Green developments remain strong in down economy

by Susan Dosemagen and Jen Thomas

The real estate market is in shambles, but there’s at least one bright spot for the housing industry – green, sustainable and energy-efficient homes. Even while the housing market struggles to deal with an unprecedented slump, building experts and researchers say green housing is still a draw for potential homebuyers.

In Chicago, many green developers, architects and real estate agents are quick to market their offerings with green labels, knowing the distinction will bolster business. Green developments consistently sell in Chicago, even as experts criticize the city’s inability to provide incentives and programs to support new green construction.

“The current economy has hurt the whole market, which includes green. That said, I believe that the green market may be less badly hurt, and there may be some areas that are growing,” said Helen Kessler, president of HJKessler Associates, Inc., a sustainable design and energy efficiency consulting firm in Chicago.

According to a 2008 nationwide survey of homeowners and renovators, 70 percent of homebuyers are more likely to buy a green home rather than a conventional home in a down housing market. “The Green Home Consumer,” a report produced by McGraw-Hill Construction, also notes that consumers are willing to pay more for green.

“On average, homebuyers are paying a premium of $19,300 more for a green home. This is nearly 6.5 percent higher than the average home price of $300,000,” the report reads.

Celeste Karan, a real estate agent who specializes in energy-efficient homes, said Chicago – despite its claims to greenness – could be doing more. She argues that Chicago may not have the policies in place to support the increased interest. Yet.

“We’re a little bit slow because we’re in Illinois. And in the state, we just haven’t had the leadership. It’s mostly business as usual,” said Karan, who has been working in green real estate for more than seven years and is considered a local expert on green building.

Chicago is a national leader in certifying commercial buildings as energy-efficient, even coming in No. 6 in a March list of America’s “greenest” cities, compiled by the U.S. Environmental Protection Agency. All of the city’s municipal buildings are required to attain the highest Leadership in Energy and Environmental Design (LEED) standards set by the U.S. Green Buildings Council.

But the city falls short when it comes to helping construct new green residential projects, because the city “measures intentions, and not performance and measuring intentions gets you nowhere” with programs like Chicago Green Homes, Karan said.

Under the program, new construction or remodeling projects receive points for green achievements in categories like energy efficiency, health and safety, resource conservation and homeowner education. But Karan fears the review process for Chicago Green Homes is too lax.

“It’s a good start, but it’s missing oversight…They need to do a better job of insisting on higher energy-efficiency standards and inspecting the buildings,” she said.

“If nobody knows the difference between somebody who didn’t put any insulation in the walls, because they knew it wouldn’t be inspected for, and somebody who has built Energy Star products, that’s where I come in. I need to tell the public what the heck the difference is.”

Howard Alan, a Lincoln Park architect who specializes in organic architecture and alternative energy conservation, was born in Chicago but only recently returned to the city after living in California most of his adult life. A lifelong environmentalist, Alan wanted to take building green from a suburban trend to a metropolitan phenomenon. So, he returned to his hometown to “look for ways to practice architecture based on necessity in the city.”

“On the West Coast, many, many more people knew about green a long time before it hit the Midwest. There’s just something about the Midwest that thinks the only thing that’s important is practicality and no spirit. Well, we’re finally recognizing the truth,” Alan said.

Sitting on the ground floor of his studio at 849 Armitage Ave., Alan explains that the building is constructed using passive solar technology, meaning the sun’s heat is stored in the building’s masonry walls, concrete floors or large floor-to-ceiling fiberglass tubes of water.

Alan said a widespread conversion to green living would only be possible as a result of major change, and the crumbling economy might drive it, pushing people to consider their options.

“A bigger recession is going to make [people] recognize that they don’t have choice anymore but to live in a simple and harmonious way,” he said.

With the risk of foreclosure on every homeowner’s mind, adopting a green lifestyle – particularly in the realm of energy efficiency – is becoming an attractive way to save cash.

“This started to come about more before the mortgage crisis, but since the mortgage crisis, especially, people are really looking at, ‘OK, maybe I have to stay in my home a little bit longer, so how do I make it more affordable to live in it?’ Or they’re looking at greening it up,” said Karan, the real estate agent.

“This general economic downturn has actually made people look at thriftiness again.”

And it’s people, not their government, who may have to make it happen.

The Chicago Climate Action Plan, an outline for curbing climate change issued by the city last year, places the responsibility on individuals to carry out the goals, putting a strong emphasis on personal changes. But the plan has few examples of how the city intends to encourage residents to do so.

