Putting price tag on green building a challenge, even for the pros

When Rob Hawthorne and Bart Bergquist give a tour of one of the ultra-efficient homes they build, some features are hard to miss. The 22 solar panels on the roof, for example. The extra-thick walls, doors and windows, too.

But a lot of what makes the house so efficient blends into the background, if it’s visible at all. The advanced ventilation system, which keeps fresh air circulating in the tightly sealed house, is mostly in the walls and ceilings. Heat exchanges, which salvage heat otherwise expelled through vents and drains, are unseen except in the form of smaller electric bills.

It’s easy for some of the materials, processes and technology used in green building to go unnoticed, even by pros like real estate agents and appraisers.

For advocates of green building, that represents one of the biggest obstacles to mainstream adoption. No one knows how much homebuyers will actually pay for green features — which means builders, remodelers and lenders won’t take the risk to put them in most homes.

“It’s kind of a cart before the horse sort of thing,” said Erik Cathcart of the Portland-based nonprofit Earth Advantage.

With that in mind, advocates of green building are working hard to highlight the value of green-building products and techniques, but not by making their pitch to consumers.

Instead, they want to make sure brokers and appraisers are taking note of those features when they value and market homes. The hope is that more data will prove consumers are willing to pay a premium for efficiency, and that will in turn push the practices into the mainstream of American homeownership.

To that end, Earth Advantage is planning a bus tour for industry pros later this year visiting showcase Portland homes and explaining how they were listed and appraised.

“A lot of this depends on the people who are out there on the front lines,” said Cathcart. “If you walk into a house and don’t know what questions to ask, things are going to be missed.”

Key to the effort is convincing agents the importance of including green features in their sale listings, which ultimately provide the basis on which appraisers determine what other houses are worth – and which keep the features front and center in the public’s mind.

When appraisers inspect a house, they’re trying to determine what a likely buyer of the home would pay for its location, size and features, and they do it by looking at the prices for which similar houses sold. Finding those comparable sales is near impossible when many or most listings leave out key features or green certifications.

“If it’s not in the listing, it doesn’t exist,” said Taylor Watkins, a Portland appraiser. “It has to be in the listing in order for me to isolate it … and demonstrate (a buyer) will pay more for it.”

Many listings just don’t. For example, the number of reported sales in Realtors’ listings database for new Energy Star certified houses in Oregon isn’t even close to the actual number homes certified under federal program, Watkins said.

Assuming green-building advocates are eventually successful with their campaign, there’s still the challenge of convincing consumers that a given feature is worth spending extra money.

There is a niche of homebuyers seeking out those features, probably more so in Portland than in many places. But most buyers will want to see a return on their investment in the form of energy savings and resale value before a feature will be considered worth the cost.

Some features of green homes, like indoor air quality, are much more difficult to quantify, and many buyers are simply unwilling to make trade-offs on neighborhood or square footage regardless of any other factors.

“Some people still shop exclusively by dollars per square foot, and that segment of the market is not going away,” Watkins said. “Simply because a home has been proven to be more efficient than the one next door doesn’t mean there’s a standard increase in value.”

Hawthorne and Bergquist, the builders who make their homes to a rigorous standard advocated by the Passive House Institute (well insulated, virtually air-tight buildings primarily heated by solar and other “passive” sources), say they haven’t had to worry about value. The homes they build under the name PDX Living LLC typically sell before they’re finished.

That would thrill most builders, but it also means their inventory hasn’t gone through the normal sales channels, where it would be seen by the biggest pool of prospective buyers.

“The last one, we actually really tried not to sell,” he said. “We don’t know how they will fare on the open market. Our goal is to show there’s a place for this.”

— Elliot Njus

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