As vice president of energy efficiency and sustainability at Top 10 production home builder Meritage Homes, C.R. Herro knows a thing or two about bringing high-performance homes into the marketplace, and selling them.
In 2009, Herro and Meritage showed the industry that it is possible for a national home builder to be 100% Energy Star qualified. The following year, Herro pushed even further, and Meritage opened an entire community of homes delivering HERS scores of less than 40. As if that wasn’t enough, last year—on Earth Day—the production home builder announced its first net-zero home, as well as the first EPA triple-certified home.
Although Herro says he can’t give “all the secrets to the sauce,” he is willing to share a few nuggets on what he thinks the market needs to do to truly transform.
It’s About Change
For Herro, the key to penetrating the market is recognizing that there is going to be change—a lot of change.
“In order to credibly move forward, there has to be an understanding that you have to proactively manage change, and that, I think, has been undervalued,” he says. “It involves your trades building slightly different. Your salespeople being aware of something a little different. Your construction people looking at things a little bit differently. Your management team thinking about business strategy in a slightly different way. Your marketing team thinking about value proposition and how to communicate to the average customers in a slightly different way.”
The problem, Herro says, is that too many builders “dip their toe in” sustainable building, but never take a holistic, top-down approach. “They’ve invested dollars in buying better equipment—better windows, better insulation—but because their marketing, sales, and financial components aren’t aligned with the strategy … it shows up as a cost, but they don’t get that benefit,” he explains. “You’ve got to bring all of your business facets into focus and make it a principle that your company is based on, or it doesn’t work.”
Builders also need to be sure that the changes they make actually offer value, Herro says. “We know what technology would allow, but we are being disciplined to ensure that the true value to the buyer is commiserate with the science,” he explains. “It’s always just constantly pushing to make sure we are right at the edge, but we are at the edge where the buyer truly gets a better built home and better value for their investment.”
The Missing Link
The other piece of the puzzle, Herro says, is reaching the consumer. In fact, he believes consumer awareness is the biggest stumbling block for the industry. “Net-zero, carbon-zero homes are available today and cost effective,” he says. “It’s no longer a technical challenge. That’s all done. All that’s left now is the average consumer choosing better.”
The critical link, he feels, is the SAVE Act. “The public needs something consistent—consistent energy labeling, consistent mortgage processes, consistent appraisal standards—all things that the SAVE Act would generate in order to validate the benefits,” Herro says. “Once they are validated, the public just chooses better—chooses what they should have had all along.”
He also feels the legislation creates an impetus for the industry to follow suit. “What the SAVE Act does is makes it a ‘no-brainer,’” Herro says. “It makes it the right thing to do everywhere, every time. It aligns all the altruistic reasons that building green is good, all the fiscal reasons why a company would build homes and sell homes, and all the value awareness for consumers in choosing a better built home. It takes it from being a unique, innovative strategy to the standard business practice.”
Steps Toward the Future
According to Herro, Meritage used a three-step approach to get to where it is today. “We developed this idealized model of what a home could be, and then we started bringing in vendors and suppliers and trades to find out what incremental improvements we could do today to push that envelope forward,” he explains.
The first phase was to standardize nationally on the Energy Star platform. Next, Meritage completely reengineered the building envelopes to cut their energy demand in half. The third phase was adding renewable energy technologies. As far as steps 4, 5, and 6, Herro says Meritage is looking at more advanced green practices such as grey water, insulated concrete forms, and heat scavenging. “So by 2020, we’re hoping our houses fly,” he quips.
And while Herro and Meritage are grounded in taking quantifiable steps toward the future, they know that true market transformation lies in the hands of the homeowner. “The next phase isn’t the way the home is built because we have pushed that so far,” Herro says. “It’s going to be the ability for the consumer to understand and modify their behaviors and proactively control the way their home consumes energy. The next big frontier is behavior, not physical function.”