Do Green Ratings Impact Affordable Housing? 4

Thursday, February 13th, 2014
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The United States Green Building Council (USGBC) recently announced that the LEED program had certified its 50,000th housing unit.

Since its inception in 2007, LEED for Homes has seen an accelerated pace of adoption, with more than 15,000 certifications in 2012, and 17,000 certifications in 2013.

“Despite its demanding technical aspects that set a high bar for green residential construction,” said Rick Fedrizzi, president, CEO and founding chair of USGBC. “LEED for Homes has also seen the broadest adoption among its peers — indicative of its position as the rating system of choice to guide the design and construction of healthier, high-performance homes.”

Overall, 44 per cent of the LEED certified homes are classified as affordable homes and 74 per cent are multifamily units. In the US and Canada, a household expenditure of 30 per cent of gross income is considered the maximum for affordable housing. Said housing must be affordable to people earning the median income for a particular municipality, region, state, province, or country.

The Australian Housing and Urban Research Institute cites the 30/40 rule: housing is considered affordable for those people spending up to 30 per cent of their gross income for housing while earning in the bottom 40 per cent.

Though certifications have surged recently, with more than half occurring in the last two years, LEED’s adoption in the residential market is still tiny. Housing starts in the U.S. for December, for example, were nearly one million annualized, and only 26 per cent of LEED-certified homes, to this point, are single-family homes.

One high-profile adopter of LEED certification is Habitat for Humanity. Founded in 1976 and famously supported by former US President Jimmy Carter and First Lady Rosalynn Carter, this group builds homes with volunteer labor and sells them at no profit to qualifying people because “every man, woman and child should have a decent, safe and affordable place to live.”

Habitat for Humanity is the leading developer of single-family LEED Platinum homes. The St. Louis chapter has completed 51 LEED Platinum-certified homes to date, more than any other developer in the country. Habitat of Kent County, in Michigan, has built only LEED-certified homes since 2007.

Those are still a tiny fraction of the overall housing market. Most new housing is tract housing, or is built “on spec,” and most of those are not LEED certified.

Why are certified homes such a small part of the market? Cost of certification is a major factor. Though it’s difficult to pin down a precise figure, $5000 and up is likely accurate. Any structural changes to the house needed to achieve certification would be an additional cost.

Australia’s Green Star program takes a similar approach to LEED and is growing quickly, with more than 600 projects certified to date, yet only multi-family homes have been certified until recently.

“An exciting element of the Selandra Rise project is that it contains 202 homes—the first free-standing homes in Australia to be part of a Green Star rated development,” said Green Building Council of Australia (GBCA) chief executive Romilly Madew.

Selandra Rise project

Selandra Rise

In the US, the Environmental Protection Agency’s Energy Star program offers a compelling alternative to LEED. Energy Star prescribes building science measures designed to increase overall energy efficiency but it does not address sustainability or resources conservation the way LEED does.

Typical improvements through the Energy Star program advocates include air sealing and insulating, upgrading heating and air conditioning equipment, installing renewable energy systems, improving lighting fixtures and bulbs, upgrading water heating systems, replacing windows, and sealing ductwork. Verification by a certified rater is required. Total costs of certification will vary depending on the size of the home, for example, but prices of $300 and up are common. Making the improvements suggested by the rater will cost extra as well.

The Energy Star program for new homes requires a Home Energy Rating System (HERS) score of 85 or lower. The HERS score is the nationally recognized method for measuring a home’s energy performance. According to the US Department of Energy, a typical existing home has a HERS score of 130. A standard new home will score 100, and Energy Star homes can achieve a HERS score of 70. Energy Star has certified more than 1.5 million homes.

Like Energy Star, LEED is clearly a valid and proven system. For the residential home market, however, it’s too expensive and too cumbersome. LEED would appear to be most viable for production builders who can take advantage of economies of scale when building hundreds of similar homes per year. So far that hasn’t happened, but LEED’s momentum appears to be growing.

As a voluntary certification, LEED will always be an option that appeals mostly to builders and home buyers who value what it delivers. Where LEED has been successful so far is in upgrading building codes, improving the standards that all new homes must meet.

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  1. Ben Carter

    Sustainable design is important. But architects and designers need to recognize that housing affordability is a problem in Australia. They and regulators need to ensure that the application of sustainable innovation is applied only when it has a proven impact on the environment, otherwise it is just adding costs for home buyers.

  2. Kelsey Mullen

    Thanks for the article Steve,
    One point of clarification. Energy Star is part of LEED for Homes and sets the energy prerequisite for all single family and low-rise LEED homes. LEED points can be achieved in the energy category if a home is going above and beyond Energy Star. Thanks again

    • Steve

      Thanks Kelsey, that's a great point and important to clarify. Sometimes space restrictions put a pinch on a full explanation, so great that you're here to help out.

  3. Jeremy Lavender

    Interesting article, I think the new Environmentally Efficient Design criteria being enacted into Victorian planning legislation will see a dramatic increase in the sustainability of all new homes, not just the few who can afford to commission a fancy architect. It will certainly stir up the kit home market, but designers and builders will quickly adapt. The long term savings through energy efficiency will definitely out weigh any increases in construction costs and the commercial sector has demonstrated that green buildings do not have to cost more, especially when this becomes standard building practice.