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Green Homes Yield Major Resale Premiums in Washington, D.C.

USGBC (U.S. Green Building Council)'s picture

The U.S. Green Building Council is committed to transforming the way our buildings are designed, constructed and operated through LEED — the top third-party verification system for sustainable...

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  • Feb 13, 2016
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by Nick Brousse

High-performing homes (HPHs) with green features—both single- and multi-family—in the District sell for nearly 3.5 percent more than those without green features, according to a recently released report, “What Is Green Worth? Unveiling High-Performance Home Premiums in Washington, D.C.,” by real estate appraiser and author Sandra K. Adomatis and the Institute for Market Transformation.

The market is taking notice. Building on the growing trend of green construction in the residential sector, a recent report from Dodge Data & Analytics, a leading provider of data and analytics serving the North American construction industry, found that among 249 builders, remodelers and multifamily firms surveyed, 51 percent expect that more than 60 percent of the homes that they build will be green by 2020.

The widely used definition of HPHs applied in the report cites six elements of green building that are found in most third-party certifying organizations’ rating systems, including LEED. These environmentally responsible and resource-efficient green building elements include site, water, energy, indoor air quality, materials and operations and maintenance.

As Kenneth Harney reported in his Washington Post article, the report calculated how much buyers were willing to pay for green features and found that they ranged from just over $10,000 to over $50,000, generating premiums as high as 7.7 percent. When renewable energy-generating technologies such as solar were incorporated into the home, that resale premium climbed even higher.

The study examined final sales prices for HPHs and non-HPHs with similar variables such as location, amenities, square footage and parking between February 2013 and June 2015. Of the HPHs examined, 75 percent were LEED-certified and marketed their unique green features in the real estate Multiple Listing Service (MLS). USGBC has been helping to drive MLSs to give homebuyers more information on green features and certifications, and this study is further proof of the value proposition for green certification and marketing those features.

Similar studies have found comparable market premiums for green, high-performing homes. For example, “The Value of Green Labels in the California Housing Market” found that green home labels added a 9 percent price premium in that state.

Green buildings perform better—they net higher rents, higher occupancy rates and higher prices when sold—and buyers know the long-term investment is well worth the premium.

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