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Aug. 10, 2012: Green Home Labels Add Significant Value, Says California Study

SAN FRANCISCO — Researchers from the University of California, Berkeley and the University of California, Los Angeles have released a new study on the economic value of green home labels in the California residential market. The study finds California homes with green labels are worth 9 percent more on the real estate market.

“The Value of Green Labels in the California Housing Market” is said to be the first large-scale independent economic analysis of the value of green home labels in California. Led by researchers Nils Kok, visiting professor at the University of California, Berkeley, and Matthew Kahn, professor at the Institute of the Environment, Department of Public Policy and Department of Economics at the University of California, Los Angeles, the study examined data on the 1.6 million single-family homes sold between 2007 and 2012 in California. Of these homes, approximately 4,300 were certified with green home labels from Energy Star, GreenPoint Rated, or LEED for Homes.

Key findings include:

• A green home label adds an average 9 percent price premium for single-family homes in California.

• Based on the average California home price of $400,000, homes with a green label sell for an average of $34,800 more than comparable homes without a green label.

• The study also provides two key insights into the effect of green labels:

1. The price premium associated with a green label varies considerably from region to region in California, and is highest in the areas with hotter climates. This may indicate that residents in these areas value green labels more due to the increased cost of cooling a home.

2. The premium is also positively correlated to the environmental ideology of the area, as measured by the rate of registration of hybrid vehicles. This correlation suggests that some homeowners attribute value to intangible qualities associated with owning a green home.

To download a copy of the report, go to www.nilskok.com/2012/07/greenhomes.html.

Publication date: 8/6/2012

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