Beazer Homes is betting on green homes

• Beazer Homes builds ‘zero energy’, climate-friendly homes, even though they are more expensive.
• CEO Allan Merrill said the upfront investment will pay off in the long run.
• Challenges include higher costs, market education and green home appraisal practices.

A new community of 19 single-family homes north of Baltimore is at the forefront of the green building movement.

There are solar panels on the roofs. Garages are equipped with a charging point for electric vehicles. Energy efficient appliances have been installed, including electric heat pumps and induction hobs. Airtight insulation prevents leaks that waste energy. Fresh air systems keep the indoor air clean. The homes use so little energy that solar energy could offset most or all of their energy costs.

The project was developed by Beazer Homes, one of the largest American homebuilders. Several years ago, the company set a goal that all its new homes would meet the US Department of Energy’s ‘Zero Energy Ready’ standard by 2025. certification. CEO Allan Merrill said Beazer was close to reaching the goal.

The effort came at a cost; Merrill said climate-friendly features can add $10,000 to $30,000 to construction and that the market for these homes is still booming. It’s also a precarious time, with so many Americans struggling to afford housing and Donald Trump’s re-election threatens to undo many environmental regulations. But there are tailwinds, including state laws requiring industries like utilities and real estate to decarbonize, and a record number of renewable energy projects in the US.

Merrill thinks the upfront investment will be worth it in the long run, even if shareholders haven’t rewarded Beazer yet. Prioritizing sustainability will help the company attract the best talent, he says, and homeowners are increasingly concerned about rising energy costs. Now Beazer must educate customers and the broader real estate market about the value of green homes.

“Leadership requires investment,” Merrill said. “We made a conscious decision to make less money on all these homes. Now it’s about talking to more customers, becoming more effective at communicating value and getting paid for it.”

Merrill added that Beazer is in the middle of that journey. The 19 single-family homes in Parkville, Maryland, cost at least $700,000, which is more than double the area’s median sales price of $300,000 in September.

Merrill said the value of Zero Energy Ready homes comes from lower energy bills, healthier air quality, quieter living spaces and reduced environmental impact. Beazer estimated that owners of the new homes in Parkville would save about $453 per month in energy costs compared to owners of older homes in the city, and $311 per month compared to owners of a typical new construction project. Better indoor air quality is a selling point for buyers with asthma or other breathing problems. Renewable energy and electrical appliances do not emit fossil fuels.

“The tricky thing is when people come in, they don’t wear a button that tells you which of those issues are relevant to them,” Merrill said. “That’s the discovery process. It’s finding a way to connect what we’ve done to every buyer.”

He said another challenge is that home appraisals generally do not take into account energy efficiency or renewable energy technologies.

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Woody Fincham, a home appraiser in Charlottesville, Virginia, who also teaches sustainable housing courses for the Appraisal Institute, says few appraisers have the expertise. But he argued the problem is broader. Real estate agents should market green features so that potential buyers understand their value. This value must then be communicated to mortgage lenders who can source qualified appraisers.

Still, there’s no guarantee that a green home will fetch a higher price, as the market largely depends on what’s selling in the area.

“If you’re in a community where people place a high value on efficiency — and there are certain parts of the country where they do — the assessment may show that the market is willing to pay more,” Andrew Pizor, a senior attorney said at the National Consumer Law Center. “But if you’re in a community where people don’t care about those kinds of things, the appraiser will compare prices and probably find that no one is willing to pay extra for it.”

Two Democrats in Congress have proposed legislation that would require appraisals to compare a home’s energy consumption with that of nearby properties, and whether the home has energy-efficient appliances, solar panels and EV charging options. The bill would also require additional training for appraisers.

But it’s not over yet and Merrill said Beazer isn’t waiting for him.