How new green investments can impact home values

The renovations that add value to the home are a constant source of discussion, influenced by everything from the local climate to current trends. But an investment that appraisers can count on to make a long-term impact on home value? Eco-friendly features and materials.

Reviewers have been working for years to learn more about the impact of green investing on their work. But it is a rapidly developing area with many new investments. We will dive into recent developments in the sustainability sector and how this may shape home values ​​in the near future.

High market growth

The demand for single-family homes remains high and green buildings are in the foreground. You can see the demand in the green housing market activity and its projected growth rate. In 2021, the green single-family home market topped $105 billion, and experts predict that figure will grow to $121 billion in 2022 and $209 billion by 2026. The compound annual growth rate (CAGR) is a staggering 14.7%.

Two areas are driving the market – new construction and remodeling of existing homes. Building new eco-friendly homes typically involves building with sustainable materials such as B. recycled wood. Remodeling projects usually change an entire structure to make it more eco-friendly, like the plumbing fixtures. Consumers are beginning to see sustainability as a must-have feature rather than a nice-to-have feature.

Consumers want sustainability

Customers are getting smarter in the real estate market and other industries. They want and demand sustainability from the companies they buy products from, so companies are changing their production models. Sustainability is most important for the younger generations, but it is becoming increasingly important in different age groups.

Younger generations, such as Gen Z and Millennials, have been the driving force behind corporate sustainability efforts. Gen Z in particular has shown that they care about the environment. Approximately 75% of Gen Z say that buying sustainably is more important than buying brand names when making purchases. The influence of Gen Z will only increase as they age, spend more and enter the housing market.

Homeowners want to be environmentally conscious

Although Generation Z is just beginning to enter the housing market, homebuyers are already prioritizing green investments. Energy efficiency in housing is fast becoming a focus as energy crises spread and extreme temperatures in winter and summer hit the globe. Studies have shown that homes with good energy efficiency ratings sell almost 3% better than those without such ratings. Additionally, over 80% of home buyers say they want Energy Star rated appliances.

Refrigerators, dishwashers, washers and dryers use large amounts of electricity every day, so energy-efficient appliances can save homeowners money now and make their homes more suitable for future buyers.

Investing in home appliances is an excellent place to start, but buyers want to see more. About 79% of home buyers want an Energy Star rating for their entire home to help their wallet and the environment. Green investments may come with an upfront cost, but the savings add up to monthly savings of up to 20% on your electricity bill.

Buyers want renewable energy

Renewable energy sources are one of the best ways to save money on utility bills and add value to your home if you’re looking to sell it. In fact, about 36% of real estate agents say solar panels add real estate value. Although not widely available, the solar panel market is growing, with 77% of real estate agents saying this renewable energy source is available in their market. Solar panels are an excellent investment for the current homeowner and future buyer.

Homeowners with solar panels see a significant reduction in their energy bills. They are beneficial in areas where buyers face extreme temperatures in both summer and winter. Solar panels are one of the most reliable sources of energy in the world as solar energy remains constant for most of the year depending on where you live. They are less responsive to fluctuations in demand caused by storms, war, pandemics and more.

Green Feature Tax Credits

Solar panels offer tremendous environmental benefits and can reduce the cost of utility bills. Homeowners can also get tax credits for this renewable energy source, making homes equipped with solar panels a popular choice. Tax credits can vary by state, but the state solar tax credit is one of the most important homeowners want to take advantage of.

Homeowners can claim the state solar tax credit if they have installed photovoltaic (PV) systems since January 1, 2017. Congress raised it to 30% for systems installed between 2022 and 2032. The credit will run until 2035, but Congress could renew it.

States have offered incentives for residents to buy solar panels and take some of the strain off the power grid. Renewable energy tax credits, rebates, and certificates can be found in regions like the Northeastern United States, particularly the New England region. Many southwestern states, with their abundance of daylight and high temperatures, provide incentives for solar panels. They now offer savings and great value to homeowners when they are looking to sell.

The effects of climate change

Scientists have been studying climate change for decades and are warning people of its dangerous effects. Global warming has caused temperatures to rise and weather to become more volatile. Hurricanes, tornadoes and other storms have become stronger and more frequent, wreaking havoc on cities across the country, particularly in coastal areas.

Demand for waterfront homes, in particular, has declined due to flood concerns and other damage. Instead of rising, homes along the East Coast have lost nearly $16 billion in value. Between 2005 and 2017, flooding caused homes in Massachusetts, Rhode Island, Maine, and New Hampshire to depreciate by over $400 million.

Climate change has proven to be a problem, so buyers want peace of mind that their new home will withstand the effects of climate change. Solar panels are an excellent start. Green roofs, on which grass and other plants grow, have also become more prominent. In areas prone to flooding, tile and concrete are some ways you can protect your home and add value for the future.

Consensus: Green investments save money and make money

Demand for housing has increased in recent years, but supply is struggling to keep up. Current home values ​​are rising and one way for homeowners to add value to their property is to add green features to their homes. Solar panels, green roofs and other structures have become a high priority for buyers as eco-friendly homes save money, increase property values ​​and contribute to a better environment.