The green homes share of the construction market was 17% in 2011, equating to $17 billion, and expected to rise 29%-38% by 2016 - potentially a $87-$114 billion opportunity. This is based on a five-year forecast for overall residential construction by McGraw-Hill Construction, released in its latest free SmartMarket Report: “New and Remodeled Green Homes: Transforming the Residential Market.”

The report, key findings of which were released May 1 at the National Association of Home Builders’ National Green Building Conference and Expo, reveals that two of the key factors driving this market growth are the fact that green homes are seen as having higher quality and that they save consumers money.

“In the current residential market, there is an enormous need to differentiate your homes for consumers,” saidHarvey Bernstein, vice president of industry insights and alliances at McGraw-Hill Construction. “When builders are able to offer homes that not only are green, but also offer the combination of higher quality and better value, they have a major competitive edge over those building traditional homes.”

This report, produced byMcGraw-Hill Constructionin conjunction with the NAHB andWaste Management, is designed to provide key insights into product and market opportunities in the single-family home building and remodeling industries.

Factors driving the growth in the green home building and remodeling market include:

  • Higher quality for both new home builders and remodelers. For those doing a high volume of green homes (at least 60% of the homes they build), its importance is magnified, with 90% who regard higher quality as an important trigger for building green, compared to 72% of builders overall.

  • Customers are strongly value-driven. Around two-thirds of builders and remodeler respondents state that customers request green homes or remodeling projects in order to lower their energy use or save money, more than twice any other factor.

  • Higher first costs for building green are noted by a much lower percentage of builders as an obstacle now than they were reported in 2008.

The study also reveals the key practices and technologies taking over in the residential marketplace as a result of the shift toward green:

  • More than 80% report that energy efficiency is making today's homes greener compared to two years ago. Use of energy-efficient features is pervasive in the market - the top practice by nearly all surveyed builders and remodelers, regardless of their level of green building activity.

  • Indoor air quality is growing in importance and focus for home builders; 60% believe that efforts to improve indoor air quality make homes greener than they were two years ago and 95% of high-volume home builders report including features that impact air quality.

  • More than half consider durable materials one of the most important features in their homes today. In particular, remodelers emphasize this key aspect of their projects. Durability and better materials are key reasons why green homes and remodeling projects are considered of higher quality.

“These findings confirm the shift we've seen in the market,” explainedJim Halter, vice president, construction solutions for Waste Management. “Builders and remodelers are placing more emphasis on energy efficiency, increases in sustainability focused waste management practices and more products made from post-consumer materials - these important factors are pushing our industry forward.”