Green Homes

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The eco-friendly homebuilding movement enters adolescence.

Judy and Michael Corbett are Heroes of the Planet. At least according to Time magazine, which awarded them that title in 1999 for their work in founding Village Homes, an environmentally-friendly community in Davis, California. The Corbetts began building Village Homes almost two decades ago. One of the first modern green developments in the United States, it features houses with passive and active solar heating systems, solar water heaters, an ecological drainage system, and a grid of paths for walking and biking. Over the years, the development has grown from 50 units to 240, and its popularity has soared. "The houses now sell in half the time, and for $11 a square foot more than the average home in Davis," says Judy Corbett. "Instead of being seen as a hippie subdivision, now people say we're too expensive and exclusive."

Once it was only a possibility. Today, developments like Village Homes have captured the interest of a growing number of homebuyers. And their influence is spreading: An estimated 50,000 eco-friendly homes have been constructed in the U.S. over the past decade. And in the not-too-distant future, the principles of environmentally-sound development may well be incorporated into the design, construction, and furnishing of every home in America. About 83 percent of Americans have reduced energy and water usage in the home, according to a 2000 Gallup poll. As these practices become ever more prevalent, a growing segment of the population is beginning to see the value in environmentally-sound development. Companies that heed this early eco-friendly message, stand to benefit enormously. "All homes will one day be green," says David Johnston, author of Building Green in a Black and White World, and president of What's Working, a homebuilding consultancy. "It makes too much sense for it not to happen."

In many ways, the green building movement is now entering an adolescent phase, and is poised for a big growth spurt. The first organized green building program began in 1991 in Austin, Texas. Today, there are 16, including the Denver Built Green program, which certified 3,000 homes in 1999. The National Association of Homebuilders has sponsored a national Green Building conference for the past two years, which draws some 600 attendees. A third conference is planned for March in Seattle. But more important, consumers are unmistakably interested in making their homes ecologically sound and reaping the many benefits that accompany that ethic. "Green homes are definitely on the radar screens of consumers," says Christine Ervin, CEO of the Green Building Council. "Within five years, many more people will be aware of the comfort and affordability of green homes, and it'll be in the interest of builders in a very tight market to differentiate themselves with these features."

The potential market for green development is enormous. With the U.S. population growing by 37 million over the next 15 years, it is expected that about 1.5 million new homes will be built and furnished each year. And homebuilders are beginning to take note. Beazer Homes of Arizona, for example, one of the state's largest builders, is betting that environmental features will be high on buyers' wish lists. Last year, Beazer joined the Energy Star program, a partnership of the U.S. Department of Energy, the Environmental Protection Agency, homebuilders, and appliance manufacturers. As a member, Beazer has promised to build homes that are at least 30 percent more energy-efficient than standard Model Energy Code homes.

In return, Beazer can tout its Energy Star affiliation in its brochures, banners outside model homes, and through its sales force. While Joseph Thompson, president of the company, says he was motivated by the desire to "do the right thing," Gary Gustefson, senior vice president of purchasing and product development has a more business-minded rationale. "This is a competitive advantage for us and we want to capitalize on it fully," he declares. "The beauty of green building is that it can often be both ecologically and economically beneficial."

When it comes to doing the right thing, however, marketers should keep in mind that consumers who go green in the home usually do so for some green in the pocketbook. "Our customers are usually most interested in the monthly utility savings in an Energy Star home, and the environmental benefits are secondary," says Thompson. In a 2000 survey by Cahners Residential Group, 39 percent of respondents chose reduced monthly costs as one of the best benefits of green building, while 33 percent chose reduced environmental impact. And for those buyers who are keen to do their part for the planet, Beazer salespeople can hype those aspects as well. After all, you don't have to be Ralph Nader to appreciate the fact that the average home produces more pollution than the average automobile in a year, and that energy efficiency in the home reduces those emissions.

Yet, if green building is so good for consumers, builders, and the environment, why aren't even more Americans on the green bandwagon? Builder inertia and a lack of knowledge on the part of the public, says William Browning, who runs the Green Development Services division of the Rocky Mountain Institute, an environmental think tank. Indeed, in a 1998 survey of homebuilders in the Atlanta area, 81 percent indicated that buyers never asked for efficient framing techniques, 33 percent said clients never sought energy conservation features, and 71 percent said they were never asked about resource-efficient building materials. Only 15 percent said buyers always, or sometimes, inquired about energy or water efficiency; and none of the builders said they were asked to use recycled building materials most, or all, of the time. This contrasted greatly with a similar survey of Atlanta area homebuyers, 86 percent of whom said that energy efficiency in a new home was important, or very important, and 74 percent who said the same of resource efficiency.

The disparity between what consumers say they want, and what builders are hearing, is often a matter of education - or a lack of it. Many homebuyers are not knowledgeable enough to bring up these issues on their own, and they are also unsure whether new building materials or techniques actually work, says Diane Cotman, executive director of the Center for Sustainable Building and Technology. But when they are given a choice, buyers increasingly opt for the environmental features. "For builders to give a lack of consumer demand as the reason for not changing, is like steering your company looking out the rearview mirror," Browning declares. "Companies who take the lead in this field are going to be rewarded."

