Home Innovation Insights

It's a fact that homebuyers want more than just energy efficiency out of their homes. Can you give them more?

Are You Willing to Bet it All on Energy Efficiency?

October 17, 2014

There seems to be a divide among home builders.

On one hand, there are builders that embrace high-performance construction, use the National Green Building Standard (NGBS) to design and construct their homes, and take advantage of NGBS Green Certification to prove their green claims. Are these builders looking to save the planet? Perhaps. Over the years I have met builders who strive to serve as environmental stewards for their communities. But more likely, builders who construct NGBS Green Certified homes do so because it provides value. Marketing value. Appraisal value. Reputation value. Customer satisfaction value. And, because attaining NGBS Green Certification is a mark of excellence, gratification value.

On the other hand, there are builders who doggedly insist that buyers only care about energy. One can quantify energy efficiency, and doggone it, buyers only care about green if they save money. Pshaw! These builders are simply mistaken. In fact, as a mom and a homeowner, I find that notion quite offensive. Are you telling me that in selecting a home, the most important thing to me is lower utility bills? I like lower energy bills, don’t get me wrong. Yet, my air conditioner is on weeks before we need cool air because of my sons’ allergies. In the winter I bump the thermostat up as necessary knowing it will cost more but valuing comfort over budget. After all, it’s my home. And it’s my family.

It is not that energy efficiency is unimportant. The cornerstone of any high-performance home is a tight building envelope with right-sized equipment and well-designed systems. But the benefits of a green home are much more than just utility savings. Even better, the benefits of an NGBS Green Certified home align perfectly with what consumers want. NGBS Green Certified homes are more comfortable. They don't have hot spots or drafty rooms. They provide a place where you can sit on the floor in the winter with your kids and stage a massive Lego battle. Oh, and those energy savings, that’s a nice back side bonus.

Homebuyers Want a Healthy Place to Live

But don’t take my word for it. The market research is irrefutable. Numerous studies have concluded that energy efficiency is not the only green feature that consumers care about. In fact, the most important issue for homebuyers is the well-being of their families. Buyers want a home with a healthier indoor environment.

A home becomes healthier when the builder incorporates building practices to ensure the home is dry, properly ventilated, and constructed with fewer pollutants. Research shows that consumers are willing to pay for features that provide a healthier indoor environment, even if there is no payback. Unlike with energy efficiency, consumers looking for a healthier home don’t need the magic equation that will tell them a home costing $2,000 more for its healthful features will provide an equal or greater payback. Having children inspires a whole new value system. And let’s face it, the smart money will take a dry home over an energy-efficient one any day. The cost to both builders and buyers to resolve moisture and/or mold issues is likely to be far greater than any potential energy savings.

Homebuyers Want Comfort

The second most important issue for homebuyers? An efficient home that delivers lower operating costs without sacrificing comfort and convenience. But there are two important caveats. First, consumers are typically willing to pay for these features provided their investment pays back over time. So, many homebuyers will find energy efficiency compelling if you can account for exactly how much they will save on energy costs. But be careful of how and to whom you direct this message. A few studies I've read observed that Millennials – individuals born between 1980 and the late 1990s, who have been steeped in sustainability issues all their lives – are likely to find it offensive if a builder touts efficiency to save on energy costs. Millennials are more likely to believe that builders should construct efficient homes because it is the right thing to do. Oh, and by the way, Millennials are also less willing to pay anything additional for efficiency, because, as I mentioned, they think it's just the right thing for builders to do, so that might not be your best marketing message if you court younger buyers.

Homebuyers Want Sustainable Lifestyles

Third most popular in the list of desirable home features is the ability to live a more sustainable lifestyle. According to an Ogilvy & Mather report, 82% of Americans have good green intentions and are trying to be more environmentally-conscious. Homes that are more durable, have lower maintenance needs, and are located in neighborhoods with multi-modal transportation options all fit into the framework of a more sustainable existence. Can you get a more sustainable lifestyle with an energy-efficient home? Nope. You just save energy.

The Bottom Line

Green homes offer exactly what homebuyers value. Market research consistently pegs the green rejecters – those for whom a message about green benefits is not at all compelling – at under 20% of all American consumers. That leaves a whole lot of market share, approximately 185 million Americans, who will find high-performance, green homes desirable.

Don’t be a fence-sitter. Come over to the green side, the NGBS Green Certification side to be specific, and set yourself apart. Your competition will be green with envy.