Quantifying the effect of green building certification on housing prices in metropolitan Atlanta
Stephenson, Robert Miller
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The buildings sector consumes approximately 40% of energy in the United States, and presents a major opportunity for reducing society's energy consumption and environmental impact. Given the potential downside impacts of climate change and resource depletion, it is imperative that the construction industry deliver buildings that meet owner requirements while using less energy and natural resources. In response to this challenge, the construction industry has adopted voluntary green building programs that provide guidelines for construction projects wishing to reduce their environmental impact. Green building programs also present the opportunity for those pushing beyond the status quo to receive increased recognition and market visibility; however, certification under these programs is not without an added cost. The added cost of certification varies by project, but building owners and builders must be able to justify this added cost through increased market recognition and sales and leasing prices. Given the relatively low recognition of a price premium for green certified residential properties by the real estate appraisal community and financial institutions, a need exists to demonstrate the added market recognition of these homes. Through the development of a hedonic regression pricing model this study isolates the effects of green building certification on housing sales prices, in order to prove the hypothesis that a significant increase in sales price is associated with green certified housing.