Step 6 - Track & Publish Market Trends
MLS Usage Trends
Measuring the impact of green MLS fields is a rewarding way to track an implementation and ensure on-going quality. Measures can include utilization of fields, errors, compliance with MLS policy such as requiring a disclosure or an attachment that documents third-party verification.
Tracking usage, compliance and errors will help MLS plan for on-going quality improvements for field design, user training or both.
See the Why Green MLS section on “Matching Inventory Supply” for more resources to track usage. Data from program providers on the number of homes that have completed third-party verifications for green building or remodeling indicate the ceiling on how frequently fields like the RETS-defined GreenVerificationProgram might be used. Some industry experts believe that usage of these fields by MLS users with such a field today hoovers at only about 2-5% nationally.
Some good news is that the green building and remodeling industries and their stakeholders are interested in seeing Green MLS fields be better utilized. See Step 1 – Establish the Business Case on “Assembling the Team” for more information. The same partners identified as potential team members may also have access to grants that might be leveraged to:
• Measure usage
• Identify gaps
• Develop resources to decrease the usage gap such as additional training and communications activities.
Many early adopters of green MLS have found that implementation partners outside the MLS including builders, appraisers and researchers are eager for reports that indicate the value and/or market time trends for high-performance home sales. Reporting market trends is most effective when responsibility for reporting these trends is shared across key industries.
For example, predominant building and remodeling programs in the market can report statistics on upgraded homes to provide context on the inventory supply of these homes.
Researchers may include local colleges or universities, governmental or non-governmental agencies responsible for tracking green initiatives and energy efficiency improvements.
Partners can also help determine report publishing options so they can be most widely shared and applied.
Appraisers can provide input into report methodologies that could be considered so that reports might be approved by underwriters in appraisers’ opinion of value. This is especially important in markets where traditional sales comparables are limited and the appraiser needs additional methods to assess fair value.
The methodology for such reports are very different from market trend reports done with MLS data or statistical reports with large data sets completed by researchers.
Elevate Energy and the National Home Performance Council offer additional details on the importance of local, high-performance home value studies, designed with appraiser input and using MLS sales data in their report, Making the Invisible Visible: Unlocking the Value of the Energy Efficient Home. Step 5 of the report’s blueprint addresses how real estate and building professionals can work together to provide meaningful local reports on green inventories as well as market value studies.
Results and Review
One of the most gratifying aspects of greening the MLS is seeing it at work. Areas where green MLS statistics have been kept show the positive trends that green home sales are making in their area. For instance, in Atlanta during 2009, certified green homes sold 3.6% closer to list price and were on the market 31 days less than conventional new construction (108 vs. 139 days).
In the May 2009 Certified Home Performance study, conducted by the Earth Advantage Institute and with the assistance of brokers, appraisers, and university professors, there is a sale price premium and marketing time advantage for homes that have a third-party green certification. The study's abstract says:
"The author documents that certified homes in the Seattle metro area sold at a price premium of 9.6% when compared to noncertified counterparts, based on a sample of 68 certified homes. In the Portland metro area, certified homes sold at a price premium ranging between 3% and 5%. In addition, the certified homes stayed on the market for 18 days less than noncertified homes. These results are based on a sample of 92 certified homes and comparable properties approved by a project appraiser."
Such findings are significant and valuable not only to brokers, but to builders, appraisers, lenders, and consumers too.
For additional data on green home market trend reports, visit the research page of the GreenREsourceCouncil website. There, you'll find an array of market reports, such as Earth Advantage's "Certified Home Performance" and the "Atlanta - 2009 Green Sales" statistics, plus other research on the market value of high-performance green buildings.
Do certified green homes perform better in the market?
A 2012 UCLA research (non-appraisal) study The Value of Green Labels in the California Housing Market finds a nine percent contributory value for green-labeled homes. The 2011 North Carolina Energy Efficiency Alliance’s ENERGY STAR Market Impact Study http://ncenergystar.org/whats-new/3081 finds that ENERGY STAR® new homes sold for a $5,500 premium, 90 days sooner than other homes. Similar statistics comparing certified green homes to non-certified homes have emerged in Atlanta, Georgia.
Another recent research study by the Institute for Market Transformation and the University of North Carolina took a different angle, looking to see if the loans for high performance homes were less likely to default. The Home Energy Efficiency and Mortgage Risks research study found a strong indication that this is indeed true.
Tracking Market Trend Case Study – Atlanta