Square footage still trumps eco-friendliness

EcoUrban LEED Platinum home in St. Louis, Mo.

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Tess Vigeland: At the peak of the housing crisis, many industry-watchers were officially declaring the era of the McMansion over. Well, as the economy gradually shows signs of recovery, home buyers appear to be saying that square-footage hasn't lost its luster just yet.

As Adam Allington reports from St. Louis Public Radio, a glut of cheap properties is keeping smaller, more energy efficient houses on the market's fringe.


Adam Allington: It seems like a long time ago already, but back in 2008, $4 a gallon gas had everyone looking to cut energy costs, including home owners.

It was during this time when Jay Swoboda had a big idea. Together with a group of investors, Swoboda formed EcoUrban, a modular-home building company that designed and built small, energy-efficient homes, around 1,000 square feet. He says right away the feedback from focus groups was not encouraging.

Jay Swoboda: 1,600 square feet was about the minimum that people wanted. They wanted three bedrooms, two baths, all on the same floor and it was just impossible to meet that demand. And so we were quickly educated away from our initial thought.

As gas prices fell back around $3 a gallon, Swoboda says buyers were still turned on by the idea of energy efficiency, but were not willing to sacrifice space to get there.

Swoboda: People are going for the square footage, hoping to do the energy efficiency improvements in the future. I don't see them actually doing them on the front end to reduce that footprint up front.

Today, one out of every 13 houses sold is new construction. Still, despite the odds, many home builders are embracing energy efficiency and square footage, and they're doing it with a variety of next-generation technology.

Vihar Sheth: Hey, how are ya?

Allington: Hello! Hi, I'm Adam.

Sheth: Vihar, nice to meet