Why Green Homes (With All Their Perks) Are Affordable
Did you know some modern green homes can be heated solely with a hairdryer? This may sound impossible. But it’s one of the reasons why green homes, with all their perks, are cost-wise on-par with conventional homes, now more than ever. This means you can have the superior health, comfort, durability and other features of a green home without needing to sell your grandmother’s jewelry. And you can afford a dwelling that helps protect the planet by using less of her resources.
Planning to Go Green Right from the Start
To ensure that building a green home doesn’t cost more than it needs to, planning right from the beginning that green is your goal is essential. Many people don’t realize that 80% of home construction costs are defined in the first 20% of the home design process. Deciding to switch to more eco-friendly methods and materials in later phases of the house design process results in unnecessary added costs. Discuss with your architect from the start that achieving a green home within your stated budget is your objective. An experienced designer of such homes will be able to make this a reality.
Small Energy Use is a Big Key to Green Home Affordability
One of your main reasons for wanting a modern green home is probably that you already know it will be energy-efficient. This means you’ll save lots of money on utility costs over time in the home. You may even understand—especially if you read my blog, “Key Ingredients in the Recipe for a Modern Green Home”—that super thick insulation, triple glazed windows and doors, solar panels and other kind-of-pricey materials are the way to derive that efficiency.
What you might not know is that the cost of building an eco-friendly home becomes virtually equal to the cost of building a standard home right at the start. This is due to what I call a “flip” in the distribution of spending. Yes, more money is invested in the construction methods and materials that will make the home vastly more energy-efficient than a conventional home; however, this squeezes out not only cold air but the need for a large, expensive mechanical system.
Mechanical Systems
What is the mechanical system in a house? Generally speaking, it is the system for heating, cooling and ventilating space, plus heating water for bath and kitchen use. In the average green, energy-efficient house of 2,500 square feet, the typical mechanical system will be relatively small and cost about $15,000. In the case of a Passive House, the most environmentally friendly type of green house a person can build, the price of a hairdryer buys you a heating system. When you compare these minimal to moderate costs with the $40,000 investment typically required for a mechanical system in a standard house, you begin to see how a modern green house is affordable.
New Technologies Tamp Down Green Home Costs
Technological advances, increased demand for home energy-efficiency products, and greater competition in the green building market industry are also big factors in bringing green home costs in line with traditional home costs. Great strides have been made when it comes to the most common heating systems used in green homes: cold climate air-source heat pumps. The U.S. Department of Energy (DOE) states these pumps can deliver one and a half to three times more heat energy to a home than the electrical energy it consumes. The capabilities of residential solar electric have tremendously improved while costs have decreased. Many more players have entered the energy-efficient window, door, and insulation industries, offering consumers more choices. All of these recent changes make modern green homes affordable for the average homeowner.
Green Homes are Worth More to Buyers
According to several leading real estate sources, green homes are in demand. As a result, they put more green in your pocket when you decide to sell your home. A 2018 Zillow study found that homes featuring solar energy systems sold for on average 4.1% more than homes without solar. The same study noted that over 80% of homebuyers want energy-efficient features and are willing to spend a bit more to have them. A study by Redfin examined real estate listings for all of the homes in their markets that specified “Energy Star,” “green-built,” or other sustainability features. The company found that such homes garnered $33,894 more than the median sale price of all homes in the markets they analyzed.
Non-profit sources are reporting similar findings regarding green homes commanding premium real estate prices. The Institute for Market Transformation (IMT) and The District of Columbia’s Department of Energy and Environment (DOEE) analyzed homes in the Washington, DC market and discovered that homes with eco-friendly features sold for a mean premium of 3.46% compared to homes without green features. The Earth Advantage Institute of Portland, Oregon revealed that green homes in Seattle built from 2000 to 2008 sold for 8% to 9% more per square foot than traditional homes.
Mortgage Lenders Recognize the Value of Green Homes
More and more mortgage companies and their appraisers are becoming knowledgeable about the worth of energy-efficient green homes. Some lenders are offering a product called an energy-efficient mortgage, or EEM, which lets you qualify for a bigger loan than you would otherwise by folding in the energy efficiency features. Another version of the EEM, also known as a “green” mortgage, provides discounts on loan fees or interest rates for homes that are certified as energy-efficient.
Recently, I worked with clients who had received the type of construction loan that eventually converts into a mortgage. As is often the case when building a new home, the bank sent appraisers to the job site to review construction progress and assess the home’s value. Fortunately for my clients, one appraiser had far more experience with sustainable features than the other appraiser. Upon recognizing the value in this project, the appraiser suggested to the bank that the clients be eligible for a larger loan.
I don’t know if the clients’ lender was ultimately defining what they gave them as a “green mortgage.” But, given that mortgage interest payments are tax-deductible, finding a sustainability-savvy lender and appraiser for your project is a cost-effective way to finance the green home you desire.
How to Find a Qualified Appraiser
If you’re financing a green home, you can make sure you’re assigned a qualified appraiser through the Appraisal Institute (AI), a global professional association of real estate appraisers. AI publishes a guide to valuing green homes and maintains a registry of appraisers who have passed “Valuation of Sustainable Buildings” coursework. The appraiser for your home should complete AI’s Residential Green and Energy Efficient Addendum.
Key Takeaways
To wrap up, green homes today—with all the benefits they offer and the good they do for the environment—are closely aligned in cost with the cost to build a conventional home. If you can afford to build a home, you can afford to build a green one. The thought that you can’t is, shall we say, “fake news.” The path to making your green home a reality at a reasonable price involves several important factors:
Make it known to your architect, early on, that you want a green home so that the appropriate design direction is followed—well before the first hammer is lifted.
Get ready to spend less on your house’s mechanical system. Since the home will be super energy efficient, you won’t need a high-priced, SUV-size system to heat and cool it.
Benefit from the latest technological advances, which have reduced the cost of the green home products and features you’ll need.
Identify green-knowledgeable bankers and appraisers to receive the best financing option for your green home.
Luxuriate in your very affordable home for many years, but rest knowing that since buyers are willing to pay more for green homes, you’ve made a sound investment.
And, as is always the case with living in a green home, be proud that you’ve reduced your carbon footprint. As Henry David Thoreau once said, “What’s the use of a fine house if you haven’t got a tolerable planet to put it on?”
Harry Hunt has worked in and across a wide range of contexts—from commercial and residential buildings, to urban planning, interiors, and landscapes. Harry is a member of the American Institute of Architects (AIA), and is a Leadership in Energy Efficient Design (LEED) accredited professional through the United States Green Building Council. He is certified with the Passive House Institute (PHI) in Darmstadt, Germany and is registered with the National Council of Architectural Registration Board. Harry is a registered architect in Vermont.
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