Builder Magazine - July 2008 - (Page 44)

UPDATE “With our buyers, it all boils down to dollars and cents,” says Vernon McKown, president of sales for Ideal Homes, a Norman, Okla.–based builder of energy-efficient entry-level homes, and one of Builder’s America’s Best Builders in 2007. “It’s got to save them money.” A GREEN PERCEPTION BUSINESS green or energy efficient, they listen to the sales pitch, then mentally check a box in their head, and that’s as much as they think about it, he says. But Sattler’s customers are different from McKown’s; they are people who are far more likely to care that radiant heat is more comfortable than whether it is more efficient. WHAT CONSUMERS WANT That’s because Ideal, which faces price cutting in its market from competitors such as D.R. Horton, passes all of the costs—roughly $3,000 more than it would cost to build conventionally—on to the consumer with a promise of low monthly energy bills. And while there is no hard statistical proof yet that consumers will pay more for green, Ideal ranks as the No. 2 builder in Oklahoma City with a 5.5 percent market share, outselling its competitors using energy efficiency as a key differentiator. “That’s a signiﬁcant amount of money, $3,000,” says McKown, for homes that range from $109,000 to the low $300,000s. “But $24 a month, in our typical house, is the guaranteed utility cost. Our buyers’ homes are running cheaper than our competitors by $60 to $100 per month.” Green Items Inspections/Modeling 2x6 exterior walls Housewrap Asphalt paper over housewrap High-quality windows Blown insulation Tight duct systems Upgrade furnace or boilers Upgrade a/c units Additional Cost $3,000–$5,000 $4,000–$6,000 $2,000–$4,000 $1,000–$2,000 $8,000–$10,000 $3,000–$40,000 $1,000–$2,000 $2,000–$5,000 $2,000–$5,000 PRICING GREEN: Sattler Homes incurs additional costs when building green versus building traditionally. The company uses some of the building practices, such as 2x6 exterior walls, on both its green and non-green homes. source: Sattler Homes Every year, Ideal examines how much extra it spends building homes to be energy efficient and determines if that cost to compete efficient is still worth it, McKown says. It is as long as consumers are willing to pay. That’s the bottom line; currently, consumers are driving green building, and with energy prices the way they are, it’s a push that is unlikely to lose momentum. “Builders will change based on what homeowners say,” says Carlos Martin, the NAHB’s assistant staff vice president for construction codes and standards. “Right now, the business case is, there’s potential. The studies aren’t there yet to know if they are selling more because they are green builders. But there is a perception, and a lot of our builders see that perception.” Sattler ﬁnds most of his customers ask whether his homes are Some builders, Sattler included, are frustrated by green standards that confuse the idea of what green is, as well as by builders who do a few things, but then market their companies as green. Other builders are frustrated by logistics; land they bought may not offer the best sites for building green houses, says the NAHB’s Martin. And builders in general do not like being dictated to, which Sattler feels is happening in the case of green building. Where is the pressure coming from? “The movement, ﬁrst and foremost, possibly followed by energy costs. When I say the movement, I mean the ‘Save the Polar Bears’ people, all of that,” says Sattler of those who are pushing green building, adding that pressure from environmentalists eventually leads to government mandates. “If we do take the responsibility [and build green], maybe we can f fend some of that off. You’ve got to look at the science and study it,” sa Sattler. “You’ve got to ﬁgure out what the consumer wants, says and y you’ve got to be willing to change and react.” T mandates are coming, some argue, because, according to The the U Energy Information Administration, residential and comU.S. merc buildings account for 48 percent of all energy consumption mercial in th U.S., and green home building has the potential to lower the ener expenditures by 50 percent, according to Bernstein. energy N all mandates are necessarily bad, say some builders. One Not that would be easy to accommodate, says McKown, would be on a wind standard. window “I we know that high-performance windows can reduce the “If cool load on a house by 50 percent, and if we can reduce the coolcooling ing l load by 50 percent and your air conditioner is 25 percent of the total electric consumption of the house, then why wouldn’t we do that? That ought to be required. And that’s just the windows,” McK McKown says. B whether builders want to go green or not, it seems they will But have to in order to remain competitive. Even Sattler, who still argu that most consumers are not willing to pay for green feaargues tures tures, thinks home building is on the cusp of major advances. “I 25 years, we’re going to look back at this period much like we “In look looked back at the race to the moon, at the technology that was created because of that effort, and we’ll say, ‘Look at what we did to create more fuel-efficient cars. Look at what we did to create zeroenergy homes,’” Sattler says. “There will be positives that come out of it. But sometimes it’s frustrating to those of us who don’t want to see it mandated or shoved down our throats when the consumer doesn’t want it. But at the end of the day, there will be clear beneﬁts and advantages.”—E.B. TO VIEW ADDITIONAL BUSINESS STORIES, GO TO W W W.BUILDERONLINE.COM/BUSINESS. HAVE BUSINESS TIPS OR STRATEGIES TO SHARE? E- M A I L E T H A N B U T T E R F I E L D AT: e b u t t e r f i e l d @ h a n l e y w o o d . c o m 44 ■ B U I LD E R j u ly 2 0 0 8 W W W.BUILDERONLINE.COM http://WWW.BUILDERONLINE.COM/BUSINESS http://WWW.BUILDERONLINE.COM

Table of Contents Feed for the Digital Edition of Builder Magazine - July 2008

Builder Magazine - July 2008 Contents Editor's Notes B-Mail Book It Green House Business Update Products National Beat Seider's Economy The Greener Good Commentary Land Planning Design Construction Marketing Ad Index Further Considerations Environmental Concerns Commentary Road to Perdition? Editor's Notes Flip Contents

Builder Magazine - July 2008

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