Will green homes perk up the housing market?
When there are more than 4 million unsold houses, builders and sellers cut prices or add value. Green homes that offer energy efficiency and power production follow the value path.
Not only do green homes save people money over time by reducing power and heating bills, they can reduce water usage, improve indoor-air quality and give owners a competitive edge when they need to sell their houses.
Even though it's still a tiny part of the overall market, green homebuilding has risen 50 percent since 2004, according to the National Association of Home Builders.
More than 97,000 such homes have been built since the mid- 1990s. The association says about 35,000 of them will be built this year out of a projected 1.5 million total housing starts.
This niche will be significant if it grows at an annual rate of 5 percent to 10 percent by 2010, as the trade group predicts. New-home construction may not return to the 2006 level of more than 2 million units until 2011, it says.
Power-producing properties are starting to take hold in California, where electricity rates are high relative to the rest of the country.
In Danville, Calif., the new Mediterranean-style homes that are being built in this dry, verdant valley east of San Francisco will all have solar-power panels. Lennar Corp. plans to build 375 solar homes in the San Francisco Bay area.
Lennar solar installations partially pay for themselves since local power rates range from 8.7 cents per kilowatt hour during off-peak periods to an exorbitant 29 cents at peak times during the hottest part of the day.
"If there is excess electricity during peak times, the residents will be credited at peak rates," says Les Lifter, vice president of marketing for Lennar.
On an annual basis, the home can cut electricity bills in half, Lifter estimates.
For $1.4 million, Lennar can build you a 3,800 square-foot, two-story home with five bedrooms, 4 1/2 bathrooms, an office and a "technology" area with a two-car garage. The house also includes a security system, intercom, high-speed Internet, home theater, energy-efficient windows, high-efficiency air conditioning and in-wall pest control. The median home price in the area is about $750,000.
Premier Homes Properties Inc., of Roseville, Calif., in an area where summer heat often exceeds 100 degrees Fahrenheit, sells zero-energy homes equipped with solar panels, tankless water heaters and additional insulation.
While their homes cost $40,000 to $90,000 more than other houses in the area, the builder says Premier's properties offer utility bills that are 60 percent less than conventional homes.
Premier tells buyers they can be "cash-flow positive" for the additional money spent, due to lower power bills.
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Going 'green' 97,000
Approximate number of green homes built since the mid-1990s. The National Association of Home Builders says about 35,000 of them will be built this year out of a projected 1.5 million total housing starts.