Even though customer interest in building high-performance homes has not waned since the economy turned sour, Beeson says financing is trickier now. “We’ve had situations where deals were discussed 18 months ago, and when we finally get to the settlement table, sometimes it’s a different story with the bank,” he says.
Other Ways to Survive
Some green pros are staying afloat with public-sector projects. Baker says his firm is working on green affordable housing complexes funded by the California Department of Housing and Community Development’s Proposition 1-C bond program. “Without them our current situation would have been bleak,” he says.
On the federal front, the $787 billion economic stimulus bill is expected to create jobs for insulation contractors, window installers, and other pros whose work involves making existing homes more energy efficient. Two provisions that offer tax credits to homeowners for energy-efficient upgrades and pay to weatherize the houses of low-income families could spur an estimated $6 billion of activity in the remodeling industry, according to congressional estimates.
The NAHB’s Martin says green remodelers are on track to benefit from these programs, but it will take a while to get them up and running. Many technicalities have yet to be worked out for the weatherization program and consumer interest in rebates has been lackluster.
“The problem is homeowners are still holding back because they don’t know if they can afford to do anything to their homes, even with the credits,” he says. “But anything that helps spur interest in housing investment is a plus for builders and remodelers.”
Los Angeles-based Pardee Homes is banking on green’s appeal to help sell more houses, at every price point. The company recently expanded its LivingSmart brand--a package of products and measures that boost energy efficiency, save water, and improve indoor air quality to include every price point and every market in which Pardee is building or developing master-planned communities.
The company’s research determined what buyers want in a green home and what they feel they can afford, according to president and CEO Michael McGee.
“Green programs must be tempered with feasibility in the production housing framework,” says McGee. “We have maintained this dual focus since introducing our first energy-efficient homes and it has paid off with greener homes that are competitively priced.”
Other recent research bears this out. In a recent McGraw Hill study, 40% of builders reported a marketing advantage from green homes during the current housing slump. More importantly, 70% of consumers said they would be more inclined to purchase a green home in a down market.
Analysts believe the green home market is expanding despite the downward trends of the industry as a whole. With a stronger construction market expected over the next five years, eco-friendly building is expected to see healthy growth, according to McGraw Hill’s 2009 Green Outlook. “We expect it to double over the next five years, to be worth 12% to 20% of all residential construction starts by value, or $40 billion to $70 billion,” the study’s authors say.
The future of residential building is uncertain for now, but most green pros say they are confident that once the market bottoms out, eco-friendly home building will help lead the industry out of its economic doldrums.
“Our market conditions did not end up like this overnight, and there won’t be a quick fix either,” concludes Ferrier. “We plan to keep at it, to keep doing what we’ve been doing, but with a new sense of urgency.”
Jennifer Goodman is senior editor for EcoHome online.