Millennial Buyers’ Willingness to Pay for Green Features

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Results from NAHB’s report, What Home Buyers Really Want (2019 Edition), show that Millennials want an environment-friendly home, but few are willing to pay more for it for that reason alone. They are, however, willing to pay for certain green features, such as those that provide energy efficiency and cost saving benefits over time.

When asked ‘how concerned are you about the impact of building your home on the environment?’, most Millennials – 83 percent –report that they are concerned about the impact of building a home on the environment, but only 16 percent would pay more for an environment friendly home (Figure 1).

The remaining 67 percent who expressed concerned for the environment, are split between ‘wanting an environment friendly home, but would not pay more’ (33 percent) and ‘concerned about the environment, but not a consideration in house purchase’ (34 percent). A minority of Millennial home buyers — 18 percent — report that they are not concerned about the environment.

But follow-up questions show that large shares of Millennials are willing to pay more for green features  related to energy efficiency, in return for reduced utility bills.  When asked how much more they would be willing to pay in up front costs for a home in return for $1,000 in utility bill savings each year, the plurality – 26 percent – would pay between $1,000 and $4,999, while 20 percent would pay less than $1,000, 19 percent between $5,000 and $9,999, 15 percent between $10,000 and $14,999, and 19 percent would pay $15,000 or more. They would pay a median of $5,000 (and an average of $9,664) (Figure 2).

Considerable shares of Millennials are also willing to pay more in up front costs for a home that comes with a particular green certification (assuming the certification is performed by a credible and independent third party).

For example, the plurality of Millennials – 32 percent – are willing to pay between $1,000 to $4,999 more in up front costs for a ‘certification that the home meets an above code standard for energy efficiency’, compared to 23 percent who would pay less than $100, 19 percent between $100 and $499, 11 percent between $500 and $999, and 15 percent who would pay $5,000 or more (Figure 3). Millennials would pay a median of $500 for this certification (and an average of $2,456) (Figure 4).

For a ‘certification that the home meets an above code standard for water efficiency’, the plurality of Millennials – 31 percent – would pay between $1,000 and $4,999 more. Twenty-five percent would pay less than $100, 20 percent between $100 and $499, 12 percent between $500 and $999, and 13 percent would pay $5,000 or more for this certification. Millennials would pay a median of $500 for this certification (and an average of $2,522).

When it comes to a ‘certification that the home meets an above code standard for indoor environmental quality’, 27 percent of Millennials would pay less than $100 more in up front costs for a home, while 19 percent would pay between $100 and $499, 11 percent between $500 and $999, 30 percent between $1,000 and $4,999, and 13 percent would pay $5,000 or more (Figure 3). Millennials would pay a median of $500 (and an average of $2,354) (Figure 4).

And for a ‘comprehensive, holistic green standard that encompasses all of the [other certifications listed] plus general efficient use of resources and environmentally friendly lot design’, 27 percent of Millennials would pay less than $100 more in up front costs, while 17 percent would pay between $100 and $499, 11 percent between $500 and $999, 28 percent between $1,000 and $4,999, and 17 percent would pay $5,000 or more. Millennials would pay a median of $500 (and an average of $2,805).

For additional information, an August 2019 NAHB study showed the history of Millennials’ preferences for select housing characteristics.  The greatest level of detail—including preferences for hundreds of items broken down by generation, geography, first-time vs. repeat buyer, household composition, race, income, and price expected to pay for the home—is available in the 2019 edition of What Home Buyers Really Want.



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