John Mcllwain

Green design’s rental boost

Author, speaker, former lawyer, Chair for Housing at the Urban Land Institute (ULI) in Washington, D.C., Jan 12, 12.

Tagged with housing, green design, energy efficiency

The US housing industry is much like the US auto industry in its resistance to change. The design of both single-family homes and apartments is only just beginning to change, just as the American auto industry is only just now trying to figure out how to deliver newer, truly fuel-efficient cars. Unlike the auto industry, however, the housing industry doesn’t have the federal government’s fuel efficiency (CAFE) standards to prod it along.

But there are early signs of change. New single-family homes in Phoenix, Arizona, are selling even at slightly higher prices than existing homes—that is, if they have green, energy-efficient features that will significantly reduce the cost of lighting, cooling, and heating over time. This is happening in many other parts of the country as well.

Energy efficiency is, as one developer puts it, “the new granite countertop.” After all, no one asks what the payback period is for a countertop. So, just as items that were once added to a new home or condo for an additional price are now standard, so too are energy-efficient equipment and design becoming standard features expected by the buyer or renter.

This shift is perhaps happening fastest in the single-family home industry as it looks for whatever it can find to move its homes. Green, it turns out, is the most effective way to sell a home; buyers find it more appealing to buy a home that is already efficient than a less expensive home that needs major retrofitting as well as new appliances and HVAC systems.

It is still hard to show that renters will pay more for an energy-efficient apartment than for a standard one, even when they are paying for the utilities. That said, there is growing evidence that energy-efficient and green apartments rent up faster than other ones, and are experiencing less turnover, both of which drop to the bottom line. MORE

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