The government and the banks it bailed out are now stuck with lots of foreclosed homes on the books. One silver lining, though, is that individual and institutional real estate investors are taking advantage of low foreclosure prices, snapping up junked homes, and then renovating them to the latest green standards.
Agents who hawk foreclosures and “REO” properties (or “real estate owned” properties, owned by a lender) frequently promote their potential for “eco-flipping” to investors, noting that neglected properties needing a lot of work present a blank canvas for the latest green features destined to save energy and also wow prospective buyers. It’s a pitch I heard first-hand last fall while on a local foreclosure bus tour, where agent Victor Hernandez was casually offering advice on how a junker 1970s home could easily be “solarized” and other options on the properties we visited.
At the national level, The Center for American Progress recently proposed that the government take clusters of foreclosed homes and apartment buildings, green them up, and turn them into energy-efficient rental properties which could be sold in batches to investors seeking income properties.
- This house comes with its own energy monitors and an online homeowners manual. Image courtesy of G2B Homes.
And locally, a handful of small outfits are negotiating their way through the Puget Sound region’s growing inventory of distressed property.
One of them, G2B Homes, a Seattle-based green builder/developer, plans to put its first green retrofit on the market in mid-April before rolling its “buy, renovate, and resell” strategy on a broader scale. The bungalow, located in the Belvidere neighborhood of West Seattle and nick-named the “Sequoia House” for a tall tree in its back yard, is the first of what G2B co-founder Aaron Fairchild hopes will become dozens of green conversions by his company in the Puget Sound region.
“What we’re really trying to do isn’t just retrofit one house, but do this on a sizeable scale,” Fairchild says. He envisions eventually acquiring, retrofitting, and marketing homes at a five-per-month pace starting in 2012-2013.
Fairchild says that this and future G2B Homes will offer several compelling features for buyers concerned about conserving energy: Built Green Certification (i.e., green building standards); energy audit reports about the home’s energy efficiency before and after its remodel; real-time energy consumption measurement tools accessible via an iTouch device (included in the home’s sale price); and—possibly coolest of all—a customized online manual with information on the home’s materials, finishes, landscaping and lawn care, appliances, vendor referrals, and every other detail a new homeowner might want to know but can rarely learn from a seller.
Of course, buying and renovating a home so that it’s less-expensive to inhabit or so that its energy-conserving features provide it with more re-sale sex appeal isn’t a brand new idea. And homes targeted by such buyers aren’t necessarily foreclosures–maybe they’re just old homes that need some love. But greening is one small way those who are dipping their toes into the housing market, or even investing in it, are looking to do good work with bad properties.
Even regular home buyers, whether green-focused or budget-strapped, are leveraging a previously little-used FHA loan program—known as the 203(k) loan—to rehabilitate homes. (The loan, written for the purchase price plus the price of agency-approved and monitored renovations, lets a buyer make renovations of their choice–including “green” ones–without having to secure a separate loan post-purchase.) These loans were the topic of much chat during a “green mortgages” seminar at the Master Builders’ Built Green Conference last month, where Dave Porter, a green building and lending educator who runs Porterworks, touted them among one of the few true “green” lending options available to buyers. Buyer awareness about the true “costs of home ownership,” he said, will become an increasing factor in the buying and marketing of homes going forward–meaning that energy efficient homes with metrics to back up their designs and features will likely proliferate going forward.
