Study shows certified green homes sell at premium

| by Heather Ferrier Laminack
Study shows certified green homes sell at premium

According to a recent study from economists at the University of California, Berkley, and University of California, Los Angeles, green home labels do, in fact, provide a market premium, holding other factors constant, according to their statistical evidence, as previously reported by ProudGreenHome.

Researchers studied 1.6 million single-family production homes sold in California between 2007 and 2012 and found that homes labeled by third-parties such as Energy Star, LEED for Homes, and GreenPoint Rated sold for 9 percent more than comparable, non-labeled homes — a difference of about $34,800.

Although previous research has shown how green labels can positively affect the financial performance of commercial buildings, this is the largest published regression analysis of how green features and energy efficiency impact U.S. home prices. According to the authors of the study, the results also provide "the first evidence on the importance of publicly providing information about the energy efficiency and 'sustainability' of structures in affecting consumer choice."

Cliff Majersik, executive director of the Institute for Market Transformation, says he isn't surprised by the results, but he does find it remarkable that buyers are significantly valuing green features and energy efficiency, given limited information available. "It shows the latent demand and the value of credible third-party labels," he says. "This could accelerate a virtuous cycle of increasing investments in verified green/energy-efficient features and upgrades."

Majersik expects labels to pick up steam as they gain greater market share and become more mainstream. However, he warns that at some point labels will need to raise the bar or gradually lose cachet.

Topics: Building Green, Certification / LEED

Heather Ferrier Laminack
Representing the fourth generation of the Ferrier Companies, Heather Ferrier Laminack functions as the marketing manager for Texas-based green home builder Ferrier Custom Homes, utilizing her passion for sustainable building practices and her first-hand experience of green building techniques. View Heather Ferrier Laminack's profile on LinkedIn

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