Millenial Buyers Expect Energy Savings

This article originally appeared in Builder Magazine, September 2015, By Rick Davenport, Director of Sustainable Construction at BASF.

A three-pronged approach can help meet young buyers’ demands for high-performance homes with proven results

Sustainability is a part of the millennial fabric. As homeowners, this generation places a greater weight on sustainability than those preceding them. Young consumers are more likely to understand how sustainable construction and a sustainable lifestyle impact their carbon footprint and help curb monthly utility bills. But the big question remains: How much of a premium will they willingly and comfortably pay for the sake of going green? While builders have grown accustomed to including a 10% to 15% premium for incorporating high-performance materials, even that mark-up is out of reach for this cost-conscious generation. 

So how do builders realistically work within a lower construction premium to meet Millennials’ expectations for a sustainable, high-performance home? It involves a three-part 50/30/20 formula, integrating sustainable construction, alternative energy, and empowering a change in occupant behavior.

Simply put, if high-performance homes are not affordable, they will never be sustainable. What’s more, the building industry faces a challenging value proposition when it comes to Millennials. As their homeownership timeline tends to be shorter than Gen X and Baby Boomers, they have less time to earn back money on an energy-saving home. 

So how do builders realistically work within a lower construction premium to meet Millennials’ expectations for a sustainable, high-performance home? It involves a three-part 50/30/20 formula, integrating sustainable construction, alternative energy, and empowering a change in occupant behavior. 

First, there’s a realistic sweet spot builders hit when they build a home that operates at a 50% higher efficiency than standard construction methods(anything higher tends to be cost-prohibitive). A key component of the 50% practice is taking a holistic approach to construction, which empowers builders to be more strategic in their approach, freeing often-siloed systems and components and creating cost-shifting opportunities to benefit both the efficiency of the home and the builder’s bottom line.

Next, we look to incorporate renewable energy to offset up to 30% of the energy used in the home. It’s important to note that, having the real estate and budget to generate 100% of the home’s demand is a rarity; 30% is realistic. While not a necessity, incorporating technology like a photovoltaic system can help reduce dependency on the grid and other nonrenewable resources. More affordable leasing programs mean homeowners can see a payback in as little as five years. 

Finally, 20% of the savings should come from the impacts of occupant behavior by empowering homeowners to control their environment. Leveraging this with Millennial home buyers can help builders set themselves apart from the competition, especially since Millennials love tangible, measurable results that save them money. Just as cars come with manuals, we need to teach new homeowners the right way to live in a high-performance home. If you equip the dwelling with the necessary technology and educate new homeowners on simple behavior changes, it can enhance their comfort, healthy, and safety, all while reducing energy costs and water consumption. 

Keep It Simple

Keep the 50/30/20 explanation simple to convey the benefits: 

• 50% savings from energy-efficient construction in comparison to standard building methods
• 30% savings from renewable energy use 
• 20% savings from smart use and behavior 
• Another selling point: High-performance upgrades on average yield a 10 percent return when it comes time to put the home on the market. 

Of course, maximizing a smaller premium of construction costs requires builders to embrace new construction methods in place of standard ones and explore alternatives. But it isn’t something they have to tackle alone. Organizations like BASF’s Center for Building Excellence act as a conduit between builders and innovative product solutions. Increased collaboration and transparency help the industry’s ability to not only meet market demands, but spur much-needed innovation that will lay the path for net-zero construction.

Learn about the importance of Occupant Behavior in a tight home in the video below: