Posted by: jeb1 | April 6, 2011

Remodeling Existing Homes Seen as the Next Big Thing in Green Building from NAHB

As NAHB volunteers and staff prepare for the National Green Building Conference & Expo in Salt Lake City on May 1-3, the green building industry finds itself at a crossroads.

On the one hand, interest in third-party green certification programs for homes continues to climb, with nearly 2,200 projects certified to the National Green Building Standard as of last week, according to the NAHB Research Center, which administers the verification and certification program.

Program growth is especially noticeable among production homes and in multifamily projects, said Michelle Desiderio, director of green building programs at the Research Center.

On the other hand, the housing industry is still struggling with appraisal issues, and those issues are compounded in many markets when builders go green. Many banks and appraisal officers don’t know how to accurately valuate green construction or say there aren’t enough comparables to reflect a green home’s potentially higher value.

Continuing housing market doldrums are compounding the problem. Consumers remain skittish about home buying and most are not willing to pay a premium for green features, even if adding insulation and more efficient equipment and appliances has the potential to save them money on their utility bills.

For instance, Shugart Enterprises, building homes for first-time and move-up buyers in North Carolina, has committed to building all its new homes to the Bronze level of the National Green Building Standard but decided it couldn’t shift the extra costs to its customers and remain competitive. It does certify homes to the higher Silver and Gold levels if the customer pays for the additional costs.

 


Armory Park Del Sol

 

Remodeling: The Next Big Thing

John Wesley Miller — principal of John Wesley Miller Companies in Tucson, Ariz., and a green building pioneer with more than 50 years of experience in the industry — made national headlines two years ago when the home he built for a Habitat for Humanity project was the first ever to be certified to the National Green Building Standard.

The company is also responsible for the 93-home Armory Park Del Sol development, an infill project in Tucson in which all the homes feature solar-powered electrical and water heating systems.

Armory Park Del Sol homes have not depreciated in value at the rate that many other Tucson homes have, but the last three homes to be built in that development will likely not have as many high-end features as the other homes. Miller said he has to price them to sell. 

For the immediate future, Miller said his company is concentrating on the burgeoning market in remodeling and renovation projects — particularly for older homes that need significant retrofitting to make them more energy-efficient.

With his green building experience, “The biggest difference that we can make towards recycling and energy conservation is by fixing the tremendous stockpile of ‘un-green’ homes,” he said.

He’s changing out windows, installing new equipment and replacing roofs — first adding a substantial layer of insulation. “Of course, even as we do this, we always make sure the client knows we can build them a new green home when they are ready, too,” he said.

Missouri builder and remodeler Matt Belcher agrees. “As the industry comes back, the focus is going to be on remodeling and revitalization and doing infill development — places where the infrastructure already exists, so you don’t have that additional capital expense,” he said.

It’s a win-win for the builder and the local government. “Cities are interested in seeing their housing stock improve,” he said.

Right now, Belcher is working on an infill development that will eventually become a community of about 30 zero-energy-ready homes and doing rehab projects in the old town section of Jefferson City, the state capital. “The number-one rule of real estate is location, and this is a short walk and an even shorter bike ride to downtown.”

A longtime NAHB Green Building Subcommittee member and volunteer, Belcher worked with an NAHB task force that advised the Appraisal Institute as it prepared new educational tools and resources for correctly valuating sustainable construction; and along with other volunteers from the state home builders association, he is trying to change the rules about who can appraise green in Missouri.

“If I sell a farm, I have to use an appraiser who is qualified in agricultural appraisals. The same should be true for green — a qualified appraiser should do the appraisal,” he said.

Just Starting Out, Focus on Quality

The residential solar equipment business that Miller started 15 years ago is booming, and now has many competitors. “I am just as enthusiastic as ever — or even more so — about green building,” he said.

But anyone just starting out needs to be realistic about the prospects, he said.

“I would warn anyone that they need to be willing and able to wait to turn a profit,” Miller said. “Focus on quality and building your reputation. Honor your warranties. Be sure you communicate with your customer and get everything out on the table.

“Of course, you want to sell the job, but you also want to be a good counselor,” Miller continued. “You have to be educated and knowledgeable about products” — one advantage of attending events like the National Green Building Conference & Expo.

“And if you can get a job in today’s market, take it. It’s tough out there right now. My guess is that it will be 2012 or 2013 before we see a turnaround here. We need to be patient,” he said.

The market in St. Louis and mid-Missouri is also slow, Belcher said, “But the guys that are building green all have projects going on. I think that’s as strong a statement as you can make about the state of green building.

“The difference is the buyers today are more discriminating because they can be, quite frankly,” he said. “Builders and remodelers need to make sure they are educated if they want to be advocates for their customers and do well in this niche, because it is the future. That’s why people should go to the National Green Building Conference.”

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