38% of New Homes Will be Green-Built by 2016

McGraw-Hill Construction says nearly four out of 10 new homes built by 2016 will be green homes. That's a five-fold increase from today. Green home construction only costs 7% more than traditional building.

Green Home Construction
By Jason Knott
April 27, 2012
For integrators still waiting to implement green solutions strategies ... don't wait much longer. According to a new study, the green home trend does not appear to be a flash in the pan.

Thirty-eight percent of new homes built by 2016 will be green homes, according to McGraw-Hill Construction. And the cost of constructing a green home is expected to drop for homebuilders. Back in 2008, builders reported that green building adds 10 percent to the construction cost. Today, it's only 7 percent more costly.

The data is evidence for integrators, especially those on the West Coast, that there will continue to be an opportunity for bringing energy-related solutions to their clients.

The Green Home Builders and Remodelers Study says green homes comprised 17 percent of the overall residential construction market in 2011, and that number is expected to grow to between 29-38 percent of the market by 2016. This equates to a five-fold increase, growing from $17 billion in 2011 to between $87-$114 billion in 2016, based on the five-year forecast for overall residential construction.

According to the study, construction industry professionals report an even steeper increase in green home remodeling; 34 percent of remodelers expect to be doing mostly green work by 2016, a 150 percent increase over 2011 activity levels. Many home builders have shifted to the remodeling market due to the drastic drop in new home construction. In fact, 62 percent of the builders who do both new and remodeling work verified that the economy has increased their renovation work.

"The housing market is critical to the U.S. economy," says Harvey M. Bernstein, VP of Industry Insights and Alliances, McGraw-Hill Construction, "and the results of our study show that despite the drastic downturn in housing starts since 2008, green has grown significantly as a share of activity - indicating that the green market is becoming an important part of our overall economic landscape."

Forty-six percent of builders and remodelers say "building green" makes it easier to market themselves in a down economy, and 71 percent of firms that are dedicated to green home building report the same.

"This study demonstrates phenomenal growth in green building and indicates that we can expect even larger increases in the coming years," said NAHB chairman Barry Rutenberg, a home builder from Gainesville, Fla. "In a sample of NAHB builder and remodeler members, nearly 90 percent reported building green at some level. This is a powerful testament to the importance of green home building - and transforms the way we think of homes overall."

By 2016, many more builders anticipate that they will be dedicated to green building work on over 90 percent of projects - 33 percent expect to be dedicated to green work in 2016, up from 17 percent in 2011. Remodeling will grow even more dramatically - 22 percent of remodelers report that they anticipate they will be dedicated to green work in 2016, nearly triple the 8 percent who report being dedicated to green work in 2011.

Many factors are driving the green homes market, with "higher quality" and "increases in energy costs" topping the list, indicating that today’s green homebuyer is not just a green consumer. Buyers recognize that green homes have lower bills due to higher building performance. The reported costs of building a green home have also gone down significantly. Builders report that the cost to go green is now 7 percent, as compared to 10 percent in 2008 and 11 percent in 2006.

While green is growing across the U.S., three regions are seeing higher than average growth. The West Coast has seen the highest green growth; the Midwest’s northern region, west of the Mississippi, is second highest; and New England ranks third.


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