By helping mainstream home buyers understand what the term “green” actually means to their bottom lines, Denver home builder Gene Myers has figured out how to sell cutting-edge technology.
Myers told a gathering of housing and real estate writers and editors from throughout the country that he talks payback not in years but only in terms of monthly payments. “That’s what people are really concerned about,” he said.
Myers said that he’s gotten rid of all the confusing, conflicting clutter that screams “energy efficiency,” settling on the one label he says is “the most recognizable”— Energy Star. “There are too many third-party labels,” the longtime builder said. “We’ve looked at them all and gave up on all of them except Energy Star. It proves our homes cost less to operate.”
Now 20 years old, Energy Star is the joint Environmental Protection Agency and Department of Energy program that helps consumers identify energy efficient household products and houses. To earn a coveted Energy Star, a home must include features that make it at least 15 percent more efficient than homes built solely to the 2004 International Residential Code.
To make it easier for buyers to compare houses, Energy Star uses the Home Energy Rating System (HERS), which uses 100 as a baseline for standard homes. Any house below that number is considered more efficient to own and operate; anything above it is more expensive to run.
Myers compared the HERS rating to the miles-per-gallon sticker on automobiles, except that with cars, you want a higher number while with houses, you are better served with a lower number. The typical resale house has a HERS rating of 130, for example, while Myers said one of his New Town Builders’ homes is usually in the 40s.
The Energy Star label is loaded with technical information, too. But the key is the HERS rating, the builder said. “Consumers have more power than ever to compare” one builder’s house against another’s, Myers said. “All they have to do is say, ‘Show me your HERS score’.”
The problem, of course, is that consumers don’t know to ask, so builders have to show them, according to the Denver builder. And therein lies the next problem: many builders don’t have their homes rated by HERS.
Myers also told the National Association of Real Estate Editors conference that contrary to popular belief, he has very little trouble selling solar energy. Even if buyers aren’t ready to spend the extra money for solar, he said, at the very least it serves as “the hook that gets people interested” in the first place. “They certainly don’t get too excited about two-inch thick insulation,” Myers said.
That goes against not only popular wisdom but also the findings of researcher Eric Snider, president of Lifestyle Research in Newport Beach, California, who told the meeting that the majority of buyers he has polled say they won’t pay for solar energy regardless of the savings.
Snider, who spent 15 years as a national vice president with Shea Homes and Pulte Homes before forming his own company in 2009, said only 21 percent of respondents say they would spend $9,000 on a solar system that would cut their annual utilities bill by 20 percent a year. Some 35 percent say they would pay $18,000 for a system that returned a 60 percent savings, but just 14 percent would spend $30,000 on a system that offers a 90 percent return.
Snider said consumers talk out of both sides of their mouths when it comes to energy conservation. “They often say one thing but behave in a completely different way,” he added. Only 10 percent of the market is what the pollster called “core value consumers” who are committed to cutting their energy costs. Forty percent more say they support the notion of energy efficiency, he said. “But when you introduce cost to the equation, they all disappear. They support it in theory, but in practice they won’t pay for it.”
But Myers, the Denver builder, said his buyers have put their money where their mouths are. In 2010, New Town Builders sold 42 houses. In 2011, it sold 89, and in May it sold an additional 19. Every last one of them had solar power.
“Solar is what gets people into the conversation. It’s our niche. It’s a powerful sales tool, and it’s why we’re still here when many other mid-size Denver builders are out of business,” said Myers, who, as a leading private builder at Stapleton, the new town that replaced the old Denver airport, sells more houses than even some public companies.