These are only a handful of the many questions addressed by the second annual green building survey conducted by the Cahners Residential Group — Professional Builder, Luxury Home Builder, Professional Remodeler and HousingZone.com — in partnership with industry manufacturers and associations. Sponsors this year include Professional Builder, Housing Zone, E-One, Panasonic, Willamette, the Wood Promotion Network, CertainTeed and USGBC.

Consumers and home builders were directed from several Internet sites, including those of the American Society of Interior Designers, the EPS Molders Association, James Hardie, the Florida Home Builders Association, the Texas Association of Builders, the NAHB and its Research Center, the Vinyl Siding Institute, the Sustainable Buildings Industry Council, Austin City Connection, the American Institute of Architects, the California Building Industry Association and Built Green Colorado, to the online survey posted at www.housingzone.com. Nearly 300 people completed the 23-question consumer survey, while 344 builders answered the 53-question residential builder survey.

The 2000 survey served as a benchmark — a snapshot of the state of green building in the residential construction industry. Today, with two years of data behind us, we have an updated picture that reveals fascinating trends in builder practices and consumer desires.

What are some of the most distinct trends? On the consumer side, saving energy, using fewer resources and improving indoor air quality continue to gain importance. Compared with last year, consumers are willing to pay significantly more up front for energy-efficiency upgrades that will reduce their monthly bills, and they’re willing to accept a longer payback period for those upgrades.

On the home builder side, green building products are more available than they were last year, but they cost more. Environmental goals are even more important to builders than they were last year. But builders continue to significantly underestimate the value customers place on a healthy environment and a healthy home.

In fact, the divide keeps widening between builders’ perceptions of what buyers want and what buyers say they want.

Eight in 10 consumers now say that new homes do not meet their demands in sustaining the environment, up from six in 10 last year. While 20% of buyers say they would pay $10,000 for a package of green features in a new home, only 6% of builders believe that buyers would pay more than $5,000.

When we reported the survey results last year, we kicked off with the builder’s perspective. But because the data point to a widening communication gap between builders and their customers, this year we’ll hear from the customers first.

Customer Snapshot
Consumer respondents this year represent a geographic cross section of the country, with slightly more than half living east of the Mississippi River. Their average annual income is $77,000, a 10% increase over last year (Fig. 1).

More respondents own their homes: nearly eight in 10 (79%) compared with seven in 10 (70%) last year. To put this in a broader context, the homeownership rate of the United States as a whole reached 68% in the second quarter of 2001. Twenty-six percent of consumers in the 2001 survey were in the process of buying a home.

Energy Efficiency Tops the Charts
The news on the energy front in the past year was harsh and relentless: soaring energy prices and apparent supply shortages, rolling blackouts in California, a failed electricity industry deregulation scheme. Some problems were regional, but consumers from across the nation responded to the 2001 survey with a clear message: They want energy-efficient homes (Fig. 2).

Nine in 10 (91%) say energy-efficient features in a new home are extremely or very important. And they’re willing to pay more up front for energy-conservation upgrades than they were last year. On average, they’ll pay $2,327 extra, a 36% increase over what they were willing to pay last year (Fig. 3).

They’re also willing to wait longer before recouping their investments. On average, consumers today expect a four-year return on investment for energy upgrades that reduce their monthly bills, compared with an expected three-year return last year. And only 2% say they would not pay more up front for energy-efficiency upgrades, down from 5% last year.

Although a survey respondent’s good intentions aren’t necessarily perfectly aligned with a buyer’s real-world actions, a year-to-year comparison of the data shows distinct trends. More people want to save energy, and more people are willing to spend more money for energy-efficient home upgrades.

Sustainability Matters
Saving energy isn’t the only environmental issue consumers care about. Instead of pocketing the savings resulting from energy-efficiency upgrades, almost two-thirds of consumers (64%) would use the savings to offset the cost of other green building features.

In general, upgrades that enhance a home’s environmental performance rate significantly higher among consumers than do upgrades that aren’t specifically green. When asked to identify the three upgrades they would most prefer out of a list of eight potential upgrades, 94% of consumers chose energy-efficiency features, 59% selected improved indoor air quality, and 40% chose a kitchen cabinet upgrade (Fig. 4).

All of the green upgrades were more important to consumers this year compared with last . And buyers ranked six out of seven resource-conserving features as more important than they did last year (Fig. 5).

Wise Wood Use
Consumer concern about the environmental impacts of wood use continues to grow. Sixty-two percent want engineered wood products to be used in new homes, up from 50% last year. Six in 10 consumers (61%) say the use of certified sustainably harvested lumber should be standard in new homes, up from 46% last year. Eight in 10 consumers prefer a home that is built without using old-growth trees, up from 64% last year (Fig. 6).

The Air We Breathe
Indoor air quality ranks second in importance on both a list of desirable home upgrades and a list of general environmental issues consumers care about. Almost nine in 10 respondents (88%) this year are aware of products that emit gas chemicals into their living environments. And three-quarters of those people say it’s extremely or very important to have a home with no products that release gas chemicals into their living environments.

Falling Short of Expectations
Builders aren’t satisfying their customers’ hunger for homes that are healthy for the environment and for their families. Eight in 10 consumers say new homes are not meeting their demands in sustaining the environment. Last year 63% made this claim (Fig. 7).

And new homes are failing to meet buyers’ expectations even though the overwhelming majority of buyers (96%) claim they are willing to pay extra for green building features, up from 89% last year (Fig. 8). More than two-thirds (68%) would pay $2,500 to $5,000 for green features, and an additional 20% would pay $10,000. This is a substantial increase from last year, when 56% said they would pay $2,500 to $5,000 extra, and only 10% said they would pay $10,000 for a green package (Fig. 9).

