Do Green Homes Have Higher Resale Value?

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By: Danni Eickenhorst

“Green home building” isn’t just a construction industry buzz word, it is a body of home construction techniques and practices that are becoming increasingly important to homeowners and home buyers alike. The methods result in homes that are more energy efficient, require lower maintenance, and healthier than typical new construction homes.

Energy efficient, sustainable homes are characterized by their use of sustainable materials, and less volatile chemicals. Green homes are finished with Energy Star-rated appliances and lighting fixtures. And these homes also employ innovative air handling systems and home sealing techniques. These features save homeowners money over the course of time when they are living in the home, but are energy efficiency and sustainability features that increases the resale value of your home?

RESALE Value of Green Homes

A July 2017 study by the University of Texas at Austin and the U.S. Green Building Council (USBGC) recent found that homes built to meet green building standards such as LEED and ENERGY STAR are worth an average of $25,000 more than conventional homes. The Green Homes study looked at more than 3,800 green-certified homes, including LEED-certified homes, built in the Austin-Round Rock MSA between 2008 and 2016 to determine if certification raised the resale value of homes.

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Appraisal methods for green home building

Since energy efficient and green homes are still on the leading edge of home building technology, it only makes sense that the valuation practices for these features are still in their infancy. The Appraisal Institute published their first book teaching professionals about how to value green homes in June of 2010, and as a developing paradigm for appraisal professionals, it is a challenge that is top of mind for many home builders and homeowners.

Kim Hibbs, owner and general contractor for Hibbs Homes, explains, “Accurate appraisals for green verified homes are really a challenge right now. Most appraisers don’t fully understand the benefits to a green built home, only made more difficult because it is hard to find comparable homes to help with their analysis. The NAHB and many local HBA’s are taking an aggressive approach to help educate appraisers as to the short and long term benefits of these homes.” He went on to add, “In many markets, there is now a special category for green homes in the Multiple Listing Service (MLS) which is used by Realtors to search for homes.”

Taking into consideration the daily cost of living, the average green home saves the homeowner around $800 a year in living expenses. Take, for example, the course of a standard home loan (30 years): the average green homeowner will save about $24,000 in living expenses, or about $66 per month, during that period of time if you maintain an energy efficient home, e.g. by replacing appliances, etc. That figure doesn’t even account for the increase escalating energy costs during those 30 years. So, bare bones you could easily say that an energy efficient home is worth in the ballpark of $24,000 more than a conventionally built home.

But the big question that remains to be answered is whether that will translate into the perceived value of a home by buyers? We predict, based on customer demand and education about these features, that energy efficiency is going to become much like many modern amenities that home buyers have come to accept as standard when looking for a home. Just as you have a home inspector evaluate the foundation of your home, you will also see buyers performing energy efficiency audits to determine if they will purchase a home or not.

Build your energy efficient home

Are you considering building a green home? Contact our green home building experts at Hibbs Homes at 801-895-2040.

Free Resources to Help You

Free Resources to Help You