Building a Green Home: Specialty Builder vs. National Builder

When it comes to buying or building a new, eco-friendly home, most home buyers have two choices: either buy from a national chain builder, or employ the services of a local builder that specializes in green home design and construction. But which route should prospective home buyers go?

It would not be a stretch to say that, for the most part, when Americans need a new home, they buy from national builders. In an era of big box stores, stripmalls, and globe-spanning chain franchises, this seems like the norm. In 1992, nine of the top ten builders in Austin, Texas were privately owned by local proprietors. Eight years later, that industry paradigm completely turned on its head with only a single independent and locally owned builder breaking the top ten.

To be clear, the rise and dominance of national builders is not a bad development. Deep-pocketed national builders have the means and resources to turn out affordable tract housing at a high rate to meet growing demands for housing in hot markets. In 2011 alone, despite the massive housing downturn of previous years, the top three national builders pulled in combined revenues of $11 billion dollars, and pumped out 43,926 new homes. The national brands did even better in 2012, and are expected to be a major pillar of the nation’s economic recovery. In the race for affordability and convenience, national builders win, hands down.

However, public attitude towards homes has shifted considerably during the recession. New paradigms of what makes a dream home have moved away from sheer size and affordability and instead, refocused around issues of quality, energy-efficiency, and general sustainability. American households also got leaner during the recession, more efficient, and better at putting their finances into shape. Many families previously racked by credit card debt climbed out of debt through a combination of reduced spending and innovative ways of saving. What that means is that, more than ever, Americans are looking to buy and build leaner more energy-efficient, and thus cost-saving, sustainable homes.

A Green Home Recovery?

study by McGraw-Hill Construction indicates that green homes will drive the housing recovery. In 2011, green homes made up 17 percent, or $17 billion dollars, of the total residential construction market. That market share is expected to balloon to 33 percent, or $300 billion dollars, by 2016. That’s quite a lot of money, and big builders have taken note. National brands are very good at making lots of homes very quickly, cheaply, and effectively. But the question is: can they make good green homes applying the same techniques?

The Bigs

A report done by Calvert Investments, an investment management firm, paints a pretty clear picture in regards to sustainability and the nation’s biggest home builders. Some key findings of the report are as follows:

A sizable gap still remains between what investors need and the information that homebuilders provide. Out of 42 points, the average total score was just over six points, or 15%.

While all 10 homebuilders have made some effort to develop environmental policies or practices, or to offer environmental products, there is strong differentiation in the level of commitment to sustainability and the penetration of “green” homes in each company’s product mix. Without leading companies KB Home and Pulte Homes, the overall analytical performance of the industry in our study would have been far worse—scoring an average of less than 6% against key green data points.

Homebuilders are not measuring and disclosing their impact on the environment in a comprehensive manner. Our analysis looked for environmental performance data points that homebuilders use to measure and manage their footprint, but nearly all homebuilders had no relevant data.

Ostensibly related, the 10 companies pay more attention to sustainability issues that can offer nearer-term financial benefits to operating costs and customers, such as building material recycling and energy and water-efficiency measures. Issues with longer-term benefits, such as climate change, are not well addressed by this industry.

In light of SEC interpretive guidance on climate change in early 2010, some homebuilders are choosing to disclose risks related to climate change through their annual 10-K filings. At this point, homebuilders appear most concerned about the effect of carbon regulation on costs, rather than direct physical impacts of a changing climate.

In other words, the big builders are falling very, very short when it comes to producing effective eco-friendly, and efficient, homes. Most homebuilders simply could not, or would not, provide relevant data on the actual performance of their homes. Likewise, the report found that big builders were characteristically more concerned about pursuing green features that offered immediate benefits at low cost, such as construction materials recycling and water-efficiency measures, rather than invest in comprehensive, whole-house initiatives such as intelligent envelope design or renewable systems.

In any case, an average score of 15 percent with builders in the bottom tier scoring a dismal 6 percent, does not inspire much confidence. “Green” is, with some exceptions, treated by national builders as a shameless selling point meant more to shift orders rather than a genuine attempt to build a good energy-efficient house. National builders are very good at producing many low-cost homes in a short period of time, but when it comes to building with sustainability in mind, they may not be the best choice.

The Specialty Builder

In order to fulfill growing demand for sustainable housing options, many areas of the United States have seen a growth of local ecobuilders offering comprehensive sustainable home building services. Unlike national brands, which typically build on mass, tract-developments, ecobuilders work house to house on a case by case basis. This is a key aspect of sustainability that is often overlooked. A home’s energy-efficiency and subsequent impact on the environment is heavily determined by the building’s solar orientation and envelope design. Houses that ignore these fundamental site considerations are essentially being built to be unsustainable from the very start.

For example, while sweeping window views are certainly nice, windows facing east and west should be avoided in order to prevent massive solar heat gain throughout the day. Major living areas and shared spaces should be oriented north and appropriately shaded. South-facing windows should also be carefully shaded while still allowing the winter sun to penetrate. Unfortunately, in nearly all suburban tract developments, houses are oriented every which way in accordance to lot lines and with an eye towards maximizing profits, not energy-efficiency. That means that on any given cul-de-sac energy bills will vary wildly from home to home. Some houses receive too much sunlight, others get too little. Some may have to put up with morning and late afternoon glare, while other must be content with electrical lighting. The list of problems could go on and on. Specialty ecobuilders rectify these problems by tailoring homes to the site before moving on to other key issues.

When You Need It Done, Choose the Experts

It is hard coded into many ecobuilders to build extremely energy efficient homes as a way of differentiating themselves from the cheap-and-cheery business model of large chain builders. Many ecobuilders offer net-zero options that push the boundaries of energy efficiency. It makes sense then that if sustainability is what you are looking for, go to the specialists.

Live Well. Think Green. BuildNative.