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Green Home Building Market to Nearly Double By 2016

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A new industry report estimates that production of sustainable homes in the nation’s housing industry will nearly double in the next four years.

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The green homes share of the construction market was 17% in 2011, equating to $17 billion, and expected to rise 29% to 38%  by 2016, potentially a $87 billion–$114 billion opportunity, based on the five-year forecast for overall residential construction, according to a new report from McGraw-Hill Construction and the National Association of Home Builders.

The data— released as part of a new MHC SmartMarket Report called “New and Remodeled Green Homes: Transforming the Residential Market”—reveals that two of the key factors driving the market growth are the fact that green homes are seen as having higher quality and saving consumers money.

“In the current residential market, there is an enormous need to differentiate your homes for consumers,” said Harvey Bernstein, vice president of industry insights and alliances at McGraw-Hill Construction. “When builders are able to offer homes that are not only green but also offer the combination of higher quality and better value, they have a major competitive edge over those building traditional homes.”

The report, produced by McGraw-Hill Construction in conjunction with the NAHB and Waste Management, is designed to provide insights into product and market opportunities in the single-family home building and remodeling industries. It is backed by proprietary research surveys and information from the McGraw-Hill Construction Dodge database.

“NAHB builder and remodeler members were surveyed on their green building practices, which allowed us to shine a light on the state of the green market in this new report,” said NAHB Chairman Barry Rutenberg, a home builder from Gainesville, Fla. “The results highlight the tremendous growth in green building, and the potential market opportunities that lie ahead. As more projects seek green certification, NAHB and the NAHB Research Center stand ready to meet the demands of this exciting and ever-changing market.”

Factors driving growth in the green homebuilding and remodeling market include:

•    Higher quality for both new homebuilders and remodelers. For those doing a high volume of green homes (at least 60% of the homes they build), its importance is magnified, with 90% who regard higher quality as an important trigger for building green, compared to 72% of builders overall.

•    Customers are strongly value-driven—around two-thirds of builders and remodeler respondents state that customers request green homes or remodeling projects in order to lower their energy use or save money—more than twice any other factor.

•    Higher first costs for building green are noted by a much lower percentage of builders as an obstacle now than they were reported in 2008.

The study also reveals the key practices and technologies taking over in the residential marketplace as a result of the shift toward green:

•    More than 80% report that energy efficiency is making today’s homes greener compared to two years ago. Use of energy-efficient features is pervasive in the market—the top practice by nearly all surveyed builders and remodelers, regardless of their level of green building activity.

•    Indoor air quality is growing in importance and focus for home builders. 60% of home builders believe that efforts to improve indoor air quality make homes greener than they were two years ago, and 95% of high volume home builders report including features that impact air quality.

•    More than half consider durable materials one of the most important features in their homes today. In particular, remodelers emphasize this key aspect of their projects. Durability and better materials are key reasons why green homes and remodeling projects are considered of higher quality.

“These findings confirm the shift we’ve seen in the market,” says Jim Halter, vice president of construction solutions for Waste Management. “Builders and remodelers are placing more emphasis on energy efficiency, increases in sustainability focused waste management practices and more products made from post-consumer materials. These important factors are pushing our industry forward.”

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