California builder aiming for net zero
It's a known fact in southern and northern California that the homebuilding market is in dire straits. But that didn't stop Herb Gardner and three partners from launching City Ventures in Santa Ana in January 2009.
Gardner, president of homebuilding for City Ventures, said that his company focuses on building green townhomes in urban areas. He said that his company was formed with the idea of getting in at the bottom of the real estate cycle, with the market at historic lows.
"We used the concept that Warren Buffett takes credit for, which is to be fearful when others are greedy, and greedy when others are fearful. Knowing that homebuilding is completely cyclical, you want to start when others are fearful and get out when others are greedy," he said.
The company builds from San Diego to San Francisco, particularly in the 13 coastal counties within 40 miles of the coast.
"If you can supply for a reasonable price in those urban infill areas you're in a pretty consistent high demand environment. Even in these times. We've sold 100 homes this year," Gardner said. "I don't believe demand ever left supply restricted areas on the coast. Just that prices ran away from demand."
The company focuses on townhomes in the price range of $250,000 to $650,000. There are projects currently underway in Carlsbad, Encinitas, Brea, Signal Hill, Santa Barbara, Alhambra, Covina, Sunnyvale and Ventura. Four of the projects are being built to LEED Gold standards.
The homes are about 40 percent away from net zero. The goal is to be at net zero by 2014, five years after the company was founded. Since the company already has to build to Title 24 standards in California, that makes them greener than most U.S. states to start with. But solar power is ignored in Title 24, so City Ventures adds that to each townhome, Gardner said.
Every townhome is all electric, and features solar panels on the roof, as well as hybrid water heaters and a heat pump for heating and cooling. Each home also has a garage prewired for electric car charging.
Marketing is key to selling the homes. "We felt like the only way we could do this was by showing the consumer how they were saving money," Gardner said. "If there's a home that's $200,000 and the one next door is $220,000 and I say, 'but this one's green,' they will go ahead and go with the $200,000 house. Even though they say they want to be green, no one is willing to pay for it."
So, while the homes sold by City Ventures still cost more than the non-green version next door, the marketing campaign used by the sales team shows that with the additional savings on utility bills, the overall monthly cost of home ownership is the same, or less, than the seemingly cheaper home.
"The first four projects we made solar power standard and we made the homes all electric, so there's no natural gas and no gas bill. Even though $20 to $25 a month isn't a lot, people get that they have no gas bill. And because the majority of the power is coming from the sun, there's no electric bill," he said.
The company has also eliminated model homes. The cost to keep a model home running for approximately two years is about $10,000 per home, so that quickly adds to the overall cost to the builder. Instead, potential home buyers get 3D virtual tours of a home.
"Our big push right now is that you can actually own a home for less than you can rent. We call it the cocktail party concept that if you were going to go to a cocktail party tomorrow and announce, 'I just bought a new home,' you're going to get people saying, 'you're out of your mind, this is a crazy time.' You'll get negative news galore. As a builder we have to provide that person with the answer. 'Yes, I bought a new home. You know why I bought a new home? Because it's less than rent. It's cheaper to be green.' You have to give a person a reason to validate buying in this market," Gardner said.
For more information, see our Building a Green Home research center.
Teena Hammond Teena Hammond has published more than 2,000 articles in People and W magazines, Women's Wear Daily, and in dozens of newspapers and books. She also wrote a home improvement, remodeling and decor column that ran in Gannett newspapers nationwide. She's interested in all things green and would love to hear from you with your story ideas.