How Green Building Can Boost Housing Affordability

Housing affordability — a top priority for NAHB in 2019 — is a critical issue nationwide and a chief concern among county officials (many of whom are current and former builders). One piece of the affordability struggle in the United States is the regulatory burden on builders. On average, regulations imposed by government at all levels account for 24% of the price of building a single-family home and 32% of the cost of a typical multifamily development.

Although there is no single solution to the affordability challenge, incentives can provide some relief. In some areas, energy efficiency and/or green home certification has helped builders qualify for several types of incentives.

State and local jurisdictions and even a few public utilities provide advantages to builders throughout the design, construction and ultimate sale of a property. Many have been successful in incentivizing green home certification with rebates, tax credits, density bonuses and other tangible benefits.

Examples of state and local jurisdiction incentives for energy efficient and/or green home certifications include:

  • Baltimore, Md.: 10-year tax credit for green certified market-rate rental housing citywide at the following rates: 80% in years 1-5, 70% year 6, 60% year 7, 50% year 8, 40% year 9, and 30% year 10.
  • Hinesburg, Vt.: Homes that have green certification are eligible to receive a density bonus of up to 2% above the base residential density.
  • Little Rock, Ark.: The Building Codes Division provides financial incentives for green building projects up to $1,500 per project to cover certification costs.
  • North Carolina: The Housing Finance Agency Community Partners Loan Pool awards a $1,000 financial incentive to participating local governments and non-profits who obtain NGBS or LEED for Homes certification.
  • Phoenix, Ariz.: The optional Phoenix Green Construction Code provides additional density to multifamily buildings that are five stories or higher that meet a minimum Energy Efficiency Performance that are built in specified areas.
  • Volusia County, Fla.: County offers expedited permitting, public recognition, and rebate of 50% of application fees ($600 value) for several green home certifications.
  • State Qualified Allocation Plan: More than 30 states mandate or incentivize green certification programs through their Qualified Allocation Plans for the federal Low Income Housing Tax Credit program.

The National Association of Counties’ (NACo) Annual Conference & Exposition in Las Vegas brings together county officials from across the country to advocate with a collective voice on national policy, exchange ideas and build new leadership skills, much in the same way that NAHB serves its builder and associate members.

At this year’s NACo conference, held July 12-15, NAHB will educate county officials from across the country on Creating Housing Affordability for All and how high-performance building strategies in both market-rate and low-income homes can be used to provide affordable solutions in their markets.

If you are attending the 2019 NACo conference, be sure to stop by Booth #819 and let us know what green incentives are available in your county. If you won’t be at the conference, please contact Program Manager Michelle Diller and help us build a resource tool to quickly identify if green incentives are an option for builders and developers in their market.

To stay current on high-performance building, follow NAHB’s Sustainability and Green Building team on Twitter.

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  1. David Koster says:

    These all seem like good programs which can reduce/subsidize the increased cost of green building. That said, these programs most definitely do not bring the overall price of a home down, which is the challenge of affordability in today’s market. I understand the argument about lower operating costs, but that doesn’t help with down payments and other acquisition costs, which is where the primary issue of affordability needs to be dealt with.

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