Green for Green

Are “green” homes worth more? Two egg-head professors did a study to find out. Egg-head professors are the people we want doing these studies, but their scientific language can be tough to take, such as: “To empirically test this hypothesis, we relate the logarithm of the transaction price to the hedonic characteristics of single-family homes, controlling precisely for the variations in the measured and unmeasured characteristics of rated buildings and the nearby control dwellings…..”

Translation: the answer is yes. Green homes sell for 9% more than regular homes in California. “Green” means a home labeled as LEED, Energy Star, or GreenPoint Rated.

The study is a 29-page report titled “The Value of Green Labels in the California Housing Market.” The high-brow professors are Nils Kok of UC Berkeley and The Netherlands, and Matthew E. Kahn of UCLA. Both have degrees, accolades, and credentials as long as your arm.

Green homes have benefits beyond energy cost savings, they report, such as more comfortable and stable indoor temperatures and healthier indoor air quality. LEED and GreenPoint Rated homes also feature efficient water use, sustainable non-toxic building materials, and other attributes that reduce impact on the environment.

After the good professors determined green homes are indeed worth more, they asked themselves: What factors influence the value homeowners place on green or energy efficient homes? Hotter climate? Higher electricity prices? Environmental ideology?

The professors found that the premium paid for a home with a green label varies from region to region in California, and is highest in the areas with hotter climates, because the green label means big cost savings in the cooling of a home, more so than the cost savings of efficiently heating a home.

The price premium is also “positively correlated to the environmental ideology of the region.” In other words, the more Prius drivers you see in a given region, the higher the premium you’ll find paid for a green home.

Our region certainly has a hotter climate, but are we seeing a price premium “positively correlated to the environmental ideology” of our region?

Answer: Count the Prius drivers. Then call in the egg-head professors.

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Doug Love is Sales Manager at Century 21 Jeffries Lydon. Email escrowgo@aol.com, or call 530-680-0817.