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Hovnanian Testing the Waters for Green Building Plunge
Although no big builder has gone green nationwide to date beyond levels close to those provided under the Energy Star program, large builders are the most likely to bring down the costs of building green and define opportunities and identify problems for the industry at large, David Cohen, division president for K. Hovnanian Homes, told the NAHB National Green Building Conference in New Orleans on May 12.
Currently, Hovnanian is looking at how much it will cost to go to a highly energy-efficient green home. Five years ago, those costs were in the 5% to 7% range in one study. “Within a reasonably short period of time there should be a determination of costs,” Cohen said.
While the bottom line may be the chief concern of large-volume companies such as Hovnanian, Cohen pointed out that they are concerned about such issues as green building “in order to prosper over the long haul” and “so we all have jobs going into the future.”
Lowering lifetime home costs can potentially provide a way for large builders to stay ahead of the competition and expand their market share, he said, but “we as builders have done an exceedingly poor job of educating buyers about lifetime costs.”
Unlike fireplaces and granite countertops, Hovnanian’s customers as a rule have not been asking for green, he said. The demand for green is being driven more by the news media and government, with buyers in some segments of the marketplace in states like California actually asking for it. “It seems more like newspapers are generating green than public demand,” he said.
Green can be profitable, Cohen acknowledged, and “large builders will be able to help generate the profits everyone can benefit from.” Certain products that seem expensive today can become more inexpensive once large builders generate a higher volume of them, he said, with costs coming down as much as 30% to 50%.
However, if a big builder were to rev up a major green building program right now, he said, it is questionable that manufacturers would be able to meet the demand for their green products.
Also, while manufacturers have been quick to jump on the green bandwagon, their actual commitment to sustainable building products is not always clear, he said.
Finally, in looking at the various certification programs now out there, materials and products “may not give you all the points you need” so builders need to assess how much using them is worth. Implementation, and not the concept, is “the number one place that large builders fall down,” Cohen said, so that “looking at implementation, you have to understand where your points are.”
“New products come on line all the time,” Cohen added, and big builders have learned from experience that they must be cautious about using them. For example, 20 years ago Hovnanian built 11,000 homes with fire-treated plywood roofing before it discovered that the product disintegrated if the attic got too hot, and had to go back and replace it.
“If there’s a defect in something, we find out the hard way,” he said, advising caution on products that “have not been tested over an extended period of time.” The large builders will probably be the first to find out the problems with [green] materials and systems.”
He added that “large builders tend to go to uniformity,” which can cause a problem when sizing an HVAC system for a north-facing house and an identical south-facing house across the street. Buyers will complain when they discover that their neighbor has a bigger system, not knowing that oversizing will cost them more up-front and in operating costs and decrease the lifespan of the system.
From experimental work on green Hovnanian homes in New Jersey, Cohen said that one approach yielding positive results was taking a 2,700-square-foot home, blowing it up to 3,500 square feet without changing the footprint and adding more bedrooms. In a market where the company sells a lot of larger homes, the expansion increases the livability of the product while reducing its energy consumption without too much of an increase in construction costs.
For big builders, sales force training will be another major component of the transformation to green, he said.
Today’s sales personnel are being retrained in just the basics of selling a home, a skill that was largely lost during the housing boom when homes virtually sold themselves. “The next step,” he said, “will be how to sell features that are green.”
If there are 127 green items in a house, “it will be impossible to cover them with the home owner,” Cohen said. Builders will have to choose the items they want their sales staff to emphasize and then document the rest.
Green Real Estate Agents Can Increase Business
John Beldock, of EcoBroker International and the Association of Energy and Environmental Real Estate Professionals, said that there is already a growing sales force to augment the green home building trend.
There are now some 3,400 Realtors® in the U.S., Canada, the Caribbean and New Zealand who have been trained to understand the mechanics of green building. “They know they are not the experts,” he said, “they are the green ambassadors.”
These sales people know about such issues as moisture and thermal climate zones and they are working with builders and consumers on such efforts as bringing down energy bills.
A marketing challenge for these real estate brokers is to educate consumers of the strides that have been made in the performance of various green products in recent times. “The systems are working,” said Beldock, “and the performance is there.”
From their experiences of some of the earlier applications of construction technology, consumers may have been left with the mistaken impression that green construction "means compromise,” he said, with HVAC systems, for instance, that leave homes too hot in the summer and too cold in the winter.
Even now, however, energy-saving features can be expensive. “Consumers want the prices to be good,” Beldock said. Utility credits and mortgage financing incentives are two approaches to overcome the initial reluctance to invest in more expensive high-performance construction.
Builders also need sales assistance in reinforcing that green makes for “a great looking property,” he said, with, for example, regular sized doors and windows.
Extraordinarily good customer service will also enable green builders to stand out from the competition, he said.
In today’s challenging market, Beldock added, overall “the high-performance builders are doing better than everybody else.”
For more information on green building resources available from NAHB, e-mail Calli Schmidt at NAHB, or call her at 800-368-5242 x8132.
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