes, and 61 percent of builders/66 percent of remodelers report home buyers are willing to pay more for green homes.
Homebuilders are taking note of the trend. One-third of all builders say they will be dedicated to green building by 2015, meaning more than 90 percent of their projects will be built using green standards. This focus is returning dividends – 77 percent of firms dedicated to green building say it helps their bottom line.
Interestingly, this green building boom is happening even though most builders and remodelers report increased costs for green measures. Builders report a seven-percent cost increase, and remodelers report an eight-percent cost increase. However, dedicated green builders reported only a five-percent increase, suggesting experience with green building techniques reduces project costs.