Buyers are sending a clear signal: They want new homes that are energy-efficient, resource-efficient and healthy, and they’re willing to pay extra for them. But is this message reaching the residential construction industry? Here’s what builders have to say:

Builder Snapshot
Home builders responding to the survey come from every region of the country, with 56% hailing from east of the Mississippi. Sixty-three percent build one to 10 homes per year, while 19% build 51 or more per year.

Eighty-two percent say that more than 75% of their units are single-family homes, while 5% say that more than 75% of their units are multifamily. Just less than half say that 75% or more of their units are custom-built, while 11% say that 75% or more of their units are spec homes.

The Greening of an Industry
This year 28% of builders claim that 75% or more of their units are green, up from last year, when 22% of builders said that 75% or more of their units were green. This increase is largest in the category of builders who build 11 to 25 homes each year: 33% of those builders say that 75% or more of the homes they build are green, up from only 19% in this category last year.

Builders give more weight to environmental issues when planning new residential developments than they did last year (Fig. 10). Fifty-eight percent say environmental goals are extremely or very important (compared with 53% last year), while only 9% say environmental goals are not very or not at all important (Fig. 11). During the next five years, builders anticipate the most change in three areas: open space and natural corridors for wildlife, water conservation, and storm-water mitigation (Fig. 12).

Despite the trend toward greater awareness about environmental issues, builders consistently underestimate the value of green building features to their customers. For example, 64% of builders regularly use formaldehyde-free insulation in the homes they build, up from 56% last year. But 85% of consumers say they want formaldehyde-free insulation. And almost three-quarters (73%) of buyers want low-VOC paint to be standard in new homes, but only 58% of builders regularly use it (Fig. 13).

When rating the importance of energy efficiency, resource conservation and indoor air quality on a scale of 1 to 5 (with 5 being most important), buyers give each issue a significantly higher mark than builders do:

Watt’s Wrong With This Picture?
Builders’ perceptions of the value of energy-efficiency features to their customers barely budged from 2000 to 2001. This year 59% of builders say energy efficiency is extremely or very important to their customers, down from 61% last year. But consumers tell a different story: 91% say energy efficiency is ex-tremely or very important.

While 61% of consumers say Energy Star certification should be standard for new homes, only 35% of builders say it’s a regular feature of the homes they build. But that's up from 24% last year, and the number of Energy Star-labeled homes continues to climb. Approximately 1,000 builders are enrolled in the program, and 38,000 homes nationwide bear the Energy Star label.

Will Buyers Put Their Money Where Their Mouths Are?
The gulf between builders and buyers is also evident in the area of green building costs. Builders continue to underestimate how much buyers are willing to pay for green features. Last year 37% of buyers said they would pay $5,000 to $10,000 for a package of green features in a new home, while only 19% of builders said buyers would pay that much (Fig. 14). This year the gap is considerably wider: 55% of buyers say they would pay $5,000 to $10,000 extra, while only 19% of builders say buyers would pay that much (Fig. 15).

It’s possible, of course, that buyers are overstating how much they’re willing to spend. After all, checking a box on a questionnaire is a lot easier than taking on a mortgage that might be thousands of dollars higher because of added green features. Still, builders ought to take notice of the main trends revealed by two years of survey data:

• Consumers say they are willing to pay significantly more for green features than builders believe buyers will pay.
• More consumers are willing to pay even more for green features than in the past.

If it’s true that consumers are willing to pay more for green, that should be welcome news to home builders because more builders are saying it costs more to build green. In fact, 23% of builders say green building adds more than 10% to the cost of a home (Fig. 16). On average, green building adds 6.6% more, builders say, compared with an average of 5.6% last year.

Purchasing Green Building Products
When selecting building products, green building and energy-efficiency features are somewhat less important to home builders this year than they were last year, even though buyers tell us these features are more important. Only 37% of builders consider a construction product's green building and energy-efficiency features to be extremely or very important, compared with 46% last year.

Some good news for green builders: The availability of green building materials has improved. Only 4% of builders say green building materials are unavailable in their markets, compared with 12% last year.

The additional cost of green building products is up, too, according to the builder respondents, from an average of 9.6% extra last year to just more than 11.2% extra this year. Price remains the No. 1 obstacle to using green building materials more extensively, with 72% of builders citing price and 57% citing lack of demand.

More good news: Suppliers are getting better at explaining the green features of their products. Last year 39% of builders said suppliers were not at all prepared to educate builders about green features, while this year only 14% have such a dismal opinion of their suppliers’ preparedness. But there’s considerable room for suppliers to improve their performance, because only 6% of builders say suppliers are extremely or very prepared to explain green features.

Fewer builders are purchasing green building materials from traditional suppliers (74%, down from 82% last year). The Internet’s role as a source of green building materials is on the rise, with 7% of builders this year purchasing green building supplies from the Internet, up from 2% last year.

What the Future Holds
The survey was conducted during August and early September, when there were already strong indications that the country was headed toward a recession. Despite a more sober economic climate compared with a year ago, consumers remain optimistic that the benefits of energy efficiency, indoor air quality and resource conservation in new homes will ultimately be worth an added investment.

One wild card now is whether consumers’ desire for sustainably built homes — and consumers’ willingness to pay extra for green features — will continue to rise if the economic slump persists. Another question is whether consumer interest in environmental issues will remain strong given the political climate post-Sept. 11 or if consumers will find their environmental values taking a back seat to more immediate global concerns.

It might take time before we can sort out the ramifications of the current economic and political situations, but the survey trends from last year to this year point to plenty of opportunities for savvy home builders to satisfy unmet consumer demand for sustainably built homes.

Jennifer Roberts is a freelance writer focusing on sustainable buildings and business. Contact: jennifer@jenniferroberts.com.