Last month in this space, I reviewed a series of market projections for 2014 from Harvard University as well as the industry’s leading associations.
Green Remodeling is a Bottom-Line Decision
In the current climate, most clients want a financial incentive to go green.
Want to sell green? These days you better be prepared to show some economic benefits.
With projects getting tighter in a declining economy, home-owners appear less likely to spend extra money on anything, especially if they are not seeing a personal benefit.
“I think the demand is still there, but I think the reality has changed,” says Dennis Allen, president of Allen Associates in Santa Barbara, Calif.
Allen, one of the pioneers of green remodeling, says it has been a long time since he’s seen clients this budget conscious, and that attitude carries over to green remodeling.
That’s not a big surprise as people tend to be less concerned about the environment during times of economic worry, studies show. A January survey from The Pew Research Center for the People & the Press found that only 41 percent of Americans ranked protecting the environment as a top priority, compared to 56 percent in 2008 and 57 percent in 2006 and 2007. Researchers said similar drops have occurred during other economic downturns. (See graph on this page. For more on the report, visit www.people-press.org.)
If people are going to cut their budgets, green benefits are the first target for many clients, says Bernie Smith, president of MasterWorks Atlanta in Roswell, Ga.
When the economy heads south, Americans tend to be less worried about protecting the environment.
“Folks right now are looking to get something that looks really nice but costs a tiny bit of money,” he says. “They’re not really worried about the quality of what’s behind it but rather what’s on the face of it. When it comes down to the final budget, people generally want to put their dollars in what they can see rather than what they can save over the long haul.”
Selling green in the current environment to most clients is all about pitching value by emphasizing the green features that can save money immediately and in the long-term.
“We talk to them about the green things that can be done to stay within their budget,” Allen says. “We keep talking to them about not just looking at upfront costs but looking at their operating costs over time and how they’ll be ahead on that. As people are hurting now, it’s hard for them to hear that, but some people get it.”
For example, Allen Associates is having a lot of success with water-saving fixtures and irrigation systems because there is little difference in the upfront costs but significant savings on water bills down the road.
“If people are stuck on the pennies, that’s pretty persuasive,” Allen says.
For most remodelers, energy efficiency is likely to be the best seller. It’s something clients can understand and an area where a remodeler can point to tangible monetary benefits.
|“Clients want to know what this remodel will save them over the next
— John Murphy, Murphy Bros.
“Energy efficiency is what people are interested in,” says John Murphy, president of Murphy Bros. Designers & Remodelers in Minneapolis. “Clients want to know what this remodel will save them over the next 10 years — it’s that return on investment more than straight cost.”
Without calling it green, Murphy has focused on building and remodeling energy-efficient homes since the early 1980s. A lot of the “common-sense” aspects of building that he adopted following the 1970s energy crisis fell out of favor with the big production builders during the last two decades, he says.
“Back when we hit the high fuel prices in the late 70s, I think it really affected people’s psyches and building practices for the next 10 to 12 years,” Murphy says. “I really think that’s going to happen again in the cars we drive and the homes we build and live in.”
Even though fuel prices have dropped recently, most people realize that the long-term trend is steadily upward, Smith says.
“If you say to someone, 'We’re making these changes to upgrade your home to a Level 2 EarthCraft house and that’s $10,000 more,’ people aren’t on board,” Smith says. “If I can tell them it’s $50 a month on their mortgage payment, but they’re going to save $200 a month on utilities, people will say that makes sense, let’s do that.”
Smith also talks about the higher resale value a green home can realize, an especially important factor in today’s tough real estate market.
“Trying to sell homes now, you’ve got to have every edge you can,” he says.
|“It’s not that people aren’t interested in health now, but if they have to cut, that’s an area they look at.”
— Dennis Allen, Allen Associates
Another approach that has worked for Allen is blending green products with other needs such as fire prevention, which is an important selling point in Santa Barbara because of California’s frequent wildfires and the lower insurance rates proper materials can garner for homeowners.
“There is a convergence between fire prevention and the green point of view,” he says. “If we talk to people about that, we get a double sales tactic.”
Many of the products that insurance companies like to see for fire prevention — such as fiber cement siding, non-asphalt roofing products and dual-glazed, tempered glass windows — also offer energy savings and last longer, both important green benefits.
“A lot of these products can meet both needs, and people like that,” Allen says.
Even features that may have appealed to clients just a year ago aren’t as important to homeowners as they increasingly watch the bottom line.
“For a long time, it was the health issues driving green. Nobody was against health,” Allen says. “It’s not that people aren’t interested in health now, but if they have to cut, that’s an area they look at.”
Allen Associates, like many remodelers, addresses indoor air quality on every project by using low- or no-VOC paints, caulks and sealants. Those changes are standard for the company and don’t cost the client any more. However, in decisions such as carpet versus other flooring materials, homeowners are often opting for the cheaper, albeit less healthy, solution.
|“When it comes down to the final budget, people generally want to put their dollars in what they can see rather than what they can save over the long haul.”
— Bernie Smith, MasterWorks Atlanta
While the distance products have to travel is important from a green standpoint, that’s another factor that doesn’t matter to most clients, Murphy says.
“If they like a product and it comes from Indonesia, they’re going to choose the product if it makes sense in their budget,” he says.
One big problem, Smith says, is the lack of definitions and standards for what is green.
“People feel like it’s a term that people just plug on to things and it doesn’t really mean anything,” he says. “They feel like it’s a loosely used term, and it’s negative from the beginning.”
In the end, many clients are distrustful of the green label when there aren’t obvious benefits to back it up. As the market settles and green becomes better defined, with more standards and regulations, it should grow in popularity — at least in the area of energy efficiency, Smith says.
Adds Smith, “Once it gets a little more momentum and people understand that they can save money on utilities every month, and they can save the earth’s resources and it’s the right thing to do, people will warm up to it.”