Do Green Enhancements Increase House Value?
Do Green Enhancements Increase House Value?
As I was contemplating whether to incorporate greener features into our house while we were remodeling, one of the questions that came up was related to whether it is financially ‘worth it.’ Certainly I see the value in doing our part to help the environment and I can certainly calculate the reduction in utility bills, but I was also wondering if my house would be worth more.
Eventually, we will be ready to downsize and sell. Will my green efforts pay off financially as well as morally (slowing climate change)?
As an industry, we’re early in the data collection phase on this topic, but the data that has been collected is promising. All data shows that buyers are willing to pay more for green attributes in prospective homes. The data range is quite wide and shows that home buyers are willing to pay anywhere from 5% all the way up to 30% more for a ‘green’ house.
For example, an article in the Boston Globe shows that green improvements will boost your home value by 6-9%. For a $500,000 house, that’s a $30,000-$49,000 increase in value!
And, the article states that each $1 in annual energy savings yields $15-$20 in increased resale value.
Pearl claims that a Pearl certified home will be worth an extra 5%.
However, the most extreme data point was presented in an article by the Washington Post. They claim existing homes with green enhancements will draw a 30% premium. That’s an extra $150,000 on top of that $500,000 house example above!
Another approach may be to look at trends that are occurring in new home sales. I think that we can safely say that the trends of green enhancements in existing homes will follow those trends that we’re seeing in new homes. And, after all, the existing home sales far outnumber the new home sales. In 2017 the sales of existing homes, according to Statista, was 5.51 million compared to 614,000 for new homes.
Per Energy Star, more than 100,000 ENERGY STAR certified single-family homes and multifamily units were built in 2017 alone, for a total of nearly 1.9 million since 1995. In 2017, this was roughly 1 in 6 new homes.
ENERGY STAR certified homes are at least 10% more energy efficient than homes built to code and achieve a 20% improvement on average, while providing homeowners with better quality, performance, and comfort.
I think that it’s safe to say that if 1 in 6 new homes, at a minimum, are super energy efficient, there is increased demand for these types of homes. And, if people are demanding this in new homes, they will demand this more and more in existing homes – driving up the value of the ‘green’ homes.
Many things impact home value – location, size, style, schools, curb appeal, update level, personal preference – and yes, energy efficiency (or the shade of green).
As described on our Calculate & Plan page, the best way to calculate or estimate the potential increased value in your home is to find a qualified realtor (with some green experience) to run some comps on houses like yours and houses like yours with various green enhancements.
When you think that you might be ready to start your journey or path to a green home, visit our Where to Start page for next steps.