Green Features Aren't Selling Houses

Green housing features like solar roofs and angled walls add cost to a development, and lenders don't see added value. So as CNN reports, green housing currently faces a stiff market.

Because green features aren't always included on the cost tab, they reflect lower resale values. Banks, in turn, won't fully finance the homes, leaving buyers with a bigger check to write for the down payment.

Adding a green feature will probably resell at a fraction of the price if the concept isn't popular, argues David Snook, a California-based appraiser who serves on the real property committee on education for the American Society of Appraisers.

"It doesn't do a lot of good to simply add value based on cost...[since] cost does not necessarily equal value. The question is 'How much will the market pay on resale?'"

Full Story: Green homes face a red light

Comments

Comments

Not an accurate summary of the article

Thanks for the link, but your headline and summary do not accurately convey the point and content of this article. The CNN story is about the fact that appraisals are valuing some high-priced green building features at less than their cost. That is very different from saying "Green features aren't selling houses."

As with any addition to a home, one should consider whether the item in question adds enough value to the home to justify the price (assuming there are not other compelling reasons to purchase the feature that otherwise justify the cost).

What this article mentions but doesn't focus enough on is that there is a big difference between flashy, expensive features like PV and the many more affordable practices and technologies -- insulation, anyone? -- that will lower utility bills and, if done right, add to the comfort and value of a home.

The article also doesn't openly question whether the practice of appraisal may need some updating as innovative new building technologies become more prevalent.

Its Not Just Green Amenities

A difference between cost and appraisal is actually fairly common, especially for features which aren't already in wide use in their marketplace. A moment on Google brought me to:

http://www.internest.com/xyz/newsletter/appreciation.asp

Upgrades in the Appraisal World

“Actually most upgrades in new homes can be given full value,” said Smotherman. “The things that are tougher to appraise for full value are the extremely personal choices people make when having their homes built.” For instance, she added, a swimming pool will get only about 50% of what a new home buyer may have spent on it because in many areas a pool is desired by about the same number of homebuyers in a resale mode as those who consider it an unnecessary responsibility.

And yet people who want swimming pools still buy them. I'm fairly confident that green features will be appraised into home values more or less in order as 1) Low maintenance and clearly saves money. 2) Low maintenance and supports a green lifestyle. 3) High maintenance but clearly saves money. 4) High maintenance but supports a green lifestyle.

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