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Building Green in a Black and White World-- Chapter 3

The following is an exerpt from the book Building Green in a Black and White World.
Section 2; Chapter 3; Part 3; Actual Costs - Is Building Green Too Expensive?

David Ritchey Johnston
January 1, 1900
HousingZone

Actual Costs - Is Building Green Too Expensive?

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.

Overhead View 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.

Stapleton Environmental Option Packages

OPTION PACKAGE 1 (What’s in it for me?)

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.

OPTION PACKAGE 2 (Will my home be healthy?)

Health Features

Low-toxic adhesives $23
Eliminating toxins in conventional glues
Sealing particleboard cabinets and counter top $250
Seals in formaldehyde, prevents out-gassing
VOC free paint $100
No harmful VOCs inside home
Water-based finishes on wood and floors $150
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.

OPTION PACKAGE 3 (additional beneficial features)

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.