Why Go Green

Excerpted from the January 2007 MONEY.

Why Go Green?
Homeowners and buyers have all kinds of reasons, although these, alone and in combination, tend to be the most common:

YOU CAN SAVE ENERGY - AND WITH IT, MONEY
Given the astronomical rise in fuel prices in the past few years, it's no surprise that energy efficiency is the top reason consumers choose green building these days. Traditionally constructed homes, while far more energy-efficient than those built in past decades, can still squander a mind-boggling amount of fossil fuel. The typical house loses 15% to 20% of its heat or air-conditioning leakage from ducts alone, according to Energy Star, a joint program of the U.S. Environmental Protection Agency and the U.S. Department of Energy.

Energy-conscious construction can significantly reduce that waste. Some of the savings come from materials that provide extra thermal resistance, such as straw-bale construction and insulated concrete forms. More can come from designs that maximize exposure to winter sun and minimize summer heat. Green builders and remodelers also favor energy-efficient appliances and water-conserving fixtures. Energy savings from all these techniques usually pay for their higher up-front costs in two to seven years, says Elliot Johnson, an Austin architect specializing in this type of design.

Solar power is a different story. Alex Wilson, author of Your Green Home, explains that panels are expensive to install and take years to recoup their costs in electricity savings. "If you've done everything else you can to conserve energy, then it makes sense to look into generating your own power."

YOU CAN SAVE YOUR LUNGS
Compared with outdoor air, indoor air can be two to five times more polluted, according to the U.S. Environmental Protection Agency. A major cause: volatile organic compounds (VOCs) commonly found in paints, stains and glues. When these products dry, they release chemicals and continue to do so for years. This can exacerbate allergies and asthma, and cause headaches and nausea. As a preventive measure, some homeowners opt for "low VOC" paint, natural stains and formaldehyde-free glue, which generally cost a few dollars more per container.

Providing adequate ventilation can also improve air quality. "Years ago the air would turn over naturally because houses were so poorly insulated, but today houses are so tightly sealed that you need to circulate fresh air," says Jeff Wassenaar, president of Legacy Homes, which built the Josephs' house. One solution: adding a mechanical ventilation system, which can run between $500 and $2,000.

YOU CAN HELP SAVE THE PLANET
The final reason you might choose this type of construction is less practical and more philosophical: You want to leave the smallest footprint you can on the planet. That means planning construction to minimize the waste of building materials; reducing water consumption by adding low-volume toilets or rainwater filtration systems; and working with products that are sustainable (wool carpeting, bamboo flooring, cotton insulation) or recycled (salvaged wood, steel made with reused rebar, insulation made from paper products).

Will It Pay Off?
If you were to build a house as green as you possibly could, it might cost you 20% to 30% more than traditional construction. But that would imply an extreme sense of environmental duty. "Most of our projects cost between 2% and 4% more than standard construction," says Wassenaar. There are also some significant tax credits available on the state and federal level that may help pay for improvements. You can claim a credit of up to $500 on your 1040 for installing energy-efficient windows, insulation, doors, roofs, boilers and air conditioners, for example. (Log on to ase.org and click on Consumers for more on this.)

Before you invest in these, however, you might want to consider whether your monthly utility savings and any tax breaks will pay for the added cost in a reasonable amount of time. Assuming a $400,000 house with a 6.5%, 30-year fixed-rate loan and $80,000 down, your monthly payment would be $2,022. Add $10,000 of energy-efficient features to that and your payment goes to $2,085. For you to cover the higher mortgage payment and recoup the up-front costs in seven years, your monthly energy savings would have to be $182. Add $20,000 and your payment goes to $2,149--and you'd need to save $365 monthly.

In terms of resale value, green homes have come a long way. These days most do not telegraph their eco-friendly features; from the outside they look like any other house on the block. You won't necessarily get a huge premium for your abode's environmentalism, says John Bredemeyer, president of appraisal company Realcorp in Omaha, "but it will likely sell at the upper end of the range and quicker," as it will have something more going for it than an equivalent traditional construction.