Friday, December 7, 2007

Green Homebuyer Intel Plus Dan Green Interview On Subprime

So this week I've spent time at the annual summit of Build It Green, one of the pacesetting west coast organizations dedicated to greening the residential sector. BIG's market impact is significant -- it is expected that forthcoming state legislation establishing minimum green standards for single family housing will be based in part upon BIG's GreenPoint Rated guidelines. Marketing Reality Check: Do you know who and where your green homeowners are and why they buy? I follow BIG's work because their standards also cover greening multifamily properties, a key area of my business. One highlight of the summit was a great presentation of key findings from a McGraw Hill Construction's Green Homeowner SmartMarket Report, putting out current intel on how homeowner attitudes about green housing are changing. Last week, I posted about pursuing demographic plays when possible in 2008. Green Journey readers are getting a couple of the more provocative nuggets here, since a) green residential is predicted to be a $60 billion market by 2010 -- possibly a good opportunistic play by some of my fund friends -- and b) this type of info should give some early insights to us commercial property professionals who need to understand LOHAS/green demographic lifestyle trends for retail, hotel and multifamily properties.

Intel #1: 71% of all green homeowners are women. Most are married and highly educated.
The study doesn't elaborate on why women green homeowners outnumber men two to one, although I thought I heard some snickering in the audience when that particular slide came up. Note also that word of mouth is the preferred method of how people get their information to buy green homes -- from direct personal recommendations by other green homeowners. Not from TV and official advertising overtures of homebuilders. Though it wasn't directly stated in the study, you can also infer pretty clearly who is missing the green wave so far: the poor, ethnic minorities and lesser educated. They do not exist in this report.
Intel #2: Texas and Florida lead in green home production.
You should have heard the San Francisco crowd gasp when they heard that one! And here's where the cynic in me can't be restrained: largely oversupplied (and now soft) markets always tend to display the highest levels of production. In another section of the report, it states that housing starts in the south in 2008 and 2009 will be their lowest ever. I think you can safely tie those two statements together when interpreting the regional data. By the way, other leading regions are: Washington, Colorado, Nevada (Ouch! California didn't even make the top five).
Intel #3: Reduced energy costs are a key motivator for buying a green home.
Green home features can cut energy bills by half. Rising energy and interest costs are starting to become apparent to homeowners and energy cost savings are the unique selling proposition of green homes, equal in importance to the green consumer's ethical concerns. Want more intel? Click the McGraw Hill link above to get the whole study (note: get out your credit card; $$$). State of Residential Real Estate Markets: Interview with Dan Green If you care about interest rates and think that the housing market performance could have some effect on commercial real estate (like I do), then you should get to know Dan Green. He's a residential mortgage planner and a pretty astute reader of the capital markets. He blogs regularly about these topics at Since the whole subprime debacle has been unfolding, he's been debunking what he calls misleading information about mortgage rates and subprime being bandied about in the media. Take a look at his recent interview at the National Association of Realtors convention, where he talks about subprime lending and where he thinks the residential market is going in 2008. If you have an opinion about whether its good for subprime borrowers to get assistance from the government or think that the housing market could make life tough for commercial real estate, listen to Dan's perspective as you think it through.


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