Affordable Housing
Estimates vary on the price of going green, but industry insiders say eco-friendly building materials and mechanical systems typically add 5% to 10% to the construction cost compared to what’s used for a standard home. The application and inspection process to achieve third-party green certification adds another 3% to 5% to the cost. Experts say that for luxury homes, these percentages are much lower, so the cost of going green on larger homes ends up being a smaller portion of the total construction cost.

Green certification can be obtained through a number of programs, including the U.S. Green Building Council’s LEED for Homes program and the National Association of Home Builders’ National Green Building Standard. The LEED (Leadership in Energy and Environmental Design) program is the world’s most widely used green building rating system. To gain certification, homes must be third-party inspected, tested and performance verified. The LEED system favors smaller houses because they tend to use less energy, so larger homes must typically achieve greater sustainability in other areas to attain one of the four levels of certification: certified, silver, gold and platinum.

As of May, the USGBC had certified over 56,000 homes in the U.S. and abroad. The organization says LEED for Homes has grown about 20% year over year. It anticipates a similar increase in 2014 and a slightly higher rate in 2015 and 2016.

The resale value of third-party-certified sustainable homes is higher than comparable standard houses, according to a 2012 study by professors at the University of California, Berkeley, and the University of California, Los Angeles. Single-family homes sold in California between 2007 and 2012 that were labeled LEED-, Energy Star- or Greenpoint-rated commanded an average premium of 9% relative to comparable, non-labeled homes.

Other studies found similar price premiums for homes sold in cities such as Portland, Ore., Seattle and Atlanta that were certified as “green” or “energy efficient.” In some cities, certified homes sold more than 3% closer to the asking price and spent over 20% less time on the market than non-certified homes.
The long-term payback from lower energy and water bills can also be significant. For example, one 15,000-square-foot eco-home near the ski town of Winter Park, Colo., reportedly pays just $450 per month in utility bills.

There are also significant tax breaks for going green. DSIRE, the Database of State Incentives for Renewables & Efficiency (dsireusa.org), provides information on federal, state and local financial incentives for implementing renewable energy systems and improving energy efficiency. Depending on where they reside, homeowners may also be eligible for rebates from their state, city or utility.

Benevolent Building
If there’s an existing structure on-site, the green building process usually begins with deconstruction, rather than demolition, to minimize the amount of usable material sent to landfills. Williams says he coordinates with appraisers who can get $25 to $35 per square foot for everything that’s in a typical home slated for deconstruction. For about $2,500, appraisers can identify salvageable items for donation to charities like Habitat for Humanity. Williams says he knows of a homeowner in the ritzy La Jolla Shores neighborhood of San Diego who generated a non-cash charitable contribution of $94,000—just for donating used cabinets.

To design the new home, Williams says it’s a good idea to hire an architect with green credentials, such as a LEED accredited professional (AP). “It’s helpful to have an architect who can design a green home, because it makes the builder’s job easier. But it’s critical to have a green builder, because it’s the implementation that really counts,” he says.