Some time ago the Institute for Resources, Environment and Sustainability (IRES) at UBC conducted a survey of 610 BC REALTORS® to assess the impact of renovations and energy efficiency on the market value of houses based on their experience of the market in 2006. I offered my take on the preliminary results in an earlier post. Essentially, the survey seemed to me to suggest:
- recovery of the cost of energy saving improvements on sale isn’t likely
- improvements to the condition of insulation and weather stripping likely make virtually no impact on sale price
- recovery of costs of energy-saving enhancements which are visible – such as heating systems, roofs, windows and doors may be partially recovered, at least if the improvements are recent at the time of sale.
Interestingly, the survey concluded ‘there is no evidence from this survey that this [positive effect on market value] is because of energy efficiency‘. In other words, recognition of costs in the selling price was more likely the result of the overall state of repair of the house.
Another study, done slightly more recently, may suggest a changing attitude. In October 2007 an Eco Home Survey was conducted by Angus Reid Royal on behalf of Royal LePage. This was an on-line poll of a national representative sample of 1,266 adult Canadians. Here are some (but by no means all) of the poll results:
- ‘…almost three quarters of Canadians (72%) say they will look for a green-improved property in their next home purchase, and 63 per cent will be willing to pay more for an environmentally friendly home’
- of those ‘…willing to pay more for an eco home, 62 per cent are willing to pay between $5,000 and under $20,000, for green features, while eight per cent (8%) of respondents are willing to spend $20,000 or more on a home deemed green’
- motivation for making their homes green or greener varied: ‘…35 per cent of respondents cited they are doing it for their children so they inherit a healthy planet; 32 per cent are doing it for the cost savings; and one quarter (25%) are doing it for their health and to have peace of mind they are living the best they can’
- ‘… more women (31%) than men (18%) are going green for their health. Conversely, more men (41%) than women (23%) cite cost savings as the most influential factor for making a change.’
Does it seem to you that the conclusion that 63% of Canadians are willing to pay thousands more for an environmentally friendly home is at odds with what was suggested by the earlier study? That any positive effect on market value of an energy-related improvement is likely more closely linked with the overall stata of repair of the home as opposed to eco considerations? I think there’s an inconsistency there. But I’m not sure why:
- maybe the REALTORS® in the earlier survey expressed their own dated bias
- or, maybe answers to the hypothetical questions posed in the second survey don’t really materialize in the real world when hard earned dollars are on the table
I suspect it’s a bit of both. But with time I think the trend will become increasingly clear. The trend will be toward both making residential eco improvements, and to recognizing their inherent value in the selling price of the home. In other words, home owners who make practical choices about eco renovations will be rewarded by higher selling prices.
Bye for now,
...Victoria's blogging real estate professional.
Tags: Green Real Estate
