Green home building is an idea with its strongest roots in the warm soil of the Sun Belt.
For a variety of reasons — especially cost and supply — it has yet to expand on a large scale beyond a few markets in the Southwest and South.
But that could change, as Chicago-area builders look to broaden their participation in Energy Star, the federal program that encourages use of energy-saving appliances, insulation and windows in new homes.
Green building encompasses a host of construction materials and methods designed to minimize a home’s effect on the environment. From recycled building products to non-toxic paints, new technologies increasingly enable builders to deliver homes marketed as Earth-friendly.
“The first step in the adoption of green building is almost always energy efficiency,” said Steve Bottfeld, senior analyst at Marketing Solutions, a Las Vegas-based real estate research firm. “In Chicago, it has not yet become a competitive necessity for builders to offer Energy Star. As builders in Chicago become more energy-aware, they will get on this bandwagon.”
There are some indications that the bandwagon will roll through Chicago soon.
Cris Cash, national vice president of construction for Pulte Homes, said his company, along with its Del Webb subsidiary, is offering Energy Star on just 600 of the 1,900 homes it’s building in metro Chicago this year. But in 2005, the company will go Energy Star on all Chicago-area homes it builds. Homes certified by Energy Star are at least 30 percent more efficient than typical homes. (Cambridge Homes and Airhardt Construction are among the two dozen Illinois builders that participate in the Energy Star program.)
“We’ll do it where it makes good business sense,” Cash said. “It might cost us a couple thousand dollars a house extra, but does it give us a marketing advantage over other builders? We believe it does. It’s not only doing the right thing; it has to make good business sense as well.”
Those costs, like all building costs, are passed on to the consumer as the market will bear.
Pulte’s effort echoes a calculation more builders are weighing. Pulte has Energy Star certification on 100 percent of the new homes it builds in Las Vegas, for example, a market in which so-called green building is coming into widespread use.
Pardee Homes, which will build 2,600 homes this year in California and Nevada, unveiled its LivingSmart program in Las Vegas last year. Among LivingSmart’s standard features: lumber from managed tree farms, formaldehyde-free insulation, drought-tolerant landscaping and fluorescent lighting.
Pardee’s green homes are also heavy on recycled and renewable materials.
Standards include carpets made of recycled plastic bottles and attic insulation composed of recycled newspapers and magazines. The insulation used in the Living Smart program is formaldehyde-free and unfaced, meaning it does not have the paper cover that is required in the more humid climates. The unfaced batt is fire-resistant and noncombustible, according to Pardee.
In addition, Pardee uses engineered wood, a composite lumber with some recycled timber, in all of its framing. As upgrades, the builder offers flooring options from renewable materials such as cork, which spares trees by using their bark, and bamboo, which regenerates far more quickly than trees.
The techniques aren’t new; what’s notable about Pardee’s program is its scope. Once limited to the custom market, where wealthy consumers could absorb the cost of more expensive construction techniques, Pardee is implementing green building in tract development.
The Los Angeles subsidiary of lumber giant Weyerhaeuser is building 800 LivingSmart homes in four Las Vegas subdivisions, as well as 500 LivingSmart homes across Southern California. The starting price? The low $300,000s in Las Vegas, compared to a market-wide median new-home value of $263,000, according to data from regional real estate research firm SalesTraq.
Pardee’s homes might cost more than other new houses in the neighborhood. Yet, building green increasingly makes sense in a burgeoning Western market confronting an array of environmental challenges.
Green building in southern Nevada has become a “competitive necessity,” Bottfeld said.
“Las Vegas had an energy shortage three years ago, and we have an ongoing water shortage and not enough land to build housing to fill the demand,” Bottfeld said. “The confluence of these factors has advanced the Las Vegas market one step ahead of the rest of the country. It has become imperative for Las Vegas builders to be energy-smart, water-smart and land-smart.”
As evidence, Bottfeld points to Energy Star.
Three years ago, just before a Western energy crisis propelled power prices in Nevada, 15 percent of new houses in Las Vegas qualified as Energy Star homes. Bottfeld pegged that number at 60 percent today.
In addition to major builders such as Pulte, entire communities such as Rouse Co.’s 22,500-acre Summerlin master planned development in Las Vegas mandate that all their new homes meet Energy Star requirements. Summerlin has also prohibited sod at all new homes, requiring drought-tolerant landscaping instead.
Mason estimated the program boosts construction costs by up to 10 percent, much of which the builder must pass on to buyers. However, housing demand in Las Vegas has been outstripping supply; Pardee, like its competitors, has long waiting lists at each subdivision, so the market isabsorbing the extra expense for now.
Pardee has found a formula that works in white-hot Western markets, but the company’s journey to large-scale green building wasn’t free of obstacles. A host of issues affects how readily other production builders nationwide can adapt to the trend.
