Eco-Friendly Mansions Can Hold Hidden Bargains for Home Buyers
(Bloomberg) -- In 2012, Dani Mouawad purchased a 1.55-acre piece of property in Chapel Hill, NC, then spent 10 months constructing a “sustainable, natural, health-promoting” house.
The building was made out of straw, clay, plaster, and lime, with a living roof made from topsoil displaced by the building’s foundation. Construction on the first of the property’s two buildings cost Mouawad, a pediatrician, “three times the cost of conventional materials,” he says, but what he spent in construction costs has more than paid off.
“The energy efficiency went up by a factor of three,” he says.
Last month, Mouawad put the three bedroom, one and a half-bath house on the market with Hodge & Kittrell Sotheby’s International Realty. His brokers faced a quandary that’s being confronted by sellers of homes that are, in whatever way, constructed in an effort to mitigate, or eliminate, environmental impact: It’s hard to put a price on green living.
“Here in North Carolina, there are certain developments that are easy to price because you have next-door neighbors you can compare them to,” says one of Mouawad’s brokers, Aileen Stapleton.
“But with a property like this, you have to use unconventional methods.” After factoring in the cost of the land, construction costs, and comparative availability in the area (it’s a few minutes from UNC Chapel Hill), along with the property’s low operating and maintenance costs, they settled on $1.3 million.
“Even if the upfront sales price seems to be a little higher,” says the property’s other broker Giselle Feiger, “the running costs and maintenance are much lower than a regular home.”
Ahead of the Curve
Calculations along these lines are happening across the country, albeit with varying results. In Garrison, NY, a $3.5 million house designed by Toshiko Mori has geothermal heating and cooling systems and a living roof. The three bedroom, three and a half bath home has views of the Hudson River through its floor to ceiling glass windows, and spans about 3,400 square feet.
When it was built in 2007, its owner was “pretty ahead of the curve,” says Compass broker Aimee Scher. The person who commissioned it was “very conscientious about her environmental impact,” and as a result spared no expense on using the most efficient building materials and design possible.
The flip side to that, however, is that prospective buyers aren’t necessarily willing to pay a similar premium.
“I do think the majority of people see it as a bonus,” Scher says. “We’re not getting a flood of people coming through who want it specifically because it’s eco-friendly.” Instead, “they’re coming to look at it because it’s beautiful, and then there’s the added layer of ‘oh, we can feel good about living in it.’ ”
As a result, home sellers are finding that the premiums they’ve spent on so-called green building best practices don’t necessarily translate into a higher sales price. “We’re seeing it across the board,” not just in eco-conscious materials, Scher says. “Whether it’s the kind of tiles you use, or the quality of windows, or a slate roof versus and asphalt roof, any of those premiums aren’t showing a return in the market right now.”
And that means that conservation-minded buyers might end up getting some bargains, where the price of “green” homes doesn’t reflect the money that went into their construction or, for that matter, the low operating cost of living in the house itself.
In Salinas, Calif., a $3.6 million, 6,330-square-foot house has a neutral footprint thanks to large solar panels set on the property’s 10.8 acres. “Just from the list price and how much my clients have invested, it’s a great value,” says the Compass agent Mark Peterson, who’s listed the property.
The sprawling, Spanish-style home is hooked up to public utilities, but is designed for more than two weeks of off-grid living. Along with the solar panels there’s a backup generator, and there’s a well-onsite as a backup water source, even though it’s also hooked up to the town water system. (The backups can be turned on on demand.)
But, Peterson says, “it’s hard to market these features as the primary draws. At the end of the day, a house is still about how it feels and what its environment is like.”
So despite the home’s minimal energy costs and comparatively light environmental impact (it is, after all, still a mansion), Peterson says that he still has to price the house just like any other. Its price per square foot is $569; a house a few doors down on the same street, set on a lot just the tenth the size of Peterson’s listing, had almost the exact price per square foot until last month, when it took a $200,000 price cut. Now it’s currently priced at $3.8 million, or $542 per square foot.
Down the road, a house that’s half the size but on a larger plot is priced at just under $3 million, or $889 a square foot. Neither of those houses has environmentally sustainable systems comparable to Peterson’s listing.
“When someone’s purchasing a house,” Peterson says, “they’re still going to look at aesthetics first.”
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