Despite historic problems plaguing the U.S. housing market such as tumbling values, record foreclosures and tight credit for buyers, a new Yahoo! Real Estate survey of current and aspiring homeowners indicates that owning a home is still a major part of the American dream.
But, unlike bullish years gone by, the so-called American dream home isn’t a supersized McMansion – it is a “green,” energy-efficient home built with “sustainable” materials that yield a lower carbon footprint. Or, more often, it is a home remodeled with energy-efficient appliances and eco-friendly home products.
Four out of five of those polled in a Yahoo! Real Estate study of 1,545 U.S. adults say that owning a home is still a part of the American dream. The Yahoo! Home Horizons 2012 study, fielded on the Web in October, is mapped to the American population of homeowners, buyers, sellers and renters.
The study finds that optimism about homeownership is widespread despite the massive downturn that has so far claimed six million homes in foreclosure and threatens to sink even more in the future. Yet, given the record inventory and dropping housing prices, buyers realize that their dream home is more attainable. In the study, 72% of homeowners and renters believe that they live in their dream home, or it will be their next home, or they will own it someday.
Yet, there is a growing consensus that the dream home must be more energy efficient. Take Marilyn, a middle-aged renter in Topeka, Kan. who is in the market to buy a home. She says that her conception of a dream home has evolved in the past five years. She seeks a brick house with four bedrooms, a large kitchen and “environmentally efficient appliances to conserve energy.”
But, rather than build or buy new homes, many eco-conscious homeowners seek to lower their carbon footprint by purchasing more energy efficient appliances or making other home modifications that may include the addition of solar panels to offset other energy costs.
According to the Home Horizons 2012 study:
50% of people consider green/energy efficient appliances/materials are a requirement of their dream home – it is more popular than perennial favorites such as “building a custom home” (38%); “water views” (38%) and “mountain views” (32%);
60% of those in the market say that green/energy-efficient appliances are amenities they’d like to have in their next home;
27% of those in the market say that looking for a greener, more energy-efficient home is a significant reason they want a new home.
Asked about their dream home, respondents indicated that they like various styles of home, but size was also a factor. One woman surveyed said that her dream home is “Small, environmentally friendly, very energy efficient.”
Higher Cost of Green
Although green homes are designed produce a smaller carbon impact that result in reduced home energy costs, even advocates concede that they have garnered a reputation as more expensive and not a little bit eccentric.
“Green homes have gotten a bad name because most stories are told about super energy efficient homes,” explains Sarah Saranka, architect and author of several “Not So Big House” books. Hyper-efficient, eco-friendly homes, the ones most closely associated with green living, “consume almost no energy – they’re essentially off the grid,” she says.
But there’s an emerging class of green homes that reduce energy consumption in cost-effective ways, yet haven’t drawn much attention because “they’re not astounding,” says Saranka. “Yet, they’re in the realm of possibility for an average home buyer.”
Increasingly homebuyers are willing to pay a bit of a premium for green or energy-efficient homes. The National Association of Home Builders (NAHB) says that baking in green construction materials and energy-efficient appliances typically adds 2% to 4% to construction costs, but that can translate to higher sales prices depending upon what local markets will bear.
To some extent this rise in interest by consumers is arguably a surprise considering that there are few if any standards about what constitutes a ‘green’ home, apart from the widely accepted EPA Energy Star standards for appliances. EPA is now moving into certifying homes. Energy Star-certified homes are reportedly 20% to 30% more energy efficient than standard homes according to the EPA – leading to average savings of about $200 to $400 per year on utility costs.
Yet, industry groups such as NAHB and organizations such as U.S. Green Building Council (USGBC) with its LEED, or Leadership in Energy and Environmental Design certifications, also seek to popularize certifications and guidelines, which may help build trust for consumers wading into uncharted waters and provide direction to the home industry itself. You can even find some green-certified realtors in certain pockets of the country.
A Greener Future
For about one in four of those surveyed in the Home Horizons study, living in a more energy-efficient home is a major reason why they plan to move. In support of this groundswell of interest, the government offers a small tax incentive to spur growth in demand for energy-efficient home materials and appliances.
Homeowners can earn up to a $500 U.S. tax credit for making energy-efficient upgrades by Dec. 31st in one or more of these areas: home insulation; windows, doors and skylights; and non-solar water heaters among other projects, according to the Alliance to Save Energy.
Still, there are plenty of other reasons why people plan to move in 2012 and it’s not all about saving on energy costs or living on a more sustainable planet. Nearly half of those planning to move simply want to live in a larger space or in a home better suited to their “life phase.” And some want to live closer to public transportation, city services or their job.
“During the height of the housing boom there was [an attitude among buyers of] drive until you qualify and I don’t care about the consequences of commuting time,” says Stan Humphries, chief economist at Zillow. “Now people are aware of the cost of commuting personally in terms of time, resources and gas, but also longer term about environmental degradation.”
Though 57% of homeowners and renters say they are very satisfied with where they live, some homeowners may never be completely satisfied with their home. “I recently bought my dream home, but there are always things that could be done to improve it,” one respondent said. “We need décor more than anything. And a hot tub, wine cellar, basement bar, laundry sink, and patio.“
With a record number of foreclosed and short-sale properties crowding the market, and historically low interest rates available to those buyers with outstanding credit and a sizable down payment, there has rarely been a better time to buy.
The Yahoo! Real Estate Home Horizons study indicates that 2012 is the year that demand for green homes, energy-efficient appliances and low-carbon impact home building materials reaches a tipping point in America.