Benefits of green homes
One of the most important investments a person will make is in their home. Today, we spend 90 percent of our time indoors, much of which is in our house or apartment. The conditions of our homes play an important role when it comes to our health, the environment and quality of life. Green homes, like those that are LEED certified, provide healthier, more sustainable spaces and create economic incentives for companies.
LEED-certified homes are transforming the residential market and people’s lives. They are built to deliver cleaner indoor air and more comfortable spaces, and they have been shown to have a sales, and re-sales, premium. Because of LEED’s rigorous standards, certified homes typically demonstrate at least 15 percent savings over energy codes and 20 percent water savings. In 2019, USGBC introduced the latest version of the residential rating system, LEED v4.1, which raises the bar when it comes to greening the residential market. LEED encourages builders to build above code and is proven to demand sales premiums, which more than exceed the .5 to two percent construction cost increase for building to LEED. LEED can be applied to newly constructed or renovated single-family homes and to new or existing multifamily buildings.
Green multifamily homes are good for business
- When researchers looked at rental rates achieved by green multifamily properties, they found an 8.9 percent premium associated with LEED-certified buildings compared to non-certified, This rental premium increases the annual income of a property, adding value to the property when its time to refinance.
- Property developers that plan on selling their asset after completion will find more willing investors if the property is LEED certified. Institutional investors are seeking higher-quality assets that are efficient, future-proofed and align with positively increasing non-financial impacts of the investment portfolio. Prudential Real Estate Investors has over $11.6 billion in LEED-certified assets.
- Property owners can make additional revenue through lower interest rates, since lenders and underwriters provide financing incentives for LEED certification.
- Fannie Mae has a Green Financing Loans program, which provides lower interest rates for LEED-certified projects. Freddie Mac’s Multifamily Green Advantage program also gives preferential pricing to multifamily projects that are LEED-certified, so long as projects have at least one affordable housing unit.
Green single family homes are good for business
- For AMLI Residential, a recent resident survey revealed that 84 percent of residents think living in a sustainable or eco-friendly building is very important or moderately important; 85 percent believe living in a sustainable home is beneficial to their health; and 64 percent will pay more to live in a green community.
- Green homes can be built for the same cost as—and sometimes less than—conventional homes. Average upfront costs of 2.4 percent are quickly recouped, as a homeowner will save money for the duration of his or her green home’s lifespan.
- In terms of what consumers value, a 2016 Energy Pulse study suggests that consumers in the market for new homes prioritize energy-efficient features over luxury items. In addition, various reports show that green homes sell at higher prices and faster than comparable, conventional homes.
- A Meta-Analysis of Green Home Premiums, which looked at all valuation studies available, concluded that green homes sell for a 4.3 percent premium (+/- 1 percent) with 90 percent confidence levels for the means. The premium starts between eight to 10 percent and then settles closer to four percent as green certification gains traction in a local market. This demonstrates that it also pays to be an early adopter.
- Several studies on specific markets show premiums associated with green homes, including Washington, D.C.; Austin-Round Rock in Texas; Maryland; North Carolina; California and the Northwest.
- For example, a 2016 report on home premiums in the D.C. market found that high-performing single family and multi-family homes with green features will sell for 3.5 percent more than those without green features. USGBC’s own study in 2017 found that LEED homes in the Austin-Round Rock area of Texas sell for a premium of 6-8 percent.
Green homes help us live healthier and more sustainably
- Green homes are increasingly desirable, because they improve comfort, health and quality of life; reduce maintenance; and lower utility bills; and because they feel it’s the right thing for the environment.
- Nationwide, the annual energy bill for a typical single family home is more than $2,000, but LEED-certified homes use less energy, leading to thousands of dollars in cost savings over the seven or eight years the typical family lives in a home.
- Energy and water consumption place a disproportionate burden on low-income residents. A study of energy efficient green certified apartments in Virginia found that residents saved an average of $54 a month on their electricity bills. These financial benefits are significant to state and local housing agencies.
- LEED homes are built to be energy-efficient, ensuring that they can be comfortably heated and cooled with minimal energy usage. Many mandatory requirements and optional credits are focused on measures that improve occupant and thermal comfort. They are individually tested to minimize envelope and ductwork leakage, which reduces drafts. Better insulation and windows prevents hot and cold rooms, as does testing to ensure heating and cooling systems are meeting design specifications.
- The EPA estimates that indoor air is two to ten times more polluted than outdoor air. LEED-certified homes are designed to improve indoor air quality and minimize exposure to airborne toxins and pollutants connected to asthma, allergies and other respiratory issues. LEED homes require proper ventilation, high-efficiency air filters and measures to reduce mold and mildew.
- Severe climate events, such as flooding, wildfires and more, can significantly impact municipalities and leave neighborhoods vulnerable. LEED encourages resilient design that allows residents to absorb and recover from adverse events. Read USGBC profiles of resilience.
- Each LEED-certified home undergoes onsite inspections, detailed documentation review and performance testing to ensure the health and safety of home dwellers.