March 1, 2008 in Business

Expense keeps many homeowners from going green

June Fletcher Wall Street Journal
 

Most homeowners like the idea of going green – until they get the bill.

With home sales slumping and consumers rethinking their remodeling budgets, building contractors and suppliers are dangling green upgrades. They hope that energy-efficient systems and products made from sustainably harvested materials will hook consumers concerned about global warming, pollution and natural resources.

Yet with a few exceptions, green materials and construction cost extra, making them a hard sell. Enermodal Engineering, a Canada-based consulting firm, estimates the premium at 5 percent to 10 percent, depending on how extensively a builder uses recycled materials and water- and energy-efficient products. When Specpan, an Indianapolis research firm, surveyed builders recently for Building Products magazine, the greatest number estimated a 10 percent to 19 percent cost increase when going green.

There are signs, though, that the industry’s sales pitch is resonating. In the American Institute of Architects’ fourth-quarter survey of 500 architects, 61 percent said their clients are interested in “renewable” flooring materials like cork and bamboo, up from 53 percent a year earlier; 47 percent said clients wanted high-end appliances, down from 65 percent.

Being earth-conscious isn’t always easy. Anna and David Porter decided three years ago to trade in their 4,000-square-foot Seattle home for a smaller, greener abode. They paid about $300,000 for an old house on a beachfront lot in Stanwood, Wash., and budgeted $450,000 to renovate it into a green showplace, with kitchen countertops made of recycled glass and concrete, a geothermal heat pump, a tankless hot-water heater, a solar electric system and cabinetry and flooring made from sustainably harvested wood.

Contractor estimates ranged from $700,000 to $800,000 and still didn’t include everything the couple wanted. In the end, they tore down the house, salvaged or gave away most of it and spent $1.2 million, not including the original purchase, to build a custom-designed, 2,700-square-foot replacement. It was “the right thing to do,” says Ms. Porter, a nonprofit project manager. Even though many of the upgrades will help keep energy costs down, she adds, “I don’t expect we’ll get back all the money that we paid in our lifetimes.”

In fact, earning back the green premium can take years, not counting rebates and incentives that may be available from government agencies. Enermodal calculates a payback period of more than 10 years for the most extreme green measures, including super-efficient furnaces and water-thrifty faucets. Systems integrator Solar Depot estimates a solar hot-water system will pay for itself in eight to 10 years, depending on the climate, site and home size; a solar radiant floor-heating system will take five to six years. But considering the average U.S. homeowner lives in a house only seven years before moving, many will need more than the hope of lower utility bills to inspire a green remodeling.

Yet there are some items with relatively short paybacks. EnergyStar.gov, an Environmental Protection Agency Web site, estimates a 3.5-year payback period for the $200 premium on an Energy Star-rated electric clothes washer costing $500 and a 3.1-year payback for the $30 premium on an Energy Star side-by-side refrigerator costing $1,100. Compact fluorescent light bulbs – which go for about five times the price of incandescent bulbs – pay back their extra cost in about four months.

Mark Silberman, a retired wine-store owner, plans to tear down a four-bedroom split level in Norwalk, Conn., he bought seven years ago for $500,000 and spend about that amount again to rebuild. He has just begun making his way through the dizzying array of green options – earthen roofs, gray-water irrigation systems, geothermal heating, recycled shingles. Since all these things could add 20 percent to his final cost, he figures he’ll probably just pick those that make the house less drafty and expensive to heat. “If something helps save the earth’s resources, that’s an extra bonus,” he says.

Cost has been a stumbling block to the green building movement ever since interest in solar homes, sod-topped buildings and dome houses took root in the 1960s. Ratings standards such as Energy Star and the U.S. Green Building Council’s LEED (Leadership in Energy and Environmental Design) point system help people evaluate costs and benefits.


Thoughts and opinions on this story? Click here to comment >>

Get stories like this in a free daily email