Green home improvements can increase a property’s real estate value by an average of 9 percent, finds a California-based study released recently.
Researchers from the University of California, Berkeley and the University of California, Los Angeles examined data on 1.6 million single-family homes sold between 2007 and 2012 in the California residential marketplace for an economic analysis of the value of green home labels.
Of the homes analyzed, 4,300 were certified with green home labels from Energy Star, GreenPoint Rated or LEED for Homes.
They found that, based on the average California home price of $400,000, homes with a green label sell for an average of $34,800 more than comparable homes without a green label.
The analysts found evidence of what they dubbed the “Prius effect” in areas where a high value or premium was placed on a green labeled home.
The “Prius effect” was a positive correlation between a home’s price premium and the environmental ideology of the area as measured by the rate of registration of hybrid vehicles.
According to the researchers, in communities with a strong prior dispositions to thinking “green” – as evidenced by owning a “green” vehicle such as a hybrid – residents seem more inclined make or look for green improvements to their homes.
“In communities with strong environmental values, residents may see green homes as a point of pride or status symbol,” said Nils Kok, visiting professor at University of California, Berkeley and lead researcher in the study.
While the price premium varied considerably from region to region in California, the analysis also found that it is highest in the areas with hotter climates.
“It appears that a hotter local climate also provides a practical reason to value green homes. With both ideological and pragmatic reasons to go green, it’s no surprise that the popularity of these labels is rising,” said Mr. Kok.
Growing awareness about global warming and the extent of greenhouse gas emissions from the residential sector has increase attention to green building in recent years. Benefits of green homes are said to be lower utility bills due to greater energy and water efficiency; higher quality construction; more comfortable and stable indoor temperatures; healthier indoor air quality; and other environmentally desirable features such as proximity to parks and shops and access to alternative or car-free transport.
Coming at the heels of the University of California, Berkeley and U.C.L.A. study comes three in-depth case studies of green homes – this time focused in Los Angeles County – that found green upgrades also increased their value by 9 percent.
The case studies, funded by the Energy Upgrade California in Los Angeles County and the Green Label Rebate Program evaluated three Los Angeles County homes before and after they received green and energy upgrades and the GreenPoint Rated label.
Following the green upgrade and labeling, the appraised value of the homes was found to have increased by 5.5 to 9 percent.
The Kienzie House, located in Whittier, had a home value of $720,000 before its green upgrades. After improving the insulation and air sealing of attic and walls and installing better shower valves, a pool pump and weather stripping, a reduction in energy costs of $2,237 a year was achieved and the house was valued at $765,000.
The Brown House in Los Angeles installed similar insulation and water reduction upgrades as the Kienzie House and added solar panels and a heating and air conditioning system with duct enhancements for a reduction in energy costs of $1,600 per year. This also raised the houses value from $475,000 to $500,000.
Lastly, the Gerardo House in San Fernando achieved the biggest increase in home value, from $420,000 to $460,000 with energy reduction costs of $1,963 per year. The Gerardo house improved its insulation, heating and cooling system, pool pump, roof, and also installed solar panels.
Other local residents who wish to follow in the footsteps of these three houses can also earn up to $2,000 in rebates for a green label on their home and an additional $8,000 in rebates for energy and green upgrades through the Energy Upgrade California in Los Angeles County.
It’s estimated that the residential sector in the United States accounts for 33 percent of its energy consumption with a total expenditure of $166 billion in 2010. Increasing the energy efficiency of housing can provide cost savings for consumers as well as help the country meet its emission reduction goals.
By EcoSeed Staff