Sustainable, “green” living is not a new trend. Builders and brokers have long recognized the importance—and often the need—of incorporating things like energy-efficient windows, power saving appliances and solar as consumers are nudged by government incentives and have grown increasingly concerned about climate change.
But in recent years, there appears to be an acceleration in the sustainable home industry. Builders have rapidly innovated more accessible green technology, and advocates and policymakers are propagating a wide, complex range of designations and incentives for green home features.
With all the technical depth and disparate bureaucracy, for real estate agents, there is a danger of getting left behind.
Chris Widmer is an architect and owner of a small, green-focused building company in Guilford, Connecticut. Like many in the sustainable real estate industry, he says he chooses to focus on these types of homes due to a commitment to combating climate change.
However, because of the growing complexities and prevalence of green designated houses, and as “zero energy” and passive home design become more ubiquitous—particularly in Western and Northeastern markets (though with states such as Virginia and Texas also growing)—Widmer says homebuyers are going to have more and more questions about green issues.
“I think it’s incumbent on REALTORS® to learn about these things,” he says. “I think they’re going to be more and more prevalent.”
The Green Landscape
Though much of the market remains in flux, there is one trend that seems certain—green is growing.
According to the National Association of Home Builders (NAHB) the number of single-family builders reporting at least 61% of their projects as “green” rose from 31% in 2015 to an expected 44% in 2022. Real estate agents surveyed by the National Association of REALTORS® (NAR) earlier this year reported that more than half of their clients were interested in sustainability. One-third said they had helped a client buy or sell a property with green features in the past year.
In the short term and in smaller markets, green remains a question mark. The simple financial barrier—with many certified green houses costing somewhere between 10-25% more than comparable builds, according to Widmer—is still enough to keep buyers from taking that plunge to choose them over traditional builds.
Still, according to Wayne Beals, a managing broker with EXIT Strategy Realty in Chicago who has prioritized sustainability in his business, green is not only growing, but sustainability and energy efficiency are actually going to define the market as time goes on.
“There are REALTORS® out there that are great business people, they’re great REALTORS®, but maybe they’re not into sustainability. Eventually it’s going to grab their attention because the business model of sustainability is very strong,” he says.
Brokerages have shown some indication that they will lead by example, making their own practices more sustainable.
Aman Daro is the chief operating officer at Red Oak Realty, an independent brokerage in the San Francisco Bay Area, boasting about 150 agents. The company recently completed an initiative to make all their offices carbon neutral, and provide regular time for agents to learn about or discuss sustainability issues.
According to Daro, sustainability is about Red Oak’s ethical commitment to solving urgent environmental issues more than anything else. But at the same time, he says that building an authentic brand can be a tremendous asset as there are now more and more consumers making choices based on a business’s environmental awareness.
“It’s not necessarily the sole reason someone is going to pick our company,” he says. “But it’s another step that helps differentiate us and helps give people greater confidence in working with a company that represents the values that those people may also hold.”
It’s this broad, creeping nationwide movement toward sustainable features that will eventually infiltrate every market from rural Alabama to scintillating San Francisco, according to Beals, as consumers learn that these features are not just vanity projects, but are beginning to replace traditional home amenities and design.
Those in the real estate and home-building sectors that fall behind will quickly find themselves at a disadvantage, he says.
“If you drive a semi-truck to work and you could care less about global warming, you will still want to live in a better house, and that is what is going to drive the change in the industry,” says Beals.
Stepping into a home with these kinds of features, experiencing the air quality, lighting and ambience of spaces will quickly change the kinds of expectations consumers have, Beals suggests, and many builders that are not even seeking a green designation or marketing their homes as sustainable are using green practices and technologies.
“Green, sustainable homes are completely different from the way we’ve been building houses,” Beals says. “They’re more comfortable, they have better indoor air quality, they are less expensive to own, they take less maintenance, they are quieter inside. There’s just a lot of things about building sustainably that align with the luxury side of the market, that align with the consumer’s preferences. And once you teach the consumer these things and they experience it and think it’s possible, they’re not going to accept anything else.”
What Is ‘Green?’
As the green landscape continues to shift, Beals—whose background is in construction—says one thing remains constant: sustainable requires more knowledge, and more skill.
“ built by a builder that just fundamentally knows more than an average builder because you have to be the ‘A’ student—who doesn’t want to buy the house built by the ‘A’ student versus the ‘C’ student?” he quips.
