29 May Millennial Market
High-performing, energy-efficient homes dominate millennial real estate market
Spring 2018 | Written by Mary Grauerholz
High-performance, energy-efficient homes are hot in the starter home marketplace.
The East Coast couple, dual-income earners in their 30s, were ready to take the leap into home ownership. They took the usual first step: a leisurely drive through their community to see what they liked, optimistic and happy about the investment they were going to make in their future.
Just one problem with the scenario: One of the most important features for the couple was virtually invisible—each property’s potential for energy efficiency and smart technology. The couple knew the positive effect these features would have on them and their environment: A dwelling built on sustainability and smart technology would be more comfortable, more economical, safer, and healthier for their family and the planet.
Millennials—people who came of age at the turn of the century—are changing the face of the real estate market, driven by their desire for a more sustainable environment. Raised with a solid grounding in environmental values, young adults are ahead of the game, using rapidly developing technology to create homes very different from the ones they grew up in. And recent studies show that homes with sustainable features are selling for higher prices: A study conducted by the University of Texas at Austin in connection with the U.S. Green Building Council showed an 8 percent boost in home price for homes with green certifications in the Austin metro area.
It is a cultural and social shift that is influencing not just the market of existing homes but also how these first-time homebuyers interact with their community and their home, says Amanda Stinton, director of sustainability and the National Association of Realtors’ (NAR) Green Designation at NAR in Chicago.
Above: Maracay’s ENERGY STAR and LEED-certified homes feature the latest generation of high-efficiency technologies and sustainable building materials and practices.
Above: Maracay’s Navarro Groves community.
Above: Maracay’s Cholla house plan.
Above: Maracay’s Cholla Great Room.
“One of the main drivers for these homebuyers is their different values,” Stinton says. “They were raised with technology and a certain set of values that tie to sustainability; they’ve never known a culture where it was okay to throw litter out the window.”
Millennials, now in their late 20s to late 30s, comprise the biggest percentage of homebuyers in the country. “We’re really only at the tip of the iceberg,” Stinton says. “It’s a massive group.” These homebuyers don’t just have desires about greening their world; they have expectations that their homes will supply them with the tools that help make it happen, options their parents didn’t have. “They want a healthier environment, lower maintenance, and smart technology; they don’t want wasteful or leaky,” she says. “They interact with their homes in a different way.” Millennial homebuyers generally purchase older housing stock and make repairs and retrofits, according to research by Better Homes & Gardens.
The NAR introduced a Green Designation credentialing program almost a decade ago to train realtors in energy efficiency and sustainability in all aspects of real estate. Still, Stinton stresses that more education is needed in the real estate market, both for consumers and professionals.
Andy Warren, president of Maracay Homes in Scottsdale, Arizona, sees ENERGY STAR, LEED, and Maracay’s proprietary program, LivingSmart®, as the ideal complementary systems for building energy-efficient homes. In 2017, Maracay brought to market 300 Phoenix-area homes with the goal of earning LEED certification.
“[These homebuyers] were raised with technology and a certain set of values that tie to sustainability.” – Amanda Stinton, Director of Sustainability Program and NAR’s Green Designation
Andy Warren is president of Maracay Homes in Scottsdale, Arizona.
“Our road toward sustainable building practices began more than a decade ago, when we committed to building only homes that were ENERGY STAR certified,” Warren says. “Today our company’s ENERGY STAR and LEED-certified homes feature the latest generation of high-efficiency technologies and sustainable building materials and practices. The LivingSmart program continues this comprehensive approach to green living.”
LivingSmart began in 1998 as an extension of Maracay’s dedication to environmentally friendly home construction. The program utilizes the latest materials, technologies, and features to promote and improve the well-being of homeowners and their houses. Advanced technology helps reduce energy consumption and utility bills through features, finishes, and filters that promote comfort and better air quality, while the use of sustainable materials also helps conserve natural resources. In 2010, Maracay joined the EPA’s ENERGY STAR program, and recently expanded new-home offerings that include LEED-certified homes in select communities.
Will Doyle, a Millennial and the operating manager of Allied Energy Efficiency Experts in Cherry Hill, New Jersey, sees firsthand how his peers are impacting real estate. Allied Energy, a home improvement business, retrofits existing homes for energy efficiency. “Millennials are looking to be more sustainable and using as little energy as possible,” Doyle says.
Working with the energy-efficiency program—New Jersey Home Performance with ENERGY STAR—Allied Energy typically installs air sealing, insulation, and energy-efficient water heaters, furnaces, and HVAC. Often, their clients are Millennials who own homes, apartments, and condos in urban settings, such as nearby Philadelphia, which is experiencing a boom in redevelopment. “They want to live in a smaller footprint and walk more than drive,” Doyle says.
The average savings in utility bills for homeowners is around 27 percent, Doyle says, which—depending on household income—can have a substantial impact. But the monetary effect on homeowners likely will be greater when they put their home on the market. In the 2017 REALTOR and Sustainability Report, 71 percent of realtors said they consider energy efficiency promotion for homes important. The association began its Sustainability Program in 2016 as a platform for dialogue among real estate professionals, trade associations, and consumers.
Doyle estimates that 95 percent of Allied Energy’s work is retrofitting homes in New Jersey. “New Jersey has a lot of older housing stock, which cannot be forgotten in the energy equation,” he says. “While new homes are becoming more efficient and sustainable, the average age of a home in America is 30 years. My company has the mission to make those homes as efficient as we can make them while being economically feasible for homeowners.”
Will Doyle is operating manager of Allied Energy Efficiency Experts in Cherry Hill, New Jersey.
Doyle lives in the Northern Liberties community in Pennsylvania, one of the revitalized neighborhoods outside Philadelphia’s Center City district that are creating a new green sweep in living. Northern Liberties and the neighboring community of Fishtown are experiencing new construction and refitting of existing homes. Many of the new houses are passive or LEED certified, Doyle says.
The nearby East Falls neighborhood is home to the largest net zero-capable development in the country, a 126-unit apartment complex that uses factory-built modular construction. Each neighborhood has an association that tackles issues of sustainability and planning. “We worry about things like walkability, bike availability and lanes, and energy efficiency,” Doyle says.
Millennials have become accustomed to the lower utility bills and greater comfort associated with LEED housing, says Marc Heisterkamp, vice president of strategic relationships at USGBC. “Given the high frequency of LEED certification in new apartment communities, it’s not surprising that younger homebuyers are valuing LEED when they go to purchase,” he says. “If that’s been their experience in a rental, they’ll certainly expect it when they take the huge life step of purchasing a home.”