Measuring the Price Premium for Energy Star Homes
Nils Kok and I have finished a new paper measuring the price premium for "green homes. You can download a copy here. On one level, this is a standard hedonic real estate paper but on another level it is a pinch "funky" because we focus on the capitalization effect of being Energy Star or LEED certified. We find a large effect of 9% based on a large sample of recent home sales in California. We hope that this paper creates a discussion among real estate developers concerning the costs and benefits of "going green". Ideally, we can partner with an electric utility to measure the actual electricity consumption of these "green buildings". Such monthly kWh data on electricity consumption would allow for a test of the "rebound effect" and to see whether the engineers are right about their promised energy savings for real world households who actually live in these homes.