Housing 2010: What’s Green About It? · 2009-11-19 · business case benefits of green homes for...

Housing 2010:Housing 2010:What’s Green About It?

Jerry YudelsonYudelson Associates

N b 2009

© 2009 Yudelson Associates

November 2009

The 2010 Green Homes Market

• Obviously a very depressed housing market!• But green homes are selling

Why?• Why?– 70% of homebuyers would buy a green home– 78% with less than median income say the same

• Green home retrofit market just getting started– Great opportunity for green products


Trends Accelerating Green Homes

• Uncertainty about energy prices; local and federal incentives

• City regulations beginning to require green homes from the private sectorD i d b ild • Increasing number of

successful green homes and developments

• Designers and builders are learning how to build green on a budget

• Major new push by NAHB • Growing evidence for the

business case benefits of green homes for builders

• Major new push by NAHB, USGBC, government and others for +50% energy-efficient homesg

• Sustained actions by local and state governments to promote efficient buildings

• Buyers responding to the eco-friendly messages

• Growing push for net-zero promote efficient buildings (more than 100 cities mandate and 20 states)

g pcarbon emissions coming from Europe


More Favorable Trends

• U.S.: Obama focus– Renewable energy– Energy efficiency– Green jobs

• Solid certifications in the marketplace– NAHB– US Green Building Council


Barriers to Going Greeng

Issue Percent Agreeing

Confusion over green standards 59%

Increased costs 57%Increased costs 57%

Need to educate cities 47%

Finding the right products takes longer 45%

Specifying the right products takes longer 38%

Need to use new/specialty subs 24%

GreenBuilder, November 2008,


2005-2009: LEED Growth Accelerates!2005 2009: LEED Growth Accelerates!

• 2005 to 2006: 50% cum. growth in new LEED projectsp j

• 2006 to 2007: +75%• 2007 to 2008: +80%

2008 to 2009: +100%• 2008 to 2009: +100%• More than 3,300 LEED

certified buildings• Nearly 3,000 LEED

certified homes– 18,000 registered– 7000 new in 2009

• Est. 100,000 ENERGY STAR homes in 2009


Galleries at Turney, Phoenix

Greening Existing Homes: Next Big ChallengeNext Big Challenge

• Need to green existing building stock

• Some existing homes • Some existing homes pursuing LEED

• Greening existing h i i b homes is going to be huge market

– Good market for green products

– Requires 3rd-party certification


What’s a Green Product?

• Source of product– New material– Recycled

• Sustainability of product• Sustainability of product– Carbon footprint

• Location of manufacture– Within 500 miles

• Certification bodyIndependent of maker– Independent of maker

– Reputation

• Other attributes– Cradle to cradle– Toxicity of ngredients


Green Product Certifications

• Scientific Certification Systems (SCS)

– Sustainable Choice

• Building Green– Green Spec Directory

• Home Depot EcoOptionsSustainable Choice

• Green Seal• Environmental Choice

• Home Depot EcoOptions– Catalog listing

• Green Format (CSI)– Eco-logo (Canadian)

• Cradle to Cradle (C2C)• SMaRT Consensus

– Standard reporting format

• Pharos ProjectHealthy Building Network• SMaRT Consensus

Sustainable Product Standards

– Healthy Building Network

– Institute for Market Transformation to Sustainability


Ceramic Tile as a Green Product

• “Tile is an inherently low-toxic, waterproof, durable finish material for flooring, walls, and other applications. While tile is somewhat energy-intensive applications. While tile is somewhat energy intensive to manufacture, the materials involved are readily available and mined with fairly low impact. Products may contain pre-consumer or post-consumer recycled may contain pre consumer or post consumer recycled content.”

• --Green Spec Directory, www.buildinggreen.com


Green Home Certifications

• NAHB• LEED

Environments for Living (GE/Masco)• Environments for Living (GE/Masco)• ENERGY STAR (Energy/IAQ only)• Dozens of local programso o o a p og a

– Southeast– Northwest

C lif i– California

• Electric utility programs (mostly energy-related)


Ease of Use by Buildersy

Program Easy to Use Difficult to Use

ENERGY STAR 69% 11%

NAHB 43% 13%NAHB 43% 13%

Manufacturer-led 41% 12%

Utility company 41% 18%

LEED 27% 43%

Local programs 27% 16%

Source: GreenBuilder, November 2008,


What Do Buyers Want?y

• Most highly requested features by home buyersMost highly requested features by home buyers– More insulation: 185– Instant tankless water heater: 18%

E St li 13%– Energy Star appliances: 13%– Air sealing/tight construction: 11%– Insulated foundation walls & floor: 10%– Energy Star HVAC: 8%– Water-efficient plumbing: 8%

Insulated concrete forms: 8%– Insulated concrete forms: 8%– Energy Star windows: 8%– SIPs: 6%– Energy Star exterior doors: 6%– Energy Star lighting: 5%

• Source: McGraw-Hill, The Green Home Builder, 2008


, ,

Where is the Demand?

