Homebuyers Go Green to Cut Bills

By JIM CARLTON
In an attempt to boost sales in a dismal market, homebuilders are turning to what has been one of the most overlooked aspects of a house: improving the way it uses energy.
While the sales results are mixed so far, industry experts say the move could eventually boost business as more cost-conscious consumers seek to save on rising power bills by having a more efficient home. Already, builder Kevin Enyeart, in Lee Springs, Mo., says he has picked up two contracts and possibly a third over the past six months to sell homes to buyers who specifically requested energy-saving features, such as better insulation and tighter-fitting windows. That's rare good news in a market Mr. Enyeart says is so bad that he has had to cut the number of homes he builds to about 20 a year from 40.
MIichael Klein
"I used to be a pessimist about going green, but not anymore," Mr. Enyeart says.
Indeed, the shift may be altering the fortunes of so-called green homes, which often include environmentally friendly building materials and energy-saving features. In recent years, when home prices were high, green homes were a tougher sell because builders tended to charge a premium for them. But now that home prices have dropped, green homes are more attractive, both because the premium has been substantially reduced and because people are more interested in saving money on energy costs over time.
Energy efficiency, in particular, has emerged as a top priority for consumers because power bills have more than doubled in many markets. When asked to list their top 12 influences in buying a home, consumers responding to a National Association of Home Builders survey last year put energy efficiency at No. 2 , behind quality of living space. Five years ago, energy didn't even make the same survey.
Debbie Swank, a 37-year-old financial planner, says energy savings played a "huge role" in the decision by her and her husband to buy a four-bedroom house by KB Home in Austin, Texas, in December 2007 that the company touted as energy efficient. The two-story, $379,000 home includes features such as a radiant barrier roof to reflect the sun's heat and a dual-thermostat cooling system that adjusts the temperature so each floor can get only the air-conditioning it needs. As a result, the couple and their two boys, ages five and eight, have cut their power bills by more than half -- from a high of $400 a month before to a high of $192 now -- even though their new home is 600 square feet larger. "We love the savings," Ms. Swank says.

The industry's new focus on energy efficiency was evident at the International Builders Show in Las Vegas last month. Green materials such as bamboo floors and carpeting made from recycled material of all stripes have been featured at past builders' shows, but this year they seemed to dominate the green space.
But the housing market remains so bad -- single-family starts this year are expected to fall to a record low, after diving 40% last year -- that any sales generated by energy-efficient homes are unlikely to help the industry much for now, industry officials say. Indeed, assistant vice president Carlos Martin says he has received reports of green builders going out of business along with traditional builders in some markets.
Credit is also so tight that many builders can't afford the extra 2% or so of a building's costs it can take to go green, or be able to pass it on to customers. In Missouri, Mr. Enyeart says it costs him about $3,500 more after credits and other offsets to build an energy-efficient home, forcing him to transfer funds from his marketing budget.
Still, nascent results are encouraging, builders say. In Las Vegas, Pulte Homes Inc. reports "very good traffic" at a subdivision it opened a few weeks ago where the homes have been outfitted with energy-saving features designed to keep power bills under $100 a month in the summer heat. The homes are among hundreds the Bloomfield Hills, Mich., builder has constructed across the country as part of a "Builders Challenge" issued a year ago by the Department of Energy for the industry to build 220,000 ultra-efficient homes by 2012.
Elsewhere, Dallas-based Centex Corp. this month launched the "Centex Energy Advantage," in which all new homes will include features such as an energy monitor the occupant can use to adjust usage of furnaces and such. KB Home, meanwhile, said that beginning Jan. 1, all of its new homes would be built under strict standards of the Environmental Protection Agency's Energy Star program. KB officials said the move was aimed, in part, at competing better against sales of existing homes, which usually don't include many energy-savings features. "Anything that helps their [consumers] pocketbook has a lot of value," says Jeffrey Mezger, chief executive officer of the Los Angeles-based builder.
Dozens of other builders have signed up for energy-efficiency and other green programs that have been started up in the industry in recent years. Building products giant Masco Corp., for instance, reports between 40 and 50 large builders have signed up for an Environments for Living Certified Green program it sponsors that emphasizes energy efficiency, compared to just 10 two years ago.
"You don't want people to be afraid of heating and cooling their homes," Pierre Le Pendeven, a custom builder from Claremont, Calif., said after standing in line to tour an energy-efficient show home sponsored by Masco Home Services Inc., a unit of Taylor, Mich.-based Masco, at the International Builders Show last month.
Some builders are also moving into the remodeling market to retrofit existing homes to use energy better. Claremont, Calif., builder Devon Hartman says he recently used an infrared camera to help a wealthy homeowner in Los Angeles identify numerous places where air was leaking out of his 7,000-square-foot mansion. Mr. Hartman is now helping to seal the home, which he expects will reduce its energy usage by two-thirds.
And companies that sell energy-savings products are benefiting. Johnson Controls Inc. of Wichita, Kan., has seen a "double digit" increase in sales to builders of devices that modulate the flow of heat out of a furnace to save energy, says Tom Huntington, a company vice president. Even companies whose sales have gone down because of the housing market report energy-saving products have helped cushion the fall. Los Angeles-based PlastPro Inc. said its sales of energy-efficient residential doors -- designed to hold in warm or cool air twice as efficiently as traditional ones -- fell 15% last year from a year earlier, as single-family housing starts plunged a much steeper 40%.
Similarly, business at wood-products giant Georgia-Pacific LLC has generally been in a funk. But officials of the Atlanta-based company say sales of its new XJ 85 Joist -- a beam engineered to contain 40% to 50% less wood, and leave space to run air conditioning and heating ductwork through homes more efficiently -- are taking off. Since unveiling the product three months ago, Georgia-Pacific officials say they are selling upwards of 60,000 feet of it a week now, or enough to fill four trucks. "You can't see it," says Michael Rehwinkel, president of Georgia-Pacific's wood-products business, "but it's what you don't see that matters in the green story."
Write to Jim Carlton at jim.carlton@wsj.com