The Value of Green Labels in the California Housing Market - An Economic Analysis of the Impact of Green Labeling on the Sales Price of a Home

Share this Post:

“The Value of Green Labels in the California Housing Market” is the first study to provide statistical evidence that, holding other factors constant, a green label on a single-family home in California provides a market premium compared to a comparable home without the label. The research also indicates that the price premium is influenced by local climate and environmental ideology. To reach these conclusions, researchers conducted an economic analysis of 1.6 million homes sold in California between 2007 and 2012, controlling for other variables known to influence home prices in order to isolate the added value of green home labels.

Key Finding: Green Home Labels Add 9 Percent Price Premium

This study, conducted by economists at the University of California, Berkeley and University of California, Los Angeles, finds that California homes labeled by Energy Star, LEED for Homes and GreenPoint Rated sell for 9 percent more (±4%) than comparable, non-labeled homes. Because real estate prices depend on a variety of factors, the study controlled for key variables that influence home prices including location, size, vintage, and the presence of major amenities such as swimming pools, views and air conditioning. Considering that the average sales price of a non-labeled home in California is $400,000, the price premium for a certified green home translates into some $34,800 more than the value of a comparable home nearby.