June 25, 2015

50,000 and Counting...

The GREEN building boom of the 00's was poised to be an explosion. Housing was producing units at high levels and the green path was starting to take a firm hold. Not just for the chicness of building green; the true value was in the use of sustainable products utilize in an efficient manner to reduce waste. Energy saving were also being proven and the builder's sales team who was proficient in the sales and marketing of this style of home building could help the potential home buyer see the difference and want the difference. The economic housing slowdown, which truly began tail end of '05 saw our country deeply submerged by crisis in '08. Green building stalled because there were no houses of significant numbers being built. Potential home buyers left the market place because of financial uncertainty.

While housing is still slow in some markets, for the most part, housing is climbing back and with it, a return to the heightened awareness of green building. The Home Innovation Research Labs, where I have served as a board member for the past five years, just passed an exciting program milestone; certification of 50,000 homes under the National Green Building Standard Green (NGBS) program! This provides a perfect opportunity to look at what a game-changer the NGBS rating system has been in the home building industry, and celebrate the achievements of both the certification program and our NGBS Green Partners who have sought rigorous, third-party green certification.

My guest blog author today is Michelle Desiderio, Vice President, Innovation Services, Home Innovation Research Labs. Michelle has a very informative message for all of us in the home building industry, including;

Forecast for Green Residential Construction

Michelle Desiderio
Home Innovation Research Labs  has unique insight into the state of green home building given that we serve as the national certification agent for the National Green Building Standard (NGBS).  We started NGBS Green in 2009 and we have been able to go from a start-up to the leading green home certification company in the nation.  Please see the attached market share report.  Until NGBS Green, residential construction lagged in green certification to other construction types (office, healthcare, institutional).  The reason that residential construction lagged in green certification is that until the development of the NGBS, there was not a green certification program that was designed specifically for residential and was affordably priced.  When the NGBS became available it was a game-changer.  In six years you can see that we have done well given the number of buildings that we have certified, but I think what is even more impressive is the pipeline of projects that are seeking certification.

As you can see by clicking this link to our chart, to date we have made more impressive gains in multifamily than in single-family construction.  There are a number of key factors driving green certification for multifamily properties and the most important is probably that the institutional investors want to see new multifamily buildings seek green certification so long as it is affordable.  I also believe that the demographic profile of renters – mostly younger, more urban-oriented individuals – also is driving green certification for multifamily buildings.  But all is not lost for single family homes.  We are engaging a generation of renters by showing them the benefits of green housing through multifamily buildings and eventually these renters will want to become home buyers.  All of the market research is consistent in that these future consumers do care about green features, again, so long as they are credible and affordable.

Since we started the program a number of important barriers to green construction have been
Multi-family Certified to NGBS
resolved which will also help propel green construction in the future.  First, the Appraisal Institute recently developed a Green and Energy Efficient Appraisal Addendum that helps appraisers properly appraise green homes and multifamily buildings.  With these forms appraisers can more easily provide the proper valuation to green certified homes and apartment buildings.  Second, we have been working with the real estate property listing organizations (MLS and CoStar) to ensure that green certified properties can be found by buyers or renters loosing for such properties.  Third, we have some improvements on financing incentives for green buildings.  Fannie Mar now provides a 10 basis point reduction in interest rate for any green certified multifamily building.  We are hoping to engage Fannie Mae on a discussion on what financing incentives might be possible for single family homes.  Last, we have been working very closely with our clients to hone their green marketing message to be most effective in capturing value for their green certified buildings.

Nationwide we have seen an increase in incentives as well as mandates for high-performing residential buildings.  The incentives range from density bonuses, tax credits, expedited permitting, and rebates (for both builders and buyers).  For example, 19 State Housing Finance Agencies (HFAs) currently incentivize NGBS green certified buildings for their LIHTC program, and each year additional HFAs propose to do the same.   Mandates are on the rise as well.  The City of Miami for example requires all large new construction to be LEED or NGBS certified. 

The 50,000 Home Certified to NGBS
Of course another trend increasing interest in green construction is the increasing building code requirements.  The International Green Construction Code (IGCC) was developed by ICC a few years ago and we are starting to see jurisdictions adopt the IGCC.  The NGBS is an alternative compliance path for residential construction where the IGCC is adopted.  Energy efficiency requirements also keep increasing with the latest versions of the IECC.  Many of our clients use the NGBS voluntarily before codes become more difficult so that they can perfect how they will comply with the more stringent rules and the stakes are higher for failure.  Not only can they learn how to meet the more difficult codes before compliance is mandatory but they can benefit from the technical assistance that we provide all of our clients.

I also have provided to with this link to the SmartMarket report initiated by NAHB and McGraw Hill.  It provides a credible forecast regarding the growth of green residential construction and some insight behind the green growth.  Our experience here at Home Innovation confirms much of their conclusions.  Increasingly we are working with the leading product suppliers here on developing and refining new building products to help builders construct greener, high-performing homes.  At the same time, our work with the leading national product builders demonstrates that builders are looking for solutions that help them build green homes more affordably and reliably. 

Please let me know if I can provide any assistance or offer any additional information that would be useful. Below is my contact information. Thank you for your time.


Michelle Desiderio | Vice President, Innovation Services

400 Prince George’s Blvd. | Upper Marlboro, MD 20774

P: 301.430.6205 | C: 240.997.8027


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