The Home Depot certainly hopes so. In 1999, the company announced that it would give purchasing preference to wood products that had been certified by the Forest Stewardship Council (FSC). Like the Energy Star program, the FSC has created an easily identifiable logo, which lets consumers know that the lumber, furniture, flooring, or any other wood-based product for sale, is made with timber from forests which are managed in an ecologically-sound manner. Founded in 1993, FSC is running an advertising campaign in magazines, featuring celebrities such as Pierce Brosnan and Olivia Newton-John, encouraging consumers to look for the FSC logo on all the wood products they buy.

As the world's largest retailer of wood products, Home Depot's announcement that it would give preference to certified products has already spurred suppliers. Window giant Anderson Corporation, recently decided to follow Home Depot's lead and join the certified-wood club. Other major retailers, such as Lowe's, have also followed suit. And there are other signs that certified wood is going to play an important role in the building and home improvement industries: Architects have started to request it, says Libby Johnston, a spokesperson for Anderson. "Architects tend to be early adopters in the building industry and this could herald a wider trend," she says.

If Europe is any example, it may soon become a liability for wood products not to carry the FSC logo. "You can't spit in a B&Q without hitting a FSC symbol," according to Nick Brown of the World Wildlife Fund. (B&Q is the leading home improvement retailer in Europe.) Meanwhile, back in the U.S., Home Depot is creating a communication plan for 2001 to build awareness of the certified-wood program and the company's leading role in it. What's the motivation? Some environmental groups say prodding by Rainforest Action spurred the decision, but Francis Grant-Suttie of the World Wildlife Fund gives the company some credit. "Here's an example of a corporation ahead of the market and consumers," he says.

In fact, the one problem in this effort so far is that there is not yet enough FSC-certified wood available in the U.S. to promote the concept in a significant way to consumers. That's left the door open for other industries to jump on the green bandwagon. The American Iron and Steel Institute (AISI), for example, has launched a concerted effort to paint steel as a green alternative. Currently, only about 3 percent to 5 percent of new homes are framed with steel, up from 1 percent in 1993. But AISI is shooting for 25 percent within five years. Sensing a turning point in consumer awareness of logging issues, AISI is pitching steel as a completely recyclable material. The AISI message: You can frame a 2000 square foot house using the metal from six old cars, rather than the quarter acre of forest that a wood frame requires. The trade group even changed its logo color to green.

To help emphasize this theme, AISI helps sponsor America Recycles Day each November 15 and gives away a brand new home every two years, which the organization builds for the winner, anywhere in the U.S. - with a steel frame, of course. AISI promotes this homebuilding technique, and the contest, on the America Recycles Web site and in mall displays. Like many of the most popular aspects of green building, steel offers both environmental and practical rewards. "Steel is three times stronger than wood, and you don't have to worry about termites," says Noah Hagerman, the contractor who's building the home of the most recent contest winner. However, Hagerman believes that the ecological benefits alone would not be enough to persuade buyers to pick up the cost increase of using steel, which runs about 3 percent more than wood in Hagerman's hometown of Charlotte, North Carolina. Similar to consumers who adopt energy-efficient measures, prospective steel-frame consumers want to know the impact on their wallets, as well as the environment, before they invest in a more expensive home.

One of the most important developments in the green building movement that will make it easier for consumers to understand what "green" actually means, and the benefits it can bring to a homeowner, is the creation of the LEED green rating system. Developed by the U.S. Green Building Council, LEED (which stands for Leadership in Energy and Environmental Design) rates buildings on a scale of 0 to 69, providing buyers and tenants with a clear picture of which environmental features a particular structure has implemented. Buildings with a rating of 26 or better are considered LEED-certified. Those scoring 33 to 38 are designated LEED Silver, 39 to 51 win a LEED Gold rating, and 52 and over, LEED Platinum. "This system will speed the growth of green building by creating a system that allows buyers to know what they are getting for their money," says David Deppin, vice president at Sausalito, California-based Van Der Ryn architects, which specializes in ecological designs.

Currently, the LEED rating is designed for commercial buildings only, but a draft of the residential version will be finished toward the end of 2001. The overwhelming industry interest in the system has led to a jump in membership in the Green Building Council from 200 in 1998, to 600 today. Already, California, Pennsylvania, Seattle, and the U.S. General Services Administration have mandated that all new taxpayer-funded buildings must meet certain LEED standards. "LEED helps prevent `greenwash' in the marketplace," says Ervin. "A rapidly growing number of consumers and builders are interested in green building and this provides a set of standards that everyone can understand."

Educating the public about the many benefits of environmentally-friendly homes is one of the key goals of green building advocates. The 2000 Roper Starch Green Gauge survey found that "not knowing how" was one of the key stumbling blocks for 56 percent of consumers who wanted to do more for the environment. Programs like the FSC certification effort, and Energy Star, are building public awareness. But marketers should remember that the most attractive features of green houses are those that provide a clear consumer benefit, not just those that appeal to an environmentalist's conscience. As in many areas of the marketplace, consumers have shown they want to "live their values" - as long as they get something in the bargain. Being a hero of the planet may be nice, it seems, but saving some money on the utility bills is even better.

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