Widmer’s homes are at the highest end of sustainability, with the aim being that they create as much energy as they use, and are therefore using “net zero” energy. Beals says this concept “has the most legs” in the current market because it saves money.
“The houses are pretty well designed; they‘re nice houses,” Widmer says. “If you’re offering somebody a home where their utility bills are zero, essentially…that could equate to some additional value to the home.”
Arlene Baxter is a real estate agent with Red Oak, and has spent over two decades in the industry with a focus on sustainability, boasting an impressive resume that includes writing some of the early guidelines for what defines a green home and consulting on the original creation of the NAR Green Designation—a program to help REALTORS® better understand sustainable homes and practices.
A lot of times, “green” is just common sense, she says.
“That was one of the things we stressed with the Green Designation. We’re trying to have our homeowners be more comfortable, and we can do that with sustainable practices—and they don’t have to be high tech ones,” she says.
Electrification of homes to install heat pumps; installing mini-split air conditioning and heating units; using recycled denim for insulation; and caulking air ducts and offsetting studs in new walls are all simple, low-tech practices that grew from the green industry—Baxter says they should and will hopefully be ubiquitous across the country.
But sustainability is also a broad and sometimes disparate set of practices and infrastructure, and it offers a whole host of ancillary benefits to a consumer. While many people do value Net Zero and higher-tech green solutions, many others are just happy to have their living space grow more comfortable, efficient and eco-friendly.
“There is a market of buyers who will specifically value, at the very top end, a ‘net zero’ home—they’re rare still, but we hope that there will be more of them,” Baxter says. “I think now, finally, we are getting to the point where sustainable homes, efficient homes are also financially efficient.”
While “green” designations through third-party certification are important to prevent “greenwashing”—features or buildings that are marketed as sustainable but really are not—many homes can offer important and useful features without these designations.
Baxter uses the example of solar battery backups, which retain excess electricity created by solar panels. These can be used in the case of an outage or natural disaster, providing temporary, limited power to a home at no extra cost.
Widmer says these sorts of benefits are becoming more and more common and cost effective—something consumers are quickly picking up on.
“It used to be ‘green’ means higher insulation and better windows; but now there’s so much more to it now than just that,” he says.
Falling Behind
There is some evidence that as green building practices and technology grows more complex, real estate agents are not keeping up with builders and consumers as far as knowledge of sustainable homes.
Agents surveyed by NAR have actually expressed lower confidence in discussing green features with clients in recent years—61% said they were comfortable answering questions from clients on home performance in 2017, but only 37% said the same in 2021.
Baxter says that it is vital for every agent across the country to keep up with green thinking and innovation—not only to address urgent climate change, but because those ideas are really re-defining what is valuable and necessary in a home.
That is not to say that understanding and tracking all these things are easy. Widmer says that over the last few years, both builders and policymakers are driving rapid changes in everything from how homes are insulated and heated to the materials used to build them.
“The energy code nationwide has really tightened up over the last five or 10 years, and I think if REALTORS® aren’t kind of thinking about those sorts of things, they need to be more proactive in their own education,” he says.
An example of these changes at a high level is a new emphasis on electrical appliances and heating over natural gas, according to Baxter. Conventional wisdom for decades held that gas was cheaper and more efficient, but through solar and other technologies, electrification is not only much better for the environment now, it can also save a lot on utility costs, she says.
In fact, these new technologies are so superior that those outside the real estate industry are now pushing them. The city of Berkeley has banned new constructions from using natural gas in favor of electricity, according to Baxter, and Beals said that in the Chicago area, a local power utility is offering builders a cash incentive to construct certain energy-efficient homes.
Baxter says she has worked with other agents and brokerages in California to spread awareness about sustainable practices. She has gone so far as hosting cooking demonstrations on an induction stove or showing what electrifying a house looks like, working with a state-wide group of other agents on a “climate action committee” to regularly highlight sustainable practices or amenities.
She also suggests that the focus on sustainability is all about protecting her community—and all communities—from the increasingly urgent threat of climate change and is something Baxter has been dedicated to her entire life. She says the hope is that more and more people grow their awareness of these issues and begin to participate positively in sustainability in all parts of their lives.
But regardless of anyone’s consciousness of these issues, the concepts and philosophies driving sustainability are already radically changing the real estate industry.
“At the beginning, it was definitely a push marketing job, where we had to inform the consumer,” Beals says. “But once these products enter a market and a consumer gets informed, they don’t want the old house.”
Jesse Williams is RISMedia’s associate online editor. Email him your real estate news ideas to jwilliams@rismedia.com.
