Study Finds Green Homes in Texas Worth $25,000 More in Resale Value

USGBC’s 2015 Green Building Economic Impact report found that the residential green construction market is expected to grow from $55 million in 2015 to $100.4 million in 2018, representing a year-over-year growth of 24.5 percent.

If you’re passing off eco-friendly home building as a trend that’s not worth the up-front investment, you might need to think again.

The University of Texas at Austin and the U.S. Green Building Council released a report finding that, not only are green homes worth more in resale, new homes in Texas built to LEED standards (Leadership in Energy and Environmental Design) command an 8 percent premium. Homes built to other green standards also sell at higher prices – 6 percent higher than conventional homes.

The joint study, conducted by the Real Estate Finance & Investment Center at The University of Texas at Austin’s McCombs School of Business, looked at 3,800 homes with third-party green certifications built between 2008 and 2016. It aimed to answer the question: Does certification impact resale value? The short answer was yes.

“Our research shows there is a ‘green premium’ in the Texas single-family home market,” said The University of Texas at Austin’s Dr. Greg Hallman. “The average new home in our Texas MLS dataset sells for $311,000, so a 6 to 8 percent green premium represents a significant gain for home owners, developers, and real estate agents and brokers.”

An analysis of more than 230,000 homes in Texas, the report used “a regression model taking into account interior floor area, number of bedrooms and bathrooms, garages and the age of the home, as well as whether or not homes were built according to green standards including LEED.”

LEED Homes Benefit People, Planet, and Profit

But it’s not just the market values that make green-built homes so appealing. Homes built to these standards are healthier and more energy efficient. And those energy savings really add up. According to the USGBC, on average, LEED-certified homes use 20 to 30 percent less energy than a home built only to code, with some homes reporting up to 60 percent savings.

With more than 6,890 homes already certified or pursuing LEED certification in Texas, interest in green residential building is only growing. USGBC’s 2015 Green Building Economic Impact report found that the residential green construction market is expected to grow from $55 million in 2015 to $100.4 million in 2018, representing a year-over-year growth of 24.5 percent.

“As developers and buyers continue to see the value in LEED, we expect the number of LEED-certified homes to increase in the Texas market,” said Taryn Holowka, senior vice president, USGBC. “Homes that are built to meet green standards deliver more value to the seller and also ensure that buyers will have a high-value sale down the road and reap the benefit of lower utility bills while living in the home.”

While LEED remains the most widely used third-party green rating systems around the globe, it’s certainly not the only measure of environmental building. In a follow-up to this report, we’ll discuss with some Texas-based experts the merits other green certifications and the affordability of green residential building for us average Joes. Stay tuned!

 

2 Comment

  • In the most populous Metroplex counties, our maturing green residential market typically has 2,000+ homes for sale that are third-party certified to ENERGY STAR, LEED, Green Built Texas, and/or energy-use-rated under the Home Energy Rating System (HERS). I provide a monthly count of these, as well as lots available for custom builds, on the “Green Homes Available” tab on my website http://www.BethJohnson.com . As the first full-time North Texas REALTOR to specialize in green building, it’s gratifying to have witnessed this market segment go mainstream in the last 12 years and now be able to offer certified homes in a wide variety of locations, sizes, prices, and architectural styles!

    • Thanks, Beth! I’ll be covering our conversation in a follow-up to this story very soon! There was so much good material, I didn’t want it to get lost!