By Dona DeZube
Homes in California that earn a green label, like LEED for Homes, Energy Star, or GreenPoint, sell for 9% more than comparable homes that don’t have a green designation, say researchers from the University of California Berkeley and UC Los Angeles.
However, the researchers didn’t calculate the actual energy efficiency of the homes or the cost of achieving the designation, and admitted that they don’t know whether home owners would recoup the green label premium when they resell their homes.
About 70% of the homes in the study, which looked at sales between 2007 and 2012, were new homes. The study’s authors took into account other things that influence home prices, like size, pools, views, and location, in calculating the value of a green label.
Home buyers paid the highest premium for the green label in areas with hot climates where electricity costs (and air conditioning bills) are relatively high.
There was also an interesting link found between how popular green ideology was in an area — which the study measured by looking at the percentage of car owners who had hybrids — and how much people were willing to pay for a green-labeled home. The premium for a green home seemed to be larger in an ecologically-concerned community. “…[S]ome home owners may attribute value to intangible qualities associated with owning a green home, such as pride or perceived status,” the study authors said.
According to the study, the average market value of a green label was three to four times higher than the value of the energy cost savings inherent in a green home, said NATIONAL ASSOCIATION OF REALTORS® Environmental Policy Analyst Austin Perez. “This doesn’t make much economic sense unless perhaps the label is misleading consumers and could stigmatize less efficient homes,” he said.
Some communities are experimenting with label programs that label all homes. “If green labels add substantially to the value of efficient, green homes, then conversely, non-green homes would see a substantial decrease from labeling. The study doesn’t investigate this negative impact but does cite research that negative information in a label would reduce a property’s value,” Perez said.
The study suggests a $35,000 loss in market value for the average inefficient California home if it were to receive a negative energy label, he concluded.