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Over the last several decades there has been an interesting contradiction in the real estate market. Sustainable homes are of high interest to consumers. Because they cost less to own, provide greater comfort and are healthier than most other homes, they should be widely successful, but so far have failed to gain significant traction in the marketplace. How could a housing product that is demonstrably superior to the competition fall short when it seems to supply the benefits that consumers declare they want? A recent survey by the National Association of Realtors (NAR) of its members may shed light on this conundrum. In spite of the indicators pointing to public desire for greener homes, the survey reveals how slowly the real estate industry is moving toward selling sustainability.

Information is Key

Information is key to the public making wise choices and is in the public interest. Yet in the most telling response, the report stated that only 43% of multiple listings services (MLSs) include information on “green data” on homes. Since MLS listings are the most important source of information for buyers, it’s regrettable that less than half of them mention green features, such as energy efficiency features and performance metrics. If such vital information about properties is not available, how can consumers make informed purchases, and how can sellers capture the true value of their properties? Nevertheless, the report does show that a strong majority of brokers (71%) said that it would be useful to promote energy efficiency features in multiple listings.

The Most Important Features for Home Sales

It should come as no surprise that comfortable living spaces placed first on the list of important features. In fact, it was the number one priority for 95% of respondents. Because thermal comfort, allergen-free air, and outside sound abatement are strengths of zero energy homes, brokers could easily capitalize on these sales points if only they there were clearly presented to buyers. Emphasizing the way energy-related features, such as air sealing, insulation, and better windows improve the thermal and auditory comfort and air quality of a property can be an effective marketing tool for selling sustainable homes.

Proximity to frequently visited places showed up second on the list of important features of a home to potential buyers at 87%. Locations close to schools, work, and shopping reduce auto commuting and increase the viability of walking and biking as alternative forms of  transportation. Paired with commuting costs, which came it at number 5 on the list, the idea of cheap and easy neighborhood transportation also melds nicely with city-capable electric vehicles. Brokers have been selling “location, location, location” for decades, so it seems logical this key housing characteristic would support an increase in sales of transportation-efficient properties.

Market research consistently shows strong interest among home buyers for energy saving features. Why then the stark contrast between what Realtors® sell and what consumers desire? Through their responses, Realtors® demonstrated that the car is still king. Commuting cost was number five on the list of most important features with a 58% response rate. But drilling down into the transportation topic with additional questions showed that their clients are most concerned with commuting time and distance (81%) as well as access to highways (82%). Walkability came in as the third greatest transportation issue with 51%. Bike lanes were 39%. While cars still rule the road, walking and biking are gaining mindshare among home buyers. On the other hand, mass transit is not top-of-mind with 69% of home buyers rarely or never requesting to see properties near public transportation.

Utility costs offer yet another opportunity for brokers to exploit the benefits of high-performance homes. Almost 80% said that utility costs are very or somewhat important to clients, making it fourth of the ten most important features. Several more interesting points appeared in the top ten. Energy efficient lighting captured 50% of responses. Green community features, such as bike lanes and green spaces came in at 37%. Finally, renewable energy was mentioned by 23% of respondents.

 

Mixed Attitudes Toward Solar

Eighty percent of brokers reported that solar panels were available in the local market. However, there was disagreement about their value. Forty-two percent said that solar panels increase a home’s value, while 9% said panels hurt value and 31% claim that there was no difference either way. Despite this confusion among real estate professionals, renewable energy is now a highly-valued home feature in the marketplace – one that is supported by a considerable amount of evidence showing that solar panels increase home value by thousands of dollars.

Market Issues

The respondents noted 12 market issues that need to be addressed. Interestingly, 8 of the 12 issues are information related. These included:

Information about the valuation of sustainable features seems to be particularly needed. While respondents may feel as if there is little information on these topics, that is not really the case.  Knowing where to find this information seems to be the bigger problem. Here at the Zero Energy Project, we provide this information either directly on our website, through our monthly e-newsletters, or via our partners. Follow the links above to see examples of the information already available on those topics.

 

Attitudes

Brokers’ biases toward their own transportation preferences may shed some light on their attitudes toward efficiency overall. Only 11% of brokers responding said that they drove an energy-efficient car, while 57% reported that not only did they not drive one, they had no intention of doing so in the future. Another 29% drive an inefficient car but plan to upgrade.  On the other hand, 86% of respondents had taken steps to use less energy in their personal lives.

 

The Way Forward

Perhaps the most encouraging element of this survey is that it shines a light on the information that is lacking in conventional real estate marketing. A good place to start to remedy this lack would be for the industry to update the 57% of the MLS services that don’t include green information. Much of the needed information is, in fact, available, but industry professionals are not aware of it or do not view it as important. The National Association of Realtors should increase its effort to spread the word on the value of high performance homes and disseminate existing data and tools to capture the additional market value of these homes. Everyone will benefit, including sellers, buyers, brokers, appraisers, and lenders. It would be a winning formula for everyone.