Homebuilders and homebuyers are odds. The political and
“moral” push to design and construct “green” homes has now forced homebuilders
in many communities to throw their collective hands in the air and say, “Damn the
economics, full steam ahead.” For many, this will require substantial changes
in how they design, build, and market these environmentally friendly homes to a
skeptical and often disinterested homebuyer. For others it may put them out of
business (HERE).
Most buyers want what I’ve been saying for years: They want the
biggest home, on the biggest lot, they can afford—period. I realize this is open
for significant debate, but most housing growth is still in the suburbs and
will be for the short and long term. It is the detached single family home that
the buyer wants. And if it’s a choice between an extra bedroom, or a
photovoltaic roof top electrical system – the building industry is finding that
the bedroom wins.
For the last few weeks there has been an interesting series
in Builder Online on the acceptance and costs of building green homes. They
found that in some instance the costs of building green can add more than
$150,000 to the cost of a home. These costs are for solar thermal and PV
systems, more efficient equipment, tighter homes, and insulation. Some of these
systems and building standards are even mandated under many state laws.
Most new homebuyers are interested in the following in order
of important:
- Location (city, neighborhood, schools, culture, etc.)
- House Cost
- Debt Cost
- Maintenance Cost
- Affordability – the blending of the three
- Design and Layout
- Environment
Yes, like it or not, in my opinion, the last and least
important is environment (HERE).
Buyers will say they value these elements of a house: Energy Star ratings for
appliances, windows, and certifications as important to their decision, but most
buyers expect the home they buy will
be energy efficient (insulation, windows, water heater, etc.), the heating and
cooling the state of the art, and appliances will not waste energy (i.e.
dollars). They do not expect to pay for these as extras.
We are heading for a time when new homes will essentially be
cost free for electricity. Solar PV systems (with battery type storage systems)
will become ubiquitous like modern HVAC systems, and as the two become better
integrated, homes will essential become zero electricity users. Cost of heating
will drop with better design and insulation (and cheaper natural gas). The
issue is always how much will the buyer pay to reach these levels – they do not
see these as trade offs.
What is more critical is the quality of the construction
itself – not the whistles and bells. Better insulation and moisture control
reduces everything from nail pop in drywall to cracks in drywall and moldings.
These are actually more for the builder themselves than the buyer – call-backs
and repairs are very costly.
One of the problems at the moment is the velocity of new
home sales is still slow. This is due to many factors from student debt, costs
of down payments, and very high cost of new homes. If the demand were higher
many new products would literally hit the street. Competition and markets would
bring these new products to the industry.
We will see substantial changes to the “green” side of the
housing industry, they may not be flashy but they will save the homebuyer money
in the long term. But one thing is for sure, the basic home will be more
expensive.
