While affordability and supply chain challenges plague the housing market, there is one area that’s seen consistent growth: the green homes sector. The green single and multifamily sector in the U.S. has been growing and is expected to continue through 2022 with customer demand and a growing green products market fueling its progress. The U.S. Green Building Council (USGBC), creators of the LEED green building rating system, released a new report on the LEED residential market showing certifications at an all-time high with 10 states leading the way:
- LEED home certifications have grown 19% since 2017 and are at an all-time high.
- California has the greatest number of LEED-certified residential units in the U.S. Other top 10 states include Texas, New York, Washington, Colorado, New Jersey, Ohio, Oregon, Maryland and Georgia.
- LEED is being applied to single-family, multi-family and affordable housing projects. More than 78,000 certified residential units are considered affordable housing.
Industry reports show that 33% of single-family builders and 36% of multifamily builders are building more than 60% of their homes green. USGBC’s residential report also outlines developers who have committed to utilizing LEED for residential projects. In addition, LEED provides triple bottom line benefits for homeowners and developers:
- Rental Premiums: Researchers found an 8.9% premium associated with LEED-certified buildings compared to non-certified when they looked at green multifamily rental rates. The premium increases the annual income of a property, adding value when it’s time to refinance.
- Higher Sale Prices: A Meta-Analysis of Green Home Premiums concluded that green homes sell for a 4.3% premium. It starts between 8-10% and settles closer to 4% after certification gains traction in the market, which proves it pays to be an early adopter.
- Energy Efficiencies: LEED residential units are required to demonstrate a minimum 15% savings over energy code (and 20% water savings). On average, certified homes use 20-30% less energy with some reporting up to 60%, which lowers utility costs.
- Costs: Building green can be done for the same – and sometimes less – than non-green. For those who do see a cost increase, it’s usually about 2.4% upfront and is quickly recouped through energy, water and maintenance savings.
- Financing: Buyers and builders can find financing options for LEED homes, like Fannie Mae’s Green Financing Loans and Freddie Mac’s Multifamily Green Advantage, that incentivize green development and purchases.
- Affordable housing solution: A study found that green affordable housing developments spend 12% less on energy in common areas per square foot. Residents use 14% less energy per square foot, putting much needed funds back into the pockets of low-income communities.
