McGraw Hill Construction, a part of McGraw Hill Financial, released findings from a new Green Home Builders and Remodelers Study at the National Association of
Home Builders (NAHB) International Builders’ Show in Las Vegas. Green homes comprised 23 percent of the overall residential construction market in 2013 and are expected to grow to between 26 percent and 33 percent of the market by 2016. This equates to a doubling in the value of green home construction over three years, growing from $36 billion in 2013 to $83-$105 billion in 2016, based on the current McGraw Hill Construction forecast for total residential construction.

According to McGraw Hill Construction research dating back to 2006, the green home building market most rapidly accelerated during the housing downturn when builders experienced in green remained in business at higher proportions than those not knowledgeable about energy-efficient and green home building. As the residential market improves, indications are that the residential market is becoming bifurcated, with green builders accelerating the depth of their green work, and new or returned entrants into the market focusing on traditional construction practices.

“Green experience was a significant part of what kept builders in business during the recession,” said Harvey M. Bernstein, vice president of Industry Insights and Alliances, McGraw Hill Construction, “and now, those same firms are embracing the competitive advantage they earned by deepening their delivery of energy-efficient and green homes. We also see firms reentering the market that are using traditional home building practices versus green practices because that’s what they know. However, the broader availability of green building products and practices, a more educated consumer and an increase in activity at the regulatory level will also encourage this group of builders to learn green practices over time.”

The study shows that the top drivers to increased green home building activity include changes in codes and regulations, better quality, wider availability and affordability of green products, energy costs and competitive advantage.

The green home building study, produced by McGraw Hill Construction in conjunction with the NAHB, is the fourth in a series that dates back to 2006. It was designed to provide key insights into market opportunities, backed by proprietary research surveys and the power of the Dodge database. The study reveals business benefits afforded by green building:

–       Competitive marketing advantage: 51 percent of builders and remodelers find that it is easier to market green homes, up from 46 percent in 2012 and 40 percent in 2008.

–       Customer willingness to pay for green features:

o       Sixty-eight percent of builders (up from 61 percent in 2011) report their customers will pay more for green, with 23 percent reporting that their customer will pay more than 5 percent.

o       Eighty-four percent of remodelers report the same (up from 66 percent in 2011), with 55 percent reporting their customers will pay more than 5 percent for green features.

“This study shows that more and more builders are incorporating environmentally sensitive and energy and resource efficient techniques into
traditional home building practices, and we expect to see even stronger growth in the coming years,” said Matt Belcher co-chair of NAHB’s Energy and Green Building Subcommittee and a Builder from Wildwood, Mo. “Green building expertise provided builders and remodelers with a competitive advantage during the housing downturn, and now as the market continues to recover, NAHB members stand ready to meet the increased demand.”

In 2013, 16 percent of builders were dedicated to green building with more than 90 percent of their projects green, and another 20 percent were highly invested in green activity with 61 percent to 90 percent of their projects green. By 2015, that is expected to increase, with 20 percent of builders expecting to be exclusively working on green buildings, and 24 percent doing 61 to 90 percent green work. Remodelers are also increasing their attention to green work, with 16 percent reporting more than 60 percent of their projects are green today, expected to grow to 23 percent doing this amount of green remodeling in 2015 and 32 percent by 2018.

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