A new study conducted by the University of California Berkeley and the University of California Los Angeles shows that a “green label” home—a home labeled by Energy Star, LEED for Homes, and GreenPoint Rated-sells for 9 percent more than comparable, non-labeled homes. The Value of Green Labels in the California Housing Market is the first study to provide statistical evidence that, holding other factors constant, a green label on a single-family home in California provides a market premium compared to a comparable home without the label. The research also indicates that the price premium is influenced by local climate and environmental ideology.
This study yields two key insights into the effect of green labels on property values, and why these effects can be so significant. This is especially important in light of the fact that the price premium for a green-labeled home far exceeds both the estimated cost of adding energy efficiency features to a home and the utility-bill savings generated by those improvements.
‧The results show that the resale premium associated with a green label varies considerably from region to region in California, and is highest in the areas with hotter climates.
‧The premium is also positively correlated to the environmental ideology of the area, as measured by the rate of registration of hybrid vehicles. In line with previous evidence on the private value of green product attributes, this correlation suggests that some homeowners may attribute value to intangible qualities associated with owning a green home, such as pride or perceived status.
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