Even in Las Vegas, where consumers have warmed to green homes, the learning curve is significant.
“I wish I could tell you buyers come into our sales offices demanding solar power and energy-efficient appliances. They don’t,” Mason said. “But when we take the time to educate them, they really appreciate the idea. In some ways, we’re leading the consumer.”
That means showing buyers their potential savings. By upgrading to a tankless water heater and a 2.4-kilowatt solar-energy system, Mason said buyers could save 67 percent on utility bills, compared to 30 percent savings through Energy Star.
But because of the upfront expense — Pardee’s tankless water heater costs $3,000 and its solar-energy system about $12,000 — buyers in markets with fewer environmental issues than Las Vegas don’t always go for it. “One thing we hear is, `What’s my payback? I’m going to be here three years. Is it really important to have compact fluorescent bulbs when I’m not going to see the payback until year five or seven?’ That’s the objection that holds us back,” said Kyle Reinson, a spokesman for WCI Homes in Florida. “Homeowners are very cognizant of the style of a home, and it’s difficult to get them to buy into lifestyle or design changes.”
Buyers aren’t the only ones giving a red light to green building. Its relative novelty often means several years of research and trial and error, and that can turn off members of a low-tech, hands-on industry.
“Traditionally, you’re building a home from a plan, and you have a group of people with a set of core values and experiences,” Reinson said. “Sometimes it’s difficult to get people to understand there are better ways to build, because it’s always been done one way. We’re fighting a bit of that in the industry at large. People tend to look at things they don’t understand with a critical lens.”
Complicating Pardee’s task was the wide disparity in products, some of which company executives considered unproven. Other materials had limited regional availability, and still others lacked local subcontractors to install and monitor them. Pardee also ditched products with weak warranties.
The biggest builders face additional hurdles to going green beyond Energy Star.
While planning its Aliante community in North Las Vegas several years ago, Pulte spent several months researching green building. Executives of the Michigan-based company decided “there was no way it would work for us,” Cash said.
“We found the industry is so new that most companies don’t have the ability to manufacture products at the rates we need them,” he said. “Products like tankless water heaters are made on a smaller scale and boutique builders are the ones using them. It’s a matter of getting enough critical mass where vendors can support big builders. They get excited talking to Pulte, but when we say we need two a day, they say they can produce only two a week” — numbers that don’t crunch for a company that delivers 33,000 homes a year nationwide, including nearly 4,000 units in Las Vegas.
Yet, industry insiders predict green construction is an inevitable, if distant, wave of the future. As municipalities encourage the practice, costs come down and consumers demand lower power bills, analysts and builders say that wave is poised to reach Chicago.
Chicago officials are stepping up efforts to encourage green building.
The city has showcased new and renovated homes featuring materials similar to those of LivingSmart to “test how these technologies work and to educate the community about them,” said Sadhu Johnston, a mayor’s assistant focusing on green building. Plus, officials established the Chicago Center for Green Technology to further educate builders and buyers.
Homeowners also can tap into a $5 million grant program reserved for green renovation of some of the city’s 80,000 bungalows.
Johnston and other city officials are meeting with members of the Home Builders Association of Greater Chicago to develop uniform standards for green home building. The benchmarks would supplement the Chicago Energy Conservation Code, which requires reflective roofing and other materials for minimum energy savings on all new construction in the city.
David Wallach, a principal of W Developments LLC, is incorporating some of those ideas in his condominium buildings. A 110-unit midrise he’s developing, 909 W. Washington St. on Chicago’s Near West Side, will have a green roof — vegetation over a watertight membrane for water collection and lower energy bills — and future projects will implement additional suggestions.
“We’re absolutely going to include these guidelines in our buildings,” Wallach said. “Not all of the things that make a building more environmentally friendly will cost more, so they make good sense. The balance is what is not financially feasible. Not every technology balances the benefits and burdens. Some practices don’t provide a benefit that the cost of the project will allow. The building community and the city are having a great dialog on that subject right now. A year from now, we’ll have a better idea of what those costs are.”
Johnston said his ultimate objective is to ensure every home built in Chicago is “efficient and healthy.”
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The Energy Star universe
For a new-construction home to qualify for the U.S. Energy Star program, it must be independently verified to be at least 30 percent more energy efficient than homes built to the 1993 national Model Energy Code or 15 percent more efficient than a state’s energy code, whichever is more rigorous, according to Energy Star.
These savings are based on heating, cooling and hot-water energy use and are typically achieved through a combination of building envelope upgrades, high performance windows, controlled air infiltration, upgraded heating and air conditioning systems, tight duct systems and upgraded water-heating equipment, according to the Energy Star Web site, energystar.gov.
The site lists 24 builders in Illinois as part of its program. In comparison, Michigan has 74 builders; Indiana, 39; Iowa, 36; and Wisconsin, 232.
