This blog follows the latest trends in high performance housing from an insider's perspective. I am the General Manager of one of Ottawa's leading homebuilders - Urbandale Construction, and it gives me a firsthand view of how the industry is changing. I've seen the barriers that builders face when trying to market new technologies and I've been working directly to overcome these barriers to bring new energy efficient designs into Urbandale homes.

December 5, 2012 15 Comments

The Real Reason Most Homebuilders Build Crappy Homes

For the last four years, I’ve been using my position as General Manager at Urbandale Construction (a large homebuilder in Ottawa) to do whatever I could to push the industry towards more energy efficient housing. I’ve sat on government steering committees, created partnerships with academia to promote research, and redesigned the homes we sell. But for what? The general public seems less interested in energy efficiency now than when I started in 2008, and although we are making better homes, most purchasers don’t seem to recognize or value the difference.

Earlier this year, we changed our standard specifications to meet the revised 2012 ENERGY STAR® Standard. We were one of the first in the country to make this commitment, and for the last year we’ve had to compete with other builders who continue to build to the old standard or to minimum Code levels. What I’ve discovered, is that in order to stay competitive we’ve had to price our homes equivalent to builders who build to lower specifications. In essence, we’re subsidizing the energy efficient upgrades and accepting a lower profit margin.

Urbandale has a high performance demo home that is currently for sale.  This is an amazing home that uses around 70% less energy than an equivalent house built to Code. It was the first home in Canada built to the revised R-2000 Standard and received national attention for this accomplishment. It is, arguably, one of the best-built homes in Canada, proven through third-party verification. Unfortunately, not a single prospect that has come to see it has been interested in the technical aspects of the home. We reduced the price by $20,000 because people were comparing it to resale homes, or to new homes built to Code. We are again put in a position where in order to sell a superior home we will have to accept less profit than if we had built a basic house.

It would be one thing to accept less profit if our actions were recognized and appreciated, but the sad fact is most purchasers do not care about the differences that make a home more energy efficient. Every single room in our demo home has a large info board describing the green upgrades, yet to this day, we have never had a purchaser walk into our Sales Office and say they want to buy from us because of our reputation for energy efficient construction.

I’ve had the pleasure of meeting many dedicated green builders from across the country. We often discuss construction techniques and marketing efforts. What I have found is that, in almost all cases, these builders have made the decision to build green out of a sense of personal responsibility and leadership, despite the fact they aren’t making as much as they could by building standard homes.

I’ve always felt that the shift to more sustainable housing would be market driven – that is, educated consumers would demand more energy efficient homes. I don’t really believe this anymore. Aside from a few high profile, super energy efficient custom homes, the greatest strides in bringing high performance homes to the mainstream have come from government policy mandating improvements to the building code minimums, and from dedicated builders willing to accept lower profits to build a better product.

Posted by Matthew

15 Responses to "The Real Reason Most Homebuilders Build Crappy Homes"

  1. Gord Cooke says:

    Matt, thanks very much for this sincere concern about the lack of apparent interest in energy efficiency and green building on behalf of the public. As you know I have spent about 25 years studying this myself and have great respect for what Urbandale has committed to with respect to leading the way on energy efficiency. I know you won’t be discouraged enough to drop your efforts, but let me encourage you more by saying energy efficiency is no longer a technical problem, all across North America we know where codes are going in the next 20 years, we know the technologies, we know how to get it done right on site. The problem is now a marketing and sales issue. We all can recite examples of dozens of technically excellent consumer products that are invented each year that never make their way into the mainstream market because they never make their way into the “emotions” of consumers. There are builders across NA that have found success in hitting the heart strings of homebuyers with energy efficiency and green efforts. Its a challenge now to your sales team, spend as much time training them as you have taken in researching, developing and training your designers, staff and trades. Those that have been successful at this would say your sales people need to have at least 7 opportunities to learn, practice, refresh, renew, repeat and practice some more BEFORE they can even start to get the value out of green, energy efficient products. This can be done over a 3 month period and I would say you could guarantee success.

  2. Matthew Sachs says:

    Hi Gord,
    I really appreciate your comments and I do agree with you that this is a marketing problem and not a technological problem. I have to support my Sales Consultants though, because they have embraced the concepts of green building and make it a component of their pitch. They have had training on green building and we’ve discussed these issues in our weekly Sales Meetings repeatedly over the last four years. They tell me that it’s very difficult to shift the conversation towards the benefits of energy efficient homes with a prospective purchaser because you only have a very limited amount of time with them and they are typically more interested in hearing about the community, the layout, the finishes and other traditional purchase criteria.
    Rest assured, we are still committed to building energy efficient homes. I just wish it were more purchaser driven and less builder driven.
    Matthew

  3. Matt says:

    Hi Matthew,

    I’m curious – approximately how much more does it cost (percentage wise) to build a home with these types of upgrades, versus one that is built to minimum code?

