Green upgrades: will home buyers pay more?
Jeffrey Anderson | Improvement Center Columnist | August 30, 2012
The benefits of making your home more energy-efficient are well-documented. Going green can provide savings while you're in your home, but what about when the house enters the real estate market? Are buyers willing to line your pockets with some extra green for the energy-saving improvements? A recent study indicates that they are.
Do green homes mean higher selling prices?
While location and the type of green improvements have a bearing on results, studies show that homes with energy-saving upgrades can bring higher prices and can sell more quickly than those without. A USA Today article mentions research by the University of California that followed sales trends in the state from 2007 to 2012. The average price of a single-family home in the state was about $400,000 at the time. According to the data, homes with green certifications sold for an average of $34,800 more than those with standard construction during the study period.
A similar study done by GreenWorks Realty in Seattle from September 2007 through December 2009 is referenced in the same article. Their findings: homes with green certifications averaged about 8.5 percent more per square foot in sales price when sold, and they spent 22 percent less time on the market than those with standard construction. While these studies focus on the West Coast, often reputed to lead the way in eco-friendly construction methods, an article in Constructech Magazine about a study done in the Atlanta area indicates that the trend might be nationwide.
Carson Mathews, an associate broker with Atlanta Fine Homes, combined the Atlanta-area sales data for 2009 and 2010 and discovered that green-certified homes sold 21.2 percent faster than those built using traditional construction practices. In addition, eco-friendly homes averaged purchase prices that were 94.9 percent of the asking price, which was 3.4 percent higher than those with standard construction.
Green construction: an upward sales trend?
While the numbers vary across the country and even between different areas within the same state, it appears that families are becoming more educated on the benefits of buying a home with green certifications. The trend is being reflected in sales prices and the length of time houses with green improvements spend on the market.
As real estate markets continue to struggle in many regions of the country, adding energy-efficient upgrades may give your home the edge it needs against the competition. Green homes made up about 17 percent of the total residential market in 2011, but the number is predicted to grow as high as 38 percent by 2016 -- their share of the market could more than double in just five years.
Which eco-friendly improvements do buyers want?
If your home is located in a part of the country subject to temperature extremes, upgrades that can contribute to lower heating and cooling costs are often buyer priorities. These green home improvements might include an Energy Star-rated HVAC system, additional insulation in the attic, ultra high-performance windows or insulated vinyl siding. A few other eco-friendly upgrades that seem to be popular with buyers include:
- Energy Star appliances
- Programmable thermostats
- On-demand water heaters
- Reflective roof shingles
- Gray-water recycling systems
- Solar panels
- Double flush toilets
Whether looking for cost savings on their monthly utility bills or having a genuine concern with protecting the environment, many of today's buyers are making green construction a priority during their search for a new home. While eco-friendly improvements on your home might not result in a sales price increase quite as high as the percentages realized by some sellers in California, every little bit helps. If nothing else, the upgrades may contribute to your home selling a little faster in a challenging real estate market.