Since the National Association of Home Builders (NAHB) published their last findings on how long buyers remain in their homes in early 2009, homes and home buyers have been subject to historically unusual changes and stress, according the updated report, which was just released.
“The 2009 article showed that, based on a long-run calculation that averaged the available data over the years 1985 through 2007, the typical buyer could be expected to stay in a single-family home roughly 12 years before moving out,” NAHB expert on Economics and Housing Policy, Paul Emrath Ph.D. wrote, “Incorporating the latest data into the long-run average produces a revised estimate of 13 years for the expected length of time a typical single-family buyer will remain in his or her home. For first-time buyers, the expected length of stay in a single- family home is somewhat shorter (about 11 and a half years, compared to 15 years for buyers who have owned a home before).”
While the expected length of stay in a single-family home has been consistently longer for trade-up buyers than for first-time buyers, the spread between them has ranged from where it now stands at four years to as high as seven years in 2009, when more people were staying put due to the economy.
So, it seems the economy ultimately has little bearing on how long people stay put in their homes, as the study’s long-term average (using actuarial tables from 1987-2011) is actually 13.3 years.
When you consider that a home is the most valuable investment most of us will ever make, the recent advances in building science and technology to conserve resources will logically need to be incorporated into the existing housing stock over time.
Recent studies demonstrate how certifying your home as sustainable can add as much as nine percent to its value. On a $150,000 property, that’s $13,500. Now that’s a measurable return on your investment.
The goal of green building has always been to conserve resources and save money. However, some people have a had a hard time making the numbers work – whether it’s in new construction or a remodel – when you look at the initial cost versus the potential return on investment (how long the savings you get from paying less each month on your utility bills will equal the added investment).
Now, a paper published by Nils Kok and Matthew Kahn on the Values of Green Labels in the Californian Housing Market, sheds a whole light on the subject.
Focused on homes that achieved LEED for Homes or GreenPoint Rated status, properties close to transportation routes and shopping centers with non-toxic building materials and energy/water efficient features, they found that the increased revenue made when a certified house sells is more than the savings that come from its environmentally-conscious attributes.
Moving forward, “trends point to more environmentally friendly, sustainable buildings and a more efficient use of space. Green developers continue to embrace this pursuit and to adapt and conform to new demands from consumers,” according the 2013 Emerging Trends in Real Estate® report published by the Urban Land Institute (ULI) and PricewaterhouseCoopers (PwC).
There’s no doubt green homes are in demand. Bridging the gap between what people want and what’s available where they want to buy remains a challenge.
In their latest SmartMarket Report, “New and Remolded Green Homes: Transforming the Residential Marketplace,” McGarw Hill Construction projects a five-fold increase in new green home construction by 2016.
Noting that green residential construction grew during the economic downturn, they anticipate it will grow even more dramatically throughout the recovery. Citing a number of factors that are driving the green market for home builders and remodelers alike, the report shows how the green home market accounts for an incredible $114 billion opportunity in the coming years.
One particularly interesting finding was the fact that the remodeling market remained above 2005 levels throughout the housing downturn, and the Joint Center for Housing Studies (JCHS) at Harvard University expects further increases with future spending supporting green growth. The JCHS has seen renovation work move to system upgrades and exteriors, elements that can increase energy-efficiency.
With more people willing to pay more for sustainability, the demand for green homes is going to be a force to reckon with in the real estate market as a whole. While new construction currently has the advantage, don’t count remodeled existing homes out just yet.