Feature: Growing Strong

Like most builders, Max Wade of Artistic Homes in Albuquerque has a schedule to keep and numbers to meet. But he also guarantees an average monthly energy cost over a year's time for every home he sells by incorporating resource-efficient materials, systems, and design practices into his construction process.

The only way Wade reconciles the dual masters of money and managing the environmental impact of his homes is to buy building products already in the center of the supply channel, not on the fringe. “Everything we build with is available,” says Wade, who sells nearly 800 single-family homes every year to first-time buyers. “There's nothing out of the ordinary or that requires a special order,” that would bog down his schedule or his subs, push his price points past the means of his buyers, or punk his profit margin.

If Max Wade sounds like an opportunity for full-service lumberyards and building materials dealers in search of a sustainable business model, he is—and he's not alone. Across the country, from some of the largest home builders to custom builders, the wave of “green building” is swelling to mainstream proportions. More than 100,000 homes, represented by 2,200-plus builders, have earned the federal Energy Star label for superior energy performance since 1995, while more than 32,000 homes (and an estimated 13,000 alone in 2002) have been certified according to guidelines developed by green building coalitions in nearly 30 metropolitan markets.

Los Angeles–based Pardee Homes mandates that all of the 2,500-plus homes it builds in three metropolitan markets each year qualify under Energy Star criteria, and recently completed a zero-energy home in Las Vegas in which photovoltaic collectors generate enough electricity to make the meter run backward. In Frisco, Texas, the local Green Building Council is the first to certify entire housing developments as a strategy to pull more builders into sustainable construction.

Tucson, Ariz.–based builder John Wesley Miller's current 90-home infill project mandates the use of solar domestic hot water, high-performance windows, and other energy-efficient features in part to prove green building's market viability. “Once you get builders to start building green, it gets competitive,” says Miller. “Then it impacts the whole country.”

Meanwhile, the U.S. Green Building Council is considering LEED (Leadership in Energy and Environmental Design) standards for housing that would raise the bar beyond Energy Star and certify qualified homes, while the NAHB Research Center is drafting voluntary green building guidelines to educate and assist home builders in markets that don't have local measures yet.

With a growing number of consumers demanding energy-efficient products, more builders specing green materials, and more manufacturers offering products that fulfill those needs, the perceived “risks” for pro dealers who go green have all but faded, and there is no better time for lumberyards to get on board with products, education, and services. Dealers interested in catching and riding the wave need to develop a market-specific definition of “green building,” respect its potential as a marketable and profitable segment of the housing industry, and recognize opportunities to initiate and support efforts by builders to bring green to the masses.

What makes a product “green” and measures it as such against other materials and systems is a process of life-cycle assessment (LCA), a land-use-to-landfill evaluation of its environmental impact included in many local and national green building guidelines or criteria.

Generally, products that conserve resources initially and through durability and low-maintenance characteristics, employ recycled or salvaged material, are made without toxins or reduce emissions or pollution in application, save energy and water, and/or improve indoor air quality (among a host of more detailed criteria) qualify as “green” to varying degrees.

The number and type of products that qualify under such criteria is rapidly expanding due to the obvious environmental and growing economic benefits of green building, as well as mandates and incentives through local codes, tax and utility credits, and/or federal regulations. “The green building market is changing all the time,” says Seattle custom builder Jon Alexander, who employs certified-sustainable lumber and wood finishes, fly-ash concrete, and formaldehyde-free insulation—examples of green alternatives that fit into historically high-impact product categories.

But more so than individual products is the process of putting them together to truly reduce a building's environmental impact. “We look at the house as a system,” says Vernon McKown, president of sales at Ideal Homes in Norman, Okla., which also guarantees the average energy bill of its 400-plus new homes each year, saving buyers hundreds of dollars annually compared to conventionally built homes. “The key is knowing how to integrate the pieces.”

Assisted by programs and partnerships, including the American Lung Association and the federally sponsored Build America program (in which builders partner with green-minded architects and building science groups to test and market environmental innovations), McKown has assembled a system that includes such specifications and low-emissivity (low-E) vinyl windows, mastic-sealed ductwork, and radiant barrier sheathing panels that work together to better control thermal transfer—and thus improve energy consumption and indoor air quality—in Ideal's homes.

Such specs and systems, however, ideally address specific geographic and demographic markets, and are often used to qualify a house for a local green building or federal Energy Star rating or certification. Appropriate to Seattle's climate, for instance, Alexander included a 7,000-gallon cistern in his latest custom home project to collect rainwater for irrigation and other water demands, while Miller's solar hot water mandate makes social and economic sense in sunny Tucson and other Sunbelt markets.

Among other educational materials (see “Green Resources,” at end of article), NAHB's forthcoming green building guidelines, due out next year, should provide builders (and dealers) with a checklist of products and performance standards from which they can create a strategy to build green. “Never before have [green building] practices evolved into a single, written set of criteria,” says Ray Tonjes, an Austin, Texas–based builder and chairman of NAHB's Green Building subcommittee. “The guidelines will ensure that all builders have the necessary tools and guidance to create resource-efficient and environmentally sensitive homes.” And they're guidelines that lumber and building materials dealers can use to supply and serve them.

It's generally accepted that the green building movement began in response to the energy crisis in the mid-1970s, eventually spawning the development of Energy Star, LEED, and similar initiatives that pushed (if not mandated) awareness and practice beyond the personal passions of a few fringe builders and architects.

