- Beazer Homes is building “zero energy”, climate-friendly homes, even though they are more expensive.
- CEO Allan Merrill said the initial investment will pay off in the long run.
- Challenges include higher costs, market education and valuation practices for green homes.
A new community of 19 single-family homes in north Baltimore is at the forefront of the green building movement.
Solar panels are on the roof. Garages come with electric vehicle charging. Energy efficient appliances have been installed, including electric heat pumps and induction cookers. Hermetic insulation prevents energy-wasting leaks. Fresh air systems keep indoor air clean. Homes use so little energy that solar can offset most or all of the energy utility costs.
The project was developed by Beazer Homes, one of the largest home builders in the US. A few years ago, the company set a goal that by 2025, all of its new homes would meet the U.S. Department of Energy’s “Zero Energy Ready.” certification. Its CEO, Allan Merrill, said Beazer was close to reaching its goal.
The effort has come at a cost; Merrill said climate-friendly features can add $10,000 to $30,000 to construction and that the market for these homes is still developing. It’s also an uncertain time, with so many Americans struggling to afford a home and Donald Trump’s re-election threatening to change many environmental regulations. But there are tailwinds, including state laws requiring industries like utilities and real estate to decarbonize and a record amount of renewable energy projects across the US.
Merrill thinks the initial investment will be worth it in the long run, even if shareholders haven’t yet rewarded Beazer. Prioritizing sustainability helps the company attract the best talent, he said, and homeowners are increasingly concerned about rising utility costs. Now Beazer needs to educate clients and the wider real estate market about the value of green homes.
“Leadership requires investment,” Merrill said. “We made a conscious decision to make less money on all these houses. Now it’s about talking to more customers, becoming more effective in communicating value and getting paid for it. “
“Zero Energy Ready” houses contain energy efficient appliances. Catherine Boudreau/Business Insider
Merrill added that Beazer is in the middle of that journey. The 19 single-family homes in Parkville, Maryland, cost at least $700,000, more than double the area’s September median sales price of $300,000.
Merrill said the value of Zero Energy Ready homes comes from lower utility bills, healthier air quality, a quieter living space and a reduced impact on the environment. Beazer estimated that new homeowners in Parkville would save about $453 a month in energy utility costs compared to owners of older homes in the city and $311 a month compared to owners of a typical new construction. Better indoor air quality is a selling point for buyers with asthma or other breathing problems. Renewable energy and electrical appliances do not emit fossil fuels.
“The tricky thing is when people come in, they don’t have a button that tells you which of those issues are important to them,” Merrill said. “That’s the discovery process. It’s finding a way to connect what we’ve done with each buyer.”
He said another challenge is that home assessments generally don’t take into account energy efficiency or renewable energy technologies.
Woody Fincham, a residential appraiser in Charlottesville, Virginia, who also teaches courses on sustainable homes for the Appraisal Institute, says few appraisers have the expertise. But he argued that the problem is broader. Estate agents should market green properties so that potential buyers understand their value, which should then be communicated to mortgage lenders, who may require qualified valuers.
However, there is no guarantee that a green house can command a higher price, because the market largely depends on what is selling nearby.
“If you’re in a community where people value efficiency a lot – and there are parts of the country where they do – the valuation will be able to show that the market is willing to pay more,” Andrew Pizor. said a senior attorney at the National Consumer Law Center. “But if you’re in a community where people don’t care about this kind of thing, the appraiser will compare prices and likely find that no one is willing to pay extra for it.”
Two Democrats in Congress have proposed legislation that would require ratings to consider a home’s energy use compared to that of nearby properties, as well as whether the home has energy-efficient appliances, solar panels and EV charging. The bill would also require additional training for appraisers.
But it hasn’t passed, and Merrill said Beazer isn’t waiting around.