• Green residential market– 5x increase, 2005-2008– 3x increase 2009-20133x increase 2009 2013

• 69% of builders will be dedicated to green in 2009– Up from 58% in 2008, 32% in 2007

• Greatest percent demand (27%) is in $50K-$74K range– 30% of demand is in lower income brackets

• Key drivers: cost savings and health benefits• Key drivers: cost savings and health benefits– Associate green with quality construction/living

Source: McGraw-Hill presentation, 2008 IBS


LEED for Homes

• There are no “LEED-approved” green products• No single product gets a “LEED point”

Some products may contribute to a “LEED point” if • Some products may contribute to a LEED point if their attributes are well documented

– Recycled content– Locally extracted and manufactured (500 miles)

• Some manufacturers may also try to claim:– Energy efficient production (3rd party documented) – Energy efficient production (3rd party documented)

methods– Carbon footprint reporting (to 3rd party)

BUT l f CT b i ifi i ll – BUT total cost of CT must be significant in overall project


NAHB Green Approved Productspp

“Products for which the manufacturer has received a Certificate from the NAHB Research Center and the right to use the NAHB Research Center Green right to use the NAHB Research Center Green Approved mark are products that the Research Center has approved as being eligible to contribute points toward certification of a building under the National toward certification of a building under the National Green Building Standard™. Such products, when appropriately used, enable builders to earn points toward certification of the building The NAHB toward certification of the building. The NAHB Research Center Green Approved mark is intended to assist builders, designers, and specifiers in identifying

d t th t t ib t i t t d b ildi products that can contribute points toward building certification.” http://www.greenapprovedproducts.com/GetListed.aspx


How Do You Capitalize?p

• Recognize the opportunities• Reconfigure your strategic plan

Get firm wide buy in to new direction• Get firm-wide buy in to new direction• Differentiate your service offerings• Execute your opportunitiesu you oppo u

New Town Builders, Denver


New Town Builders, Denver

Five Ways to Market Green Productsy

• Differentiate the offering• Become #1 in something

N i d l i i• Name it and claim it• Find out how your

customers make moneyu o a o y• Build a green brand


Idea One: Differentiate your offeringy g

• Some good at this– Stand for something

important to your customers

“Differentiation is the practice of finding a difference that makes

• Need high level of communication skills & high levels of performance

difference that makes a difference, to someone who levels of performance

– Only your parents love you unconditionally

someone who matters, and then communicating it to

• Differentiation needs to permeate the company’s activities

them persuasively.”-- Jerry Yudelson

– Everyone needs to talk the green talk

– Walk the green walk


Walk the green walk

Positioningg

• Positioning occurs in the mind of the buyer

– Segmentation & targeting Segmentation & targeting yield target customer

– Positioning lets target buyer know youbuyer know you

– Must be in dimensions target customer cares aboutabout

• Integrate with all marketing communications


Strategic Positioningg g

• The best (Accenture, KPMG)• Best value (Hyundai)

Lowest cost (Southwest)

• Organizational (H-P)• Emotional (MTV)

S lf i (B tt )• Lowest cost (Southwest)• Innovative (Boeing)• Product-focused (P&G)

• Self-expressive (Benetton)• User experience (Nike,

Starbucks)

• Target segment (Gerber in baby food)

• Category killer (Oracle)

• Brand personality (Harley)• Competitive position (Hertz)• Top quality in category Category killer (Oracle)

• Product attributes (Michelin)• Product-line scope

(Amazon)

Top quality in category (Toyota)

• Technology leader (BMW)(Amazon)


Positioningg

• Positioning occurs in the mind of the buyer– Segmentation and targeting yield target buyer– Positioning lets target buyer know who you arePositioning lets target buyer know who you are– Must be in dimensions target buyer cares about

• A good place for applying market research

M b i d i h ll k i i i• Must be integrated with all marketing communications– Branding– Literature– Web site– Internal culture/training

S ki d iti– Speaking and writing


Positioning Attributesg

• Market leader• Third party certification or endorsement

Types of materials used in product• Types of materials used in product• Energy efficiency of manufacturing process

– 100% green powerg p

• Source of materials– The more local, the better

L t i l t• Less toxic glazes, etc.– Most “indoor air quality friendly”


Idea Two: Become No. 1 in Some Aspect of Green Products!Aspect of Green Products!

• Reduce your carbon footprint

• Increase your use of yrenewable energy

• Reduce your energy use• Increase recycled content• Increase recycled content• Low-toxicity finishes


Idea Three: “Name It and Claim It”

• Find a signature green aspect or sustainable design aspect of your

d h b product that you can be the first to name

• Attractive to customers who have a hard time making decisions

• A form of differentiation• Stand for something

valuable to your customer!


Idea Four: How Do Your Customers Make Money?Make Money?

H il d f • How can tile made from recycled and local materials contribute to a

f l LEED successful LEED certification?

• How can the use of “ til ” h l “green tile” help an architect or builder define their green brand better?

• Can the dealer develop a green brand itself?

– In this case, the tile is generic

– Customer buys from the dealer

30 The Bond, Sydney, Australia


Idea Five: Become a Brand

• What are the recognizable brands in recognizable brands in green products?

• A brand is always a f l ti i safe selection in a

world of confusing green choicesD ’t h t b • Don’t have to be a world leader to be a brand

• As a brand, the client experience is critical

– How well do you manage it?


Looking Ahead: What Should You Do?g

• Look past the ugly slowdown• Rely on significant changes in

buyer attitudes– The “Al Gore”/Obama effectThe Al Gore /Obama effect

• Keep figuring out how to do more with less

• Show buyers what to ask forP bli i k • Publicize market successes

• Measure and communicate results, honestly

• Keep raising the goal postsKeep raising the goal posts


Triple Bottom Linep


Greening Your Organizationg g

• Buildings– All green, new and existing

• Facilities• Facilities– Green power/sustainable actions

• Operations– Carbon-neutral– Environmental purchasing

• Products– Incorporate green characteristics


The Future is Green!

• Skate to where the puck is headed, not

h i i to where it is now.• What will the green

d t k t products market look like in 2010? 2011? 2012?2011? 2012?

• Go to market accordingly!Sidney Crosby, Pittsburgh Penguins accordingly!2009 Stanley Cup Winners


A Final WordA Final Word

“An invasion of armies can be resisted, but not an idea whose time has come”but not an idea whose time has come

- Victor Hugo, Les Miserables author


THANK YOU!


Housing 2010: What’s Green About It? · 2009-11-19 · business case benefits of green homes for...

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