As we discussed in our last posting, NAHB recently conducted a study how housing preferences differ among the main racial/ethnic groups in the US. One of the aspects examined in the study was energy efficiency. While each of the four groups (White, African-American, Hispanic, Asian) identified it as a top priority, the study revealed some interesting results in terms of how people think about energy efficiency.
To make this a little clearer, let’s take a look at some of the questions included in the study. When asked to identify their level of concern about the impact of their home on the environment participants could choose from the following answers: not concerned, concerned but would not pay more, or would pay more for an environmentally-friendly home. Over 65% of all groups indicated they would like an environmentally-friendly home but were not willing to pay more for it. Less than 15% of participants in each group indicated they were willing to pay more.
While the previous question seems to indicate environmental impact is not a top priority, when the question was phrased more specifically regarding energy efficiency and cost savings, the results are drastically different. Participants were asked to choose between two options relating to energy efficiency: 1) a highly energy efficient home with lower utility bills over the life of the home, and 2) a home without energy efficiency that costs 2-3% less. Over 80% of participants indicated they would choose the highly efficient home. The results from this question clearly show that home buyers are definitely concerned and are willing to pay more for an energy efficient home. Energy and cost savings are quantitative benefits that hit closer to home for the majority of consumers than environmental friendliness which is viewed as more of a qualitative benefit and a social issue.
To further support this finding, participants were asked how important low utility costs will be when choosing their next home. Again, at least 80% of participants from each demographic group indicated that utility cost savings would be either important or very important. Building on that question, when asked home much more they would be willing to pay in order to save $1,000/year in utility costs, the results show consumers expect a fairly steep rate of return on their investment (between 10.9% and 14.8%). The average amount participants were willing to pay varied among the four groups as shown in the chart below.
From this portion of NAHB’s study we can see that the way we frame a topic or question can significantly change the way it is perceived and has a direct result on the outcome. Environmental friendliness, energy efficiency, sustainability, green living, etc. all have some common ground in the building and housing industry. However, each of these phrases can (and evidently do) have a different meaning for home buyers. This can be incredibly important for professionals in the building and housing industry. While you may mean one thing, the terminology you use and the way a topic is framed has a significant effect on how it is perceived by the consumer.