Green home building and remodeling expected to increase five-fold by 2016

| by Teena Hammond
Green home building and remodeling expected to increase five-fold by 2016

Green home building and remodeling are growing fast, with a five-fold increase predicted by 2016, according to a study released today at the National Association of Home Builders (NAHB) International Builders' Show in Orlando, Fla.

More than 200 people attended the presentation where the study was revealed. McGraw-Hill Construction, a part of The McGraw-Hill Companies, conducted the study and reported that green homes comprised 17 percent of the overall residential construction market in 2011. Green homes are expected to grow to between 29-38 percent of the market by 2016. By value, this equates to a five-fold increase, growing from $17 billion in 2011 to $87-$114 billion in 2016, based on the five-year forecast for overall residential construction.

According to the study, construction industry professionals report an even steeper increase in green home remodeling, with 34 percent of remodelers expecting to be doing mostly green work by 2016, a 150 percent increase over 2011 activity levels. Many home builders have shifted to the remodeling market due to the drastic drop in new home construction. In fact, 62 percent of the builders who do both new and remodeling work verified that the economy has increased their renovation work.

"The housing market is critical to the U.S. economy," said Harvey Bernstein, vice president of Industry Insights and Alliances, McGraw-Hill Construction, "and the results of our study show that despite the drastic downturn in housing starts since 2008, green has grown significantly as a share of activity, indicating that the green market is becoming an important part of our overall economic landscape."

The incremental cost of building a green home has also decreased. Builders reported that building a green home in 2006 cost an average of 11 percent more than building a standard home, and in 2008 it decreased to 10 percent and, in 2011, it was down to 7 percent. Meanwhile, the average cost of building green in 2011 was only a 5 percent increase for builders who are dedicated almost exclusively as green builders.

"The more knowledge you have, the less it costs," Bernstein said.

The green home building study was produced by McGraw-Hill Construction in conjunction with the NAHB and Waste Management. The study reveals business benefits afforded by green building, such as a competitive marketing advantage: 46 percent of builders and remodelers find that building green makes it easier to market themselves in a down economy, and an overwhelming 71 percent of firms that are dedicated to green home building report the same.

"This study demonstrates phenomenal growth in green building and indicates that we can expect even larger increases in the coming years," said NAHB Chairman Barry Rutenberg, a home builder from Gainesville, Fla. "In a sample of NAHB builder and remodeler members, nearly 90 percent reported building green at some level. This is a powerful testament to the importance of green home building—and transforms the way we think of homes overall."

More than 60 percent of builders and 66 percent of remodelers said their customers are willing to pay more for green.

By 2016, many more builders anticipate that they will be dedicated to green building work on over 90 percent of projects, with 33 percent expecting to be dedicated to green work in 2016, up from 17 percent in 2011. Remodeling will grow even more dramatically with 22 percent of remodelers reporting that they anticipate they will be dedicated to green work in 2016, nearly triple the 8 percent who report being dedicated to green work in 2011. These builders are clued into the revenue opportunity afforded by green building and know that home buyers will pay more for green homes, according to 61 percent of builders and 66 percent of remodelers.

Many factors are driving the green homes market, with higher quality and increases in energy costs topping the list, indicating that today's green homebuyer is not just a green consumer. Buyers recognize that green homes have lower bills due to higher building performance. The reported costs of building a green home have also gone down significantly. Builders report that the cost to go green is now 7 percent, as compared to 10 percent in 2008 and 11 percent in 2006.

While green is growing across the U.S., three regions are seeing higher than average growth. The West Coast has seen the highest green growth; the Midwest's northern region, west of the Mississippi, is second highest; and New England ranks third.

"Association with quality drives green. It's the most important trigger for builders and the second most important trigger for remodelers. The housing market has shifted. Green is an integral part of it," Bernstein said.

Read more about building a green home and remodeling a green home.

Topics: Building Green, Remodeling, Trade Show

Companies: NAHB

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.

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