Energy-efficient homes often command higher prices, study finds

By Diana Dietz | Aug. 9, 2012 | 2 min. read

Homes that meet environmental standards, such as energy efficiency and proximity to public transportation, are selling at higher prices than homes that don’t, according to a new study.

The study, conducted by researchers at UC Berkeley and UCLA, examined data on 1.6 million single-family homes sold between 2007 and 2012 in the California residential marketplace for an economic analysis of the value of green home labels.

Of the homes analyzed, 4,300 were certified with green home labels from Energy Star, GreenPoint Rated or LEED for Homes.

A green label increased the selling price of a single-family home by average of nine percent compared with non-green label homes. Another reason the price of green homes is increasing is because of an increased awareness of the “going green” ideology, the report said.

“This is the first systematic evidence of the financial value of green label homes as measured in the marketplace,” said Nils Kok, University of California professor and lead researcher in the study.

Analysts found evidence of what they have dubbed the “Prius effect” in areas where a high value was placed on a green labeled home. According to researchers, communities with a strong prior outlook to thinking “green” – as evidenced by owning a “green” vehicle such as a hybrid – residents seem more inclined to look for green home improvements to their homes.

Growing awareness about global warming and the extent of greenhouse gas emissions from the residential sector has increased attention to green building in recent years. Benefits of green homes are said to lower utility bills due to greater energy and water efficiency; higher quality construction; more comfortable and stable indoor temperatures; healthier indoor air quality; and other environmentally desirable features such as proximity to parks and shops.

It is estimated that the residential sector in United States accounts for 33 percent of its energy consumption with a total expenditure of $166 billion in 2010. Increasing the energy efficiency of housing can provide cost savings for consumers as well as help the country meet its emission reduction goals.

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