HousingZone
Building Green in a Black and White World-- Chapter 3
David Ritchey Johnston -- 1/1/1900
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Builders often claim that building green is too expensive and that they can’t afford to incorporate the green features. They also claim that when they increase the cost of the home, they lose the lower income families who can’t qualify for the higher priced home. Although it is possible to add costs that exclude buyers, the following analysis shows how to add the features that customers want and increase the percentage of buyers who can qualify for the home.
The following study was conducted for the redevelopment of the old Stapleton airport site in Denver. It began with focus groups and an analysis of what prospective homebuyers wanted. The cost breakdowns were directed at several areas of consumer interest: What’s in it for me? How can I save money? How can I protect my children with a healthier home? and other environmental or "feel good" options.
This study is based on a 1540 square foot home typical of the market average in the Denver neighborhood adjacent to Stapleton. The house is two stories with an unfinished basement. It is front loaded with an attached two-car garage. It has 3 bedrooms and 2 baths. The sales price of the original model is $150,000.
The following costs reflect materials only. They were based on the builders’ costs for conventional materials, and where green features were more expensive, only the additional cost is identified.
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Stapleton Environmental Option Packages |
Energy Features:
- Enhanced sealing package $230
Spray foam seals cracks to reduce drafts - Spray-cellulose insulation $150
Recycled newsprint further reduces infiltration - Suntempering $0
Existing windows moved to south wall Southern windows help heat the home - Energy efficient hot water heater (DHW) $275
R=16 tank jacket reduces heat loss - Set-back thermostat $75
Night temperature reduction saves energy - Low-E Windows $185
Coating saves heat and improves comfort - Ceiling fan $300
Green Features, reduced maintenance:
- Recycled content decking $163
30 yr. life/no painting required - Recycled content carpet $0
Longer lasting, more stain resistant - Xeriscaping $0
Water saving, less maintenance
Other no or minimal cost green features
- Recycled content siding $0
Less repainting, more durable - Engineered lumber $200
Eliminates old growth framing lumber, Creates a stronger, straighter home
Total additional cost Option 1 $1578
Energy upgrade features result in an estimated annual utility savings of $185. The amortized carrying costs of the upgrades at an 8% mortgage rate is $139, resulting in an annual savings of $46 for the family.
Health Features
Eliminating toxins in conventional glues
Seals in formaldehyde, prevents out-gassing
No harmful VOCs inside home
Lowered toxic solvents in floor finish
Total additional cost Option 2 $523
Based on a $150,000 priced home, additional costs for Option 1 + Option 2 of $2101= 1.4 percent added to price ($152,101).
The total annual carrying costs for Options 1+2 = $185. This is equivalent to the energy savings from Option 1.
Energy Features:
- High efficiency furnace & DHW $1000
Saves energy with 90%+ efficiency - Passive solar features $1350
30% energy savings with south windows Add recycled tile for thermal mass - Above code insulation $1000
R=24 walls (1” foam wrap), R=38 ceilings - High efficiency appliances $500
$100-200/yr. savings - Compact fluorescent lighting $200
Electricity savings, bulbs last 4 times longer
Total energy upgrade $4,050 Additional Green Features:
- Cement based roofing $3850
Fire insurance savings, 50 year life - Cement based siding $250
No maintenance, fire resistant, 50 year life - Recycled content ceramic tile $375
More durable floors
Total green upgrade $4,475
Additional Health Features:
- Formaldehyde-free sub floors $600
No off- gassing from adhesives - Formaldehyde-free cabinets and counters $600
No off- gassing from cabinets into food - Heat recovery ventilation $1000
Year ‘round fresh air, vents indoor toxins Eliminates furnace, heats home with DHW
Total health upgrade $2,200
Total additional cost Option 3 $10,725
The additional energy features result in an estimated energy savings (including Option 1) of $70-100 per year, depending on the extent of passive solar contribution. The additional carrying cost for all Option 3 features is $856 per year.
Based on the $150,000 house, additional costs = 6.5 percent added to the price. With all options, the total is $162,826 (some features are redundant and reductions would be made to total cost depending on features chosen).
A typical family with a combined annual income of $48,000 could qualify for a $150,000 home. By incorporating just some of the energy features, the buyer could qualify for an Energy Efficient Mortgage. (This mortgage program factors in principal, interest, taxes, and insurance, plus energy bills, PITI+E.) The program allows a "stretch" of 2 percent increase in the buyer’s debt-to-income ratio, so the same family could qualify for a $163,000 home and use all three option packages above for $162,826.
This example of costs associated with green building illustrates that not only can you incorporate the features your customers want, but you can do it so that even more buyers can qualify for your home by taking advantage of the Energy Efficient Mortgage program. Energy conservation helps sell homes by making them more affordable monthly and by helping lower income families get better housing.
Continue to Taking Your First Steps
Would you like to purchase this book?
Building Green in a
Black and White World
by David Robert Johnston
Also See:
I.How to Enter the Market Introduction
III. Actual Costs - Is Green Building Too Expensive?
IV.Conclusion
© 2009, Reed Business Information, a division of Reed Elsevier Inc. All Rights Reserved.