What's evolved now is a groundswell of support for green building among consumers. Independent and industry surveys indicate that issues such as energy efficiency and indoor air quality are among the most desired features in new homes; more recently, buyers have indicated a willingness to pay for them, as well, especially if they result in lower energy bills, better mortgage terms, utility rebates, and tax credits. “Green building has true market value to home buyers,” says Tonjes.

Alexander believes that the housing industry is actually behind the consumer curve. “The level of eco-awareness [among homeowners] is huge,” he says. “Builders are catching up, and there's no reason why the industry won't soon be at the same level.”

Until then, builders such as McKown, Wade, and Miller continue to lead the industry—and prove that green building is marketable, profitable, and even affordable.

For instance, despite a $1,500 premium to upgrade its specs for better energy efficiency and indoor air quality, Ideal Homes maintains a gross profit margin above 30 percent and saw its housing starts, sales revenue, and profits rise while selling homes from the mid-$70s to the mid-$200s. “Green building gives us the ability to defend our margins,” says McKown. “People are fascinated with it, and they'll always choose a healthy home over one that is less healthy.”

As much as his company's own success, however, McKown sees Ideal Homes pulling its competition into the pool. “Given our size [number of starts], if we push it, others get in line to compete,” he says, noting increased local demand for low-E vinyl windows 18 months after Ideal Homes pioneered them as a standard specification.

As a result, the premium he pays for windows through his lumberyard has ebbed from 25 percent to less than 5 percent, with more demand keeping prices in check while also delivering the environmental benefits of green building market-wide. “It drives down our costs when others demand it,” says McKown.

Wade, meanwhile, has seen his exposure to liability and defect litigation retract, callback and warranty costs drop to near zero, and buyer satisfaction rise since going green with improved building practices and superior product performance. “We want to sustain our business for multiple generations,” he says. “This was a business decision as much as an environmental choice.”

Despite premiums for masonry construction and solar hot water, among other green building features and systems, Miller set a price point for his Armory Park del Sol project in Tucson below $200,000 for models measuring less than 1,600 square feet. He has since sold a third of the 90 homes planned and watched buyers add energy and environmental upgrades to push some sales prices into the high-$400s. “The market has told us what they want, and that they're willing to pay for it,” he says.

Miller's longstanding commitment to green building (including leading what was then a task force of a NAHB subcommittee on the issue nearly a decade ago) has translated to a stable of suppliers that not only expect him to spec green products, but also be the market guinea pig for innovations. “Vendors and manufacturers seek us out with new products because of our history,” he says.

More often, though, builders report having to drag their lumber and building materials dealers along. “There's lots of room for improvement in the supplier realm,” says Alexander, whose efforts in part pushed his longstanding lumber dealer to carry framing materials certified by the Forest Stewardship Council (FSC). “Some materials are widely available, but most are hard to get or require a longer lead time or other challenges.”

McKown can't recall an instance when his lumber dealer brought him a green building product to consider, but credits the company with investigating and sourcing his needs. “We told them what we wanted and they went out and found it,” he says.

As part of an overall philosophy of treating suppliers and subs as partners in its success, Ideal Homes easily integrated its desire to build green into the regular contact it has with its vendors. “We already had the groundwork established, so they were open to [green building] when we brought it up.”

A few dealers are getting the hint. Dunn Lumber, an 11-location dealer in Seattle, formed a “Green Team” among its sales force and distributors that has led the company to stock limited supplies of FSC-certified lumber, engineered framing and decking, composite siding, and formaldehyde-free insulation to serve builders like Alexander and others.

“We looked at the Built Green [local green building council] checklist and saw that most of what they listed was lumber and panel products,” says Racine Snyder, the sales associate leading Dunn's Green Team. “We just need to get everyone up to speed to respond to [builder] requests.”

While McKown might be shocked to see his dealer present a green product he hasn't heard of yet, he sees suppliers helping educate builders and consumers by underwriting and hosting building science workshops or other forums, then supplying that increased awareness and demand. “A dealer's job is to show builders options,” he says. “These workshops would help bring new products to the market.”

Miller thinks that the continuing strength of the housing market may also be hampering dealer efforts to get into green building. “The problem is that business is too good right now,” he says. “When business is slow, you come up with new and creative ways to sell.”

That said, he's convinced that green building is already a mainstream practice. “You'll either be a green builder or have to get out of the market within five years,” he says of his peers. “Suppliers that are interested in increasing and sustaining their businesses are going to have to deliver to that kind of market.” —Rich Binsacca is a contributing editor to PROSALES.

Among a sea of green building and environmental design and construction resources, consider the following sources to start your journey:

The GreenSpec Directory, 4th edition ($89; www.buildinggreen.com; 800.861.0954 x191). Lists more than 1,750 green building products screened by the editors of Environmental Building News, organized into 250 categories within the CSI MasterForma. Features product descriptions, environmental characteristics and considerations, and manufacturer contact information with Internet addresses.

Summary of Green Building Programs (NAHB Research Center; www.nahbrc.org). Follow the “green building” link to download a PDF file or view the most current list of state or local green building programs in 30-plus metropolitan markets, including certification requirements and qualified products.

The EcoIQ.com Green Design & Building Web site (www.ecoiq.com/greendesign). Offers the EcoGateway Link Center to more than 10,000 sources of green building and design practices and products.

Whether you initiate it or take a responsive stance to builder demand for green building materials, consider the following tips to best serve the market:

Green products, including radiant barrier roof sheathing, flexible and zoned ductwork, and resource-efficient engineered lumber, are increasingly mainstream.

Photovoltaic roof panels power solar hot water and other systems at Armory Park del Sol, a 90-home infill project in Tucson, Ariz.; parapet walls help shield the panels from view on the street level to limit their impact on design.