July 24, 2014: Appraisal Institute Supports USGBC, Says Green Homes Do Sell for a Premium
Report Says a Green Label Adds an Average 9 Percent Price Premium
CHICAGO — The Appraisal Institute, the nation’s largest professional association of real estate appraisers, has announced its support for a U.S. Green Building Council (USGBC) report that finds green labeled homes can sell at higher prices.
According to the report, a green label adds an average 9 percent price premium, according to a study that analyzed 1.6 million homes sold in California between 2007 and 2012.The USGBC’s “LEED In Motion: Residential” report further noted that Leadership in Energy and Environmental Design (LEED)-certified homes provide 20 to 30 percent savings in energy and water use compared to code-built homes.
The USGBC estimates that there are as many as 150,000 LEED-certified green housing units worldwide, a number that more than doubled between 2011 and 2012 and continues to grow steadily. Additionally, the green share of new single-family residential construction has grown dramatically — increasing from 2 percent in 2005 to 23 percent in 2013. McGraw Hill Construction estimates that green market share will continue to increase, reaching 26 to 33 percent by 2016, based on its overall Dodge residential construction forecast as of January 2014, according to the USGBC report.
“The USGBC report clearly shows that consumer interest in green homes continues to increase, and the Appraisal Institute is proud to help educate real estate appraisers so they can provide credible, reliable opinions of value for these types of properties,” said Ken P. Wilson, MAI, SRA, Appraisal Institute president. “As the market’s needs continue to grow, the Appraisal Institute will keep expanding its efforts to meet that need.”
The report also details the U.S. states with the most LEED-certified homes, with California in the No. 1 spot, followed by New York and Texas.
Wilson provided guidance for appraisers on the use of such findings within appraisal reports. “Professional appraisal standards require appraisers to only use reports or studies that are credible and appropriate for the local market. Appraisers should only rely on studies where they understand the methodology, explain it, and confirm it applies to their real estate market.”
For more information on the Appraisal Institute, visit www.appraisalinstitute.org.
Publication date: 7/21/2014