Does It Cost More to Build Green?

I talk a lot. No, really, I do talk a lot. I also do a lot of public speaking about green building. I give workshops at the annual Renewable Energy Round Up. I talk to Realtor groups. I've conducted seminars at the Green Products Expo and the Renewable Energy Stampede. In November, I presented case studies for three different Austin Energy Green Building 5-star rated homes at the monthly green building seminar. I listen a lot too.

How much does it cost? Does it cost more to build green?

One inevitable question from the audience is: "How much does it cost?" Sometimes, the question is in the form of, "How much does it cost per square foot to build?" Or, "How much more per square foot does it cost to build green?"

My first answer: Pricing a house by the square foot is like pricing a car by the weight. If a car weighs more, is it worth more?

Discussing the square-foot cost of a house always raises concerns for me. Let's all make sure we're talking about the same thing. In this blog post, I want to discuss two concerns:

  • Let's define "square foot cost."
  • Is cost really the best way to determine the value of building green?

Just what do you mean by square-foot cost?

When you're talking to someone about cost-per-square-foot, always stop and ask them to explain their terminology.

What Realtors mean. When I was a Realtor, and we talked about the cost of a house per square foot, we meant the air-conditioned space. This did not include the garage, porches, patios, driveways, sheds, or other out-buildings.

What builders mean. As a builder, when I talk about the cost of a house per square foot, I include everything to be built - including garage, porches, patios, driveways, sheds, and other buildings. We have to build 'em, so we must include these costs in the project budget. I call this the "buildable square-foot cost."

Square-foot cookie-cutter cost doesn't work for us

When I create a project estimate or budget for a construction project, I don't base it on square-foot cost. That wouldn't make sense because as a custom green builder, every project we do is unique. A cookie-cutter type of square foot pricing won't work.

Sure, there's some standardization of many of the materials, building techniques, and energy efficiencies we use on every project. But some projects have rain water collection systems; some don't. Some have septic systems; some don't. Some have solar PV systems; some don't. In addition, quite a few selections are unique to each customer, such as plumbing and lighting fixtures, doors, windows, cabinets, countertops, flooring, wall covering, siding, and finishes. All these items affect the overall cost of a home.

The only way I can arrive at a viable square-foot cost is to take the last home I completed and divide the price to the customer by the buildable square foot. This is the truest representation of current cost based on the price point and type of home we build, and it at least gives us a starting point for discussions.

Value of building green

Now let's talk about value.

After more than ten years in the building industry, I'm still amazed that intelligent and financially well-off people approach the most expensive and important purchase in their life using cost as their primary criteria.

Builders know that owners should choose their contractor based on experience, reputation, and financial stability. Not based on who can claim to do the job the cheapest.

At Solluna Builders, we typically don't bid for projects. We know we will never be the low-ball bidder. We're a value-based builder. We refuse to cut corners. As a consumer, wouldn't you want a builder who uses the latest in energy efficient techniques, materials, the best trade contractors, and who is a leader in the green building industry?

Building value through green building and design -- in layers

So how do we give a client the best value? Let's look at green features on a home as a pyramid and we'll start with the items that are the easiest things first.

Start at the bottom. The following are easy to achieve with proper planning and design, and they add little or no additional cost to a project:

  • Appropriate site design and site location
  • Seal air conditioning ducts
  • Energy-efficient lighting and appliances
  • Use paints and adhesives or low or no volatile organic compounds (VOC)
  • Recycle and reduce construction waste
  • Design for green upfront

As you move up the pyramid, some costs might be added for the following items, but they pay you back in long-term value and energy savings:

  • Upgraded insulation
  • Air seal building envelope
  • Air conditioning ducts in conditioned space
  • Durable materials
  • Advanced framing
  • Recycled and composite materials

The energy efficiencies payback really starts to increase with:

  • Upgraded heating/air conditioning systems
  • Air exchanger
  • Xeriscaping and native plantings
  • Efficient water heating systems
  • Sustainable materials
  • Alternative structural systems like structural insulated panels
  • Upgraded windows

And at the very top:

  • Waste water systems
  • Rain water harvesting
  • Alternative energy - geothermal, photovoltaics, wind, bio-fuel
  • Carbon neutral, water neutral

The best value would be a zero energy house -- a home that over a years' time produces enough energy to reduce the energy bill to zero. The one thing we can be assured of in the future is that energy costs will continue to rise. It makes sense to take the money you wouldn't be spending on energy and apply it towards the mortgage, increasing your equity. In the long run, green building doesn't cost more. It saves more.