Green homes comprised 17 percent of the overall residential construction market in 2011 — a number that is expected to grow to between 29 percent and 38 percent of the market by 2016.
By value, this equates to a five-fold increase, growing from $17 billion in 2011 to $87-$114 billion in 2016, based on the five-year forecast for overall residential construction.
According to the study, construction industry professionals report an even steeper increase in green home remodeling; 34 percent of remodelers expect to be doing mostly green work by 2016, a 150-percent increase over 2011 activity levels. Many home builders have shifted to the remodeling market due to the drastic drop in new home construction. In fact, 62 percent of the builders who do both new and remodeling work verified that the economy has increased their renovation work.
“The housing market is critical to the U.S. economy,” said Harvey M. Bernstein, VP of Industry Insights and Alliances, McGraw-Hill Construction, “and the results of our study show that despite the drastic downturn in housing starts since 2008, green has grown significantly as a share of activity — indicating that the green market is becoming an important part of our overall economic landscape.”
The green home building study, produced by McGraw-Hill Construction in conjunction with the NAHB and Waste Management, is designed to provide key insights into market opportunities, backed by proprietary research surveys and the power of the Dodge database. The study reveals business benefits afforded by green building, such as a competitive marketing advantage: 46 percent of builders and remodelers find that “building green” makes it easier to market themselves in a down economy, and an overwhelming 71 percent of firms that are dedicated to green home building report the same.
“This study demonstrates phenomenal growth in green building and indicates that we can expect even larger increases in the coming years,” said NAHB Chairman Barry Rutenberg, a home builder from Gainesville, Fla. “In a sample of NAHB builder and remodeler members, nearly 90 percent reported building green at some level. This is a powerful testament to the importance of green home building—and transforms the way we think of homes overall.”
By 2016, many more builders anticipate that they will be dedicated to green building work on over 90 percent of projects— 33 percent expect to be dedicated to green work in 2016, up from 17 percent in 2011. Remodeling will grow even more dramatically— 22 percent of remodelers report that they anticipate they will be dedicated to green work in 2016, nearly triple the 8 percent who report being dedicated to green work in 2011. These builders are clued into the revenue opportunity afforded by green building and know that home buyers will pay more for green homes, according to 61 percent of builders and 66 percent of remodelers.
“Home buyers and builders increasingly want to do what’s right for the environment,” said Jim Halter, VP for Construction Solutions, Waste Management. “This trend has been taking off within our business as customers look to recycle and divert more materials from landfills. We’re excited to see the results of the study; they validate the services we offer.”
Many factors are driving the green homes market, with “higher quality” and “increases in energy costs” topping the list, indicating that today’s green homebuyer is not just a green consumer. Buyers recognize that green homes have lower bills due to higher building performance. The reported costs of building a green home have also gone down significantly. Builders report that the cost to go green is now 7 percent, as compared to 10 percent in 2008 and 11 percent in 2006.
While green is growing across the U.S., three regions are seeing higher than average growth. The West Coast has seen the highest green growth; the Midwest’s northern region, west of the Mississippi, is second highest; and New England ranks third.
McGraw-Hill Construction will continue analyzing the results of the Green Home Builders and Remodelers Study and release a printed report in April during the NAHB’s National Green Building Conference and Expo in Nashville. Further findings, including remodeling details, green technologies, and green product adoption in green homes, will be included in that report. For more details in the meantime, visit http://bit.ly/wsF2gJ.Share