Builders going 'green' out of necessity

When sustainable development first emerged a few years ago, most builders weren't willing to risk their production schedules for new building methods and options that were either untested, not in demand by buyers, or both. Even as recently as a couple of years ago, buyers claimed they wanted 'green' homes but weren't willing to pay the extra freight for its benefits. But now, with LEED energy certified projects in much greater demand (especially for commercial buildings but increasingly for residential developments), builders are finding that offering energy efficiency far beyond what's currently available in existing homes can sometimes pry skittish buyers out of hiding. From a Wall Street Journal story:

More builders are adding "green" features to their new homes. It is a strategy born out of necessity.

In October, the Trilogy division of Shea Homes rolled out a program dubbed Shea Superiology for its 1,500 to 2,000 new homes this year. The homes will have environmentally friendly features such as increased insulation and energy-efficient electronic appliances. KB Home this year also began including appliances awarded the federal Energy Star rating for high energy efficiency as standard in homes, even though they cost more than those without the designation. And Pulte Homes Inc. is adding more insulation and energy-saving appliances at some of its subdivisions in the southwestern U.S...

he push for environmentally friendly construction comes as the housing industry remains mired in a deep and protracted slump, with single-family housing starts off more than a third from 2005 and widely expected to keep sliding this year. To stand out from the crowd, big home builders are going green for the first time or are expanding their existing programs -- a departure from previous practice, when environmentally friendly building was mainly limited to a niche of smaller builders. But results so far are mixed: some developments report increased traffic but no pickup in sales. Other builders say sales are on the upswing but it is too early to tell whether it is at a faster pace than their comparable, nongreen developments. And the higher cost of green construction is proving a hurdle for some companies.

Overall, as much as 10% of all housing starts, at a market value of $38 billion, are expected to include environmentally friendly construction by 2010 -- up from 2% of starts, or $7.4 billion, last year, according to the National Association of Home Builders. The trend is also getting a boost from the federal government: The Department of Housing and Urban Development has in the last year sponsored "concept homes" in Omaha, Neb., and Charleston, S.C., that include various green features...

Consumers have also responded favorably to Shea Homes' new green program. Although sales prices of the homes with environmentally friendly features run 3% to 4% higher than those of comparable properties, buyers told the Scottsdale, Ariz., builder in surveys that they would be willing to pay more for a green home in return for energy savings. In one Phoenix-area subdivision, Encanterra, Trilogy officials say they have sold 83 homes since opening it in November, or twice as fast as the local market...

Among other obstacles, green building can be costly. Industry experts figure that features such as energy-efficient appliances and better insulation can add 3% to 5% to the cost of a home...

Such costs have taken a toll. Pardee Homes, a Seattle-based builder that is owned by forest-products giant Weyerhaeuser Co., is backing off a green program it started last year to include Energy Star appliances as a standard feature in its homes. It costs about $50 more for an Energy Star dishwasher than a conventional model...

Environmentally friendly building doesn't always result in immediate new sales. At its 78-home Timber Creek development in Las Vegas, which opened in April, Pulte Homes had retrofitted in January the models to be certified as green under local green building standards. Features include ultraefficient air conditioners, dual-pane windows with a metallic coating that blocks out the sun's heat and low-flow toilets.

The Bloomfield Hills, Mich., builder says visitor traffic to the development has since increased, with customers drawn in part by estimated monthly savings of $60 to $80 on their power bills because of increased insulation in the Nevada heat. Still, Pulte officials say it is too early to tell what impact the move will have on sales; to date, 50 of the homes in the Las Vegas development have sold...

Meanwhile, Cherokee Investment Partners, a private-equity fund in Raleigh, N.C., in December opened a show home that has been certified by the builders' association as the first green home built in an existing development. Officials of the equity fund, which specializes in socially-responsible investments, say they built the five-bedroom, $500,000 home with traditional-looking designs to show other builders it could be done.

Among its features: a wheat kitchen cabinet coated with a cherry veneer, and solar shingles that match the look of shingles of older homes in the neighborhood. Jonathan Philips, senior director for the firm, has moved into the home and says builders from all over the country have come to tour it.