Is green building good for business?
August 10, 2016 by John Bleasby
It’s hard to turn around without reading another study that either touts the benefits of eco-friendly home design and construction, or suggests that consumers are increasingly willing to pay a premium for ‘green features’ in their homes and renovations. Does this offer an opportunity for savvy builders and renovators to differentiate themselves from the competition?
Go green, young man! Many studies would suggest ‘Yes’. In fact, a 2013 study conducted by the Business Development Bank suggests that Canadian small and medium sized business (SME’s) should not only embrace the drive towards eco-friendliness, but communicate it forcefully to their potential customers. “Consumer concern for the environment has been increasing steadily over the past decade…. [SME’s] have to show how their products and services fit into an integrated, green and sustainable approach…. Eco-friendly actions are now part of consumers’ daily routine…. For example, one in four Americans say they systematically take steps to make their home or lifestyle greener, such as recycling, weatherproofing their home, using eco-friendly products or driving energy efficient vehicles. Six out of 10 claim they “sometimes” take such actions, and only a small minority say they never do so”
Cans, plastic, and paper recycling is one thing, but what about housing? More specific to housing, an EnerQualty Green Building Survey back in 2009 gave early indication of the growing awareness and consumer trend. At that time, 40% of Ontario homebuyers surveyed were willing to pay up to $10,000 for a so-called ‘green home’ versus only 22% the year before.
The trend keeps growing. Harmony Habitat cites a 2011 study by McGraw-Hill (Green Home Builders and Remodelers Survey (US) wherein the green home construction was expected to rise from 17% of overall residential construction to close to 38% by 2016. And it’s not only new home builders feeling the effect. “Renovation firms are expected to carry out 65 percent of their projects in a ‘green’ manner by 2014 with that number increasing to 77 percent by 2016, increasing from 22 percent in 2009”.
Not all eco-friendly products and services are embraced by action In fact, the eco-friendly bandwagon for home building and renovation is more pervasive than with other products and services. A Leger Marketing study cited by GreenHouseCanada observes that while 90% of Canadians are willing to go along with environmental basics like recycling, only 37% are willing actually pay more for products that are environmentally friendly.
Talking dollars and sense However, money moves both markets and market demand, and this may be where environmental concerns mesh most successfully with real action. If a homeowner is confident of cash savings month-to-month when switching to more efficient light bulbs and improving insulation, or an increase resale value later on, they may well be willing to pay a little extra for their new home or renovation.
This is confirmed by a TD Bank survey conducted by Ipsos Reid: “73% of Canadian homeowners or those considering buying a home would be willing to pay a premium for environmentally friendly features. Among those considering a purchase in the next two years, this propensity increases to 85%. When asked how much more they would be willing to pay, the average response was 10%, similar to the 2009 survey cited above. When asked why they would consider choosing environmentally friendly features in their homes, two-thirds of respondents (67%) say that future energy cost savings are very important. Another 59% cite improved resale values as very important.”
More studies suggest similar motivations. In fact, putting a number to it, Harmony Habitat, again citing the McGraw-Hill study, suggests that “people are willing to pay ten to twenty times more for every dollar reduction in annual fuel bills.”
If banks promote eco-friendliness, why not you? There’s more savings available to homeowners than just though energy efficiency. Almost all of Canada’s major banks offer mortgage rate reduction incentives if the home or renovation meets certain environmental or energy efficiency criterion. For example, TD Bank offers its Green Mortgage and Home Equity line of credits, wherein customers are eligible for a 1% discount off the posted interest rate and up to a 1% cash rebate when making Energy Star-qualified purchases. CMHC offers a premium refund of up to 25% to homeowners who either buy or renovate for energy efficiency when using a CMHC-insured loan.
Tagging your building or renovation business to this trend seems to make sense. If you can offer not only future cost savings and other eco-friendly material choices but also the prospect of additional savings through the financing of the work, how could it not be good business?
Going one step further and including options for your clients that include material choices that deliver a safe, clean environment within the home and a reduced impact on the overall environment through more eco-friendly manufacturing processes, places you nearer the leading edge of a seemingly unstoppable consumer force.