Homebuilders going green
Housing market sees shift toward environment-friendly, energy-saving
materials

March 11, 2007
By Vinnee Tong the associated press
NEW YORK -- Green building as a cause has united disparate parties
from environmental groups to big business to policymakers, but one
key industry has struggled to react to the change in public
sentiment.

The major homebuilders, who account for 80 percent of all
homebuilding activity in the nation, face a unique challenge in
implementing green building on a widespread scale. Many have added
energy-saving features and experimented with environmentally
friendly materials but have not yet been able to sign on a critical
mass of buyers willing to pay more for them.

Increase expected

» Click to enlarge image

A San Diego "green home" by Pardee uses a solar electric power
system with photovoltaic cells integrated in the roof. The major
homebuilders, who account for 80 percent of all homebuilding
activity in the nation, face a unique challenge in implementing
green building on a widespread scale.
Lenny Ignelzi / The Associated Press
Increase expected

The National Association of Home Builders and McGraw-Hill
Construction predict a rise in green building to 10 percent of homes
by 2010 from 2 percent today, but experts say the large-scale
residential builders have been slower to respond because of the
extra costs and availability of materials.
"The residential market as I see it is the last one to take off,"
said Mary Ann Lazarus, sustainable design director of the
architectural firm HOK.

Global warming a factor

Homebuilders are crucial to reducing greenhouse gas emissions
believed to cause global warming, according to Ed Mazria, founder of
environmental activist group Architecture 2030. He estimates that
buildings - their construction and operation - contribute 48 percent
of overall emissions while transportation adds 27 percent and
industrial activity 25 percent.
Certainly, there has been frustration among some of the largest
homebuilders about finding the right cost formula. Estimates vary
widely for how much green building can add to the final price, with
the lower estimates at 3 percent to 5 percent versus higher
predictions of 10 percent to 15 percent.

Efforts disappointing

Ara Hovnanian, head of one of the nation's biggest homebuilders,
said that all other things being equal, consumers would choose
green. But, he said, all is not equal.
"Consumers have not been willing to make the investment," said the
CEO and president of Hovnanian Enterprises Inc.

Hovnanian was one of 10 homebuilders that developed an all-green
community called Terramor in Orange County, south of Los Angeles. He
said the results of that venture were frustrating; consumers were
unwilling to pay extra for green features such as solar panels to
generate electricity.

"The disappointing thing is we were all hoping consumers would
embrace it and at least be willing to pay a substantial part of the
premium," he said. "I can't say we were overwhelmed by the results
financially."

Recouping that premium is more of a problem for developers who build
properties for sale, as opposed to those who can benefit later from
lower electricity bills or being able to charge higher rents.
Investing in green features ultimately benefits the home buyer, so
if the consumer is unwilling to pay more, the cost-benefit formula
makes no sense, in Hovnanian's view.

Suburban building

Bill Valentine, chairman of architecture firm HOK, said the main
goal for architects who support green building is to get
sustainability into the common man's budget.
"The real action is in suburbia, in reconstructing suburbia," he
said.

Mazria of Architecture 2030 and others say that's about to happen.

"I think we're just seeing the beginning of a total transformation
of the building sector," Mazria said.

Mazria said a number of different parties are working on proposals
to extend the tax benefits in the Energy Policy Act of 2005 that
could encourage growth in green building. He said two New Mexico
Democrats, Rep. Tom Udall and Sen. Jeff Bingaman, are working on one
version that could extend the act to 2013, and in some cases double
the level of tax credits allowed for energy-saving measures such as
using solar or photovoltaic panels.

"It is a very small price to pay for mitigating the potential impact
of climate change," Mazria said.

Green building laws

To date, 11 federal agencies, 17 states and 53 municipalities
require buildings to meet either local green standards or those set
by the U.S. Green Building Council, a nonprofit group.
Among the early adopters are two smaller homebuilders, Los Angeles-
based Pardee Homes and Florida-based WCI Communities Inc. While they
are much smaller than homebuilders like Hovnanian, KB Home and
others, they also build mainly where consumers have been more
receptive to green building practices.

Pardee marketing Vice President Joyce Mason said one-third of about
10,000 homes it has built since 2001 are in its Living Smart line of
homes, which come with carpet made from recycled soda bottles and
wood from managed forests. She said consumers had always appreciated
the green features, but buyers have started specifically asking for
them in recent months.

"We saw it first happen in hybrid cars," Mason said. "I think it's
probably going to shift over to houses."

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