Builders Need to Make Energy Efficiency a Selling Point
At a time when energy costs are taking a bigger bite out of the household budget and consumers are increasingly receptive to energy efficiency and sustainability in their housing, the nation’s home builders must do a better job of selling green home building features to their customers, according to participants at the NAHB National Green Building Conference in St. Louis on March 25-27.
In its 2006 Energy Pulse survey, the Shelton Group found that 86% of Americans would choose one home over another based on its energy efficiency, said Suzanne Shelton, president of the research and marketing company. Yet 78% of the home owners who were polled reported that nobody talked to them about energy efficiency during the buying process.
The results were derived from telephone surveys of more than 500 nationally representative adults last July.
The leading incentive persuading survey respondents to pursue energy-efficient home improvements was a lower monthly utility rate, which was identified by 84.2%, Shelton said.
Ranking at the top of a list of what would be most likely to convince a home owner to spend $2,500 on energy-efficient improvements was that the monthly utility savings would more than cover the increase in the mortgage payments, identified by 22.9%. Close behind, cited by 21.9%, was that the investment would on average be paid back within six years through reduced utility costs.
Responses at the bottom of the list showed less support for other green building attributes: multiple benefits, including mold and moisture prevention, cited by 8.6% of the respondents; a higher-quality home by 4.8%; and better indoor air quality by 3.8%. These results also imply that consumers might need to be educated about these attributes of green-built homes.
At the outset of their marketing efforts, home builders are likely to receive a more favorable response from prospective customers by talking about “conservation,” which struck a positive chord with 65.2% of those surveyed, instead of “green,” which registered positively with 48.5%.
Average household energy costs have risen $3,800 a year, Shelton said. However, as a primary concern among those surveyed, the quality of the earth our children and grandchildren will inherit (cited by 21%) ran ahead of increasing energy prices (18.9%). That was followed by U.S. reliance on other countries for energy (16.1%) and global warming (14.3%).
When asked about the primary reason they would participate in energy-conserving activities and purchases, 26.9% said to preserve the quality of life for future generations, 23.4% cited protecting our environment and saving natural resources, 17.1% saving money and 15.9% protecting our nation’s economy and reducing foreign dependence on oil.
Make the Entire Development Green
The best way by far for home builders to sell energy-efficient home features, Shelton said, is to make all of the homes in the development energy-efficient. Prospective buyers “want all of the neighbors to have it” as a source of reassurance, she said.
Offering slightly higher-priced homes with the features as a standard would motivate 21.9% of the respondents to buy energy efficiency; and the same percentage would be motivated by the builder offering an optional package for an additional price. Builders offering energy-efficient features individually during construction would appeal to 17.1% of their prospective buyers.
Shelton suggested that home energy audits might be a good way of opening up the green home building discussion; 42.5% expressed interest in having one conducted and 20.8% said they had already requested an audit.
Shelton also stressed the importance of talking to prospects about energy efficiency right up front. “The issues of green are not being presented at the point of sale,” she noted, which is a lost opportunity because “your prospects’ ears will perk up as soon as they hear” about savings on the monthly utility bills.
To be successful, green home building messages will also need to be pitched to different segments of the marketplace, she said:
- Comprising 33% of the prospective green home market are “Conservative Classics,” who tend to be politically conservative, middle-aged, Caucasian and male (64%), with middle- to upper-middle income and a moderate education, living in rural and suburban areas that are largely in the South and West. Saving money and protecting the nation’s economy will be the message that strikes the most responsive chord with this market segment, she said.
- With a 27% market share, “Young Urbanites” are younger, ethnically diverse (mainly Latino), largely male (62%), most likely to have children, well educated and living in cities and suburbs and tend to vote Democratic. The message green builders should be conveying to them should tie into protecting the environment and saving natural resources and preserving the quality of life for future generations.
- “Working-Class Realists” make up 21% of the prospective audience. They are ethnically diverse (mainly African American) men and women with low incomes, blue-collar jobs and less education residing in the urban and rural South and Midwest. Preserving the quality of life for future generations and saving money are the two messages that resonate with them.
- “Progressive Matriarchs” are 19% of the market; they tend to be older, liberal and in professional and white-collar jobs and living in the suburbs in the Northeast, West and Midwest. The two most effective messages for them are related to protecting the environment and saving natural resources and preserving the quality of life for future generations.
Shelton advised builders to take a social market approach and to link “preserving the earth for future generations” to taking personal responsibility — shifting the message from “you can do something” to “you should do something” through the home in which you decide to live.
“Make sure the money works,” she advised, and provide incentives in possible partnership with architects, Realtors® and utility companies.
More Prospective Remodelers and Buyers Expecting Green
Remodeler Michael Strong, CGR, GMB, CAPS, vice president of Brothers Strong in Houston, called the Shelton Group research "an eye opener" about the green opportunities that builders and remodelers should be looking for in today's marketplace. "The rules are changing in terms of consumer expectations," he said.
Michael Strong, CGR, GMB, CAPS
"We've gotten more calls from people interested in green remodeling in the last 18 months than we had in 18 years, yet the problems are no different than they've always been," he said. "It's what we've done forever — make the owners' homes healthier, safer and working more efficiently."
Strong observed that green is fast becoming synonymous with better performance of the home and that increasing numbers of prospective buyers are expecting their homes to be healthier.
Cost, he said, is a concern and green building doesn't necessarily have to cost more.
"Home owners need to know what options are available, and that requires remodeling contractors to be more aggressive in their research so that they can speak intelligently about what the options are," Strong said. "You can get a high-performance paint that doesn't have VOCs — what a difference that will make in a house."
For more information, e-mail Calli Schmidt at NAHB, or call her at 800-368-5242 x8132.