  4. Matthew Sachs says:

    Good question. It varies of course with the size of the house and the specific upgrades, but generally speaking, to go from code to the 2012 EnergyStar Standard levels, (which is a 20% improvement in energy efficiency), is around a 2%-3% price increment. Going to 50% better than code (the 2012 R-2000 levels) is around an 8%-10% price increment. To go to a full Net-Zero home (ie a house that creates as much energy as it uses) requires the use of a solar photovoltaic system which is much more expensive, and that can be done for around a 20%-25% increase in price compared to a home built to code. These prices can come down significantly if you can take advantage of the orientation of the lot and design the house to benefit from the passive solar energy from a South facing orientation.
    Matthew

  5. Brad says:

    Hi Matthew,

    Not all buyers feel this way, my wife and I did a lot of research before buying our next home. After doing our research we decided to build with Urbandale for many of the reasons you listed above.

    We simply could not afford Bridlewood, Kanata Lakes or Riverside South prices, so we decided to build in eQuinelle instead, and saved a bunch in the process. The quality of the home was a much better trade off to us, than to build a cheaper home with one of the crappy builders.

    Brad

  6. Matthew Sachs says:

    Thanks Brad, I really appreciate your comments.
    I’m sure you will love living in Kemptville! It’s a beautiful area.
    Matthew

  7. Annick says:

    Hi Matthew
    Just wanted to say THANK YOU! Because we have been in Riverside south since 2006 and we are now at purchasing our 3 home here in Riverside south. We have done research and we are very excited to be looking at purchasing a new Urbandale home! Our last 3 homes were from another builder and we have been very disappointed with the quality, green approach and energy saving offered.
    We love that Urbandale uses copper pipes, uses low VOC materials and heat recovery, better climate windows…just to name a few. We are in the process of choosing our model and we are very happy and hope this will be our forever home.

  8. Josh Kardish says:

    Great piece Matt – you deserve lots of credit for what you have done to date by standardizing these elements in your design. It is of course immensly interesting that you conclude that meaningful change will only come through further regulation. Keep up the good work…

  9. Nataliya says:

    I’ve commented before, so I apologize for repeating myself. We are very much in love with everything Urbandale has to offer and cannot wait for your new phase in Kanata Lakes. Having renovated homes and visited many other builder’s properties, we cannot believe the low quality of everything that today’s consumers are paying for. It is such a shame. That is why we are even more impressed with Urbandale and your commitment to going green/using better materials overall.

    Hopefully your new release in Kanata Lakes will include Jazz condos! I have my heart set on the Horizon Harmony model :)

  10. Julie says:

    Hi there, after watching Holmes on homes I was wondering when urbandale will use spray foam insulation on the above garge floor instead of the leaving the gap with heat duct. There is a big concern that if any seal is not done right like around electrical or lights that carbon monoxide could accumulate in that space and send co2 in the air ducts to the furnace and hen back thru the whole house. Seems like a risky practice and the spray foam is so much more effective and we would end up with higher garage ceiling by doing this way.

  11. Matthew Sachs says:

    Hi Julie,
    That’s a great question and something I’ve looked into in some detail. In fact, if you don’t mind I’d like to use your question as the basis for a full article, since the answer is a little lengthy. Please check back in a couple of days and I will post a full response to this question.
    Sincerely,
    Matthew

  12. Nice post!This is a great information it can help me, thanks for sharing.

  13. Thanks for the share of useful information.

  14. Nice information. This post is going to be very helpful for a lot of people. I really appreciate your concern for others.

  15. Peter Shepherd says:

    Thanks very much for the article & answer to comment #3, which would have been my question.

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ABOUT THE AUTHOR:

Matthew Sachs

B. Eng. LEED AP

  • General Manager of Urbandale Construction since May 2008
  • Vice-Chair R-2000 Renewal Committee
  • Member of Energy Star Technical Advisory Committee
  • Greater Ottawa Homebuilders Green Committee
  • Recipient of Canadian Homebuilder’s Association 2009 R-2000 Builder of the Year Award
  • Participant in Natural Resources Canada’s Technology Roadmap for Sustainable Housing
  • Energy Consultant with Marbek Resource Consultants (Feb 2002 – May 2006)

ABOUT URBANDALE CONSTRUCTION:

Ottawa's Quality Homebuilder for 30 Years. Building R-2000 and Energy Star Homes in Kanata Lakes, Riverside South, & Bridlewood in Ottawa, and in eQuinelle in Kemptville. For more information on Urbandale Construction, please visit www.urbandale.com.