“What’s going to make people want to do this? No one knows,” said Kathy Tholin, CEO of the Center for Neighborhood Technology, a Chicago “think-and-do tank” that focuses on promoting urban sustainability.

"The fundamental issue of green building is the cost upfront,” she said. “The developers have no incentive.”

Despite the obstacles that exist to green construction, professionals in the green field see a wave of change coming to Chicago. And it’s coming quickly.

“It makes a lot of sense to use the natural forces to heat and cool and ventilate the buildings we live in. And suddenly that has become clearer to more people in the Midwest than it ever has been,” Alan said. “In fact, the word green is everywhere. It’s on every building. Every developer has the word green in his title. The title was the same as it was before green, but now the word is in there. And that’s good. People are aware of it; they’re thinking about it. They don’t know much about how you do it, but they still think it’s important, and that’s a plus.”

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Smartmarket Report The Green Home Consumer

 

Financial savings are one of the biggest drivers in the green market’s success. Fully 59 percent of green homeowners say lower energy bills is an “extremely effective” incentive, according to the “Green Home Consumer” report. The report shows that 56 percent cited tax credits and 52 percent, lower rates or better terms for green home loans. Health concerns and increased environmental awareness are also major factors in the decision to switch to green.

Some think the arrival of green thinking and hard times is directly related.

“All of the environmental, sustainability stuff is happening at the same time that the economy is crashing, I think it’s all tied together,” said Dan Hatch, a Chicago-based architectural designer and board member of Architects/Designers/Planners for Social Change. “The current economic, consumeristic system, has been a lot of the reason why the environment is so torn up and also a lot of the reason why the economy is failing.”

By 2013, green home building is expected to at least double to make up from 12 percent to 20 percent of all residential construction, equaling a market value of between $40 billion and $70 billion, the McGraw-Hill report said.

With the potential for that much extra cash infused into the construction industry, there’s some fear that companies will increase the practice of “greenwashing,” or over-stating the green-ness of their products.

“When you talk about the green movement versus sustainability, to me, at times, they’re almost separate things. The words are used interchangeably, but a lot of times, they’re not the same thing,” said Brian Haynes, an architectural designer who works with Hatch at Grounded Design Studio, a design company that focuses on living simply. “The green movement tends to reference where sustainability fits into existing American culture. How can Company B selling Product A sell Product A in a green way? Not even questioning whether Product A is necessary in this world.”

“What we want to do is be good, not be less bad,” added Hatch.

In 2007, environmental marketing firm TerraChoice tested the accuracy of claims on 1,018 consumer products marketed as having green traits. All but one were found to be making false claims. For example, TerraChoice notes paper and lumber products that promote their recycled content or sustainable harvesting practices without attention to manufacturing impacts such as air emissions, water emissions and global warming impacts as an instance of greenwashing.

As a result of increased green advertising claims, the Federal Trade Commission is revising its environmental marketing guidelines a year ahead of schedule, according to news reports.

Consumers have to research their green choices to determine their real impact, Karan said, and education is the key to finding the right professionals.

“Most of [the people] that are doing it, they see the change coming and they want to get in at the front of the wave so they have the experience going forward,” Karan said.

As the green trend continues to grow, experts predict Chicago will become a hotspot for green development and may even achieve the mayor’s goal of becoming “the greenest city in the U.S.”

"I think [green is] fashionable and hip, and any magazine you open nowadays is going to show you some neat, green building or green design, product or service. And it's kind of what's hot,” said Elise Zelechowski, the mastermind behind the Rebuilding Exchange, a recycled construction materials warehouse in Brighton Park. “ I don't think it's one of those trends that will die off but will just become so integrated to the way we build and do business that it won't necessarily be worth…[talking] about as much as it is just expected as part of the process."

With $43 billion earmarked for energy and the environment in the stimulus package Congress passed in February, going green is sure to gain momentum, and Chicago would do well to stay ahead of the trend.

“I think you’re going to see a growing momentum, especially given our current economy,” said Ald. Manny Flores (1st), whose is trying to make his Northwest Side ward a city leader in green developments and the green jobs that go with them.

“When we need new jobs and there’s a pressing need to deal with climate change, you’re going to see leadership emerge.”


Jen Thomas/MEDILL

Organic architect Howard Alan's office at 849 Armitage Ave.

Susan Dosemagen and Jen Thomas/MEDILL

Tips for going green in your home.

Smartmarket Report The Green Home Consumer

 

Smartmarket Report The Green Home Consumer

 

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