Lots of people have argues that energy efficiency and other "green" improvements should improve the value of a house, at least commensurate with the investment, but survey data on the ground has been hard to come by.
Now a new study, “The Value of Green Labels in the California Housing Market”, shows that a green certified home adds 9% to its appraised sales value in California. Conducted by Nils Kok and Mathew Kahn of the University of California, the study is the first rigorous, large-scale economic analysis of the value of green home labels in California. Halleluijah!
Researchers conducted a pricing analysis of all 1.6 million single-family home sales in California from 2007-2012, controlling for all other variables that typically influence selling price, such as location, size, age and amenities. They documented that homes labeled with Energy Star, LEED or Greenpoint Rated (California’s label) sell for a premium of 9% compared to average similar homes.
The average sales price of a non-certified California home is $400,000. Green certification raises the price by more than $34,800.
Interesting that the sales premium is greater than the cost of the green features people are paying for and it’s greater than resulting utility savings. The most common green features are insulation and air sealing of attic and walls, weather stripping and efficient HVAC – none of which are particularly expensive.
The authors conclude that part of the premium is the certification itself – the premium is highest in areas of California that also have the highest sales of hybrid cars. People will pay more to buy a house that’s green-certified because it fits their values. They also found premiums to be higher in parts of the state that tend to have hotter climates, indicating that people valued these certifications as reassurance that their homes would stay cooler without more energy costs.
A report released last year by Lawrence Berkeley National Lab showed that having solar PV boosted the sales price in California. The premium was about the same as the cost of the solar system.
Read the original report at www.nilskok.com/2012/07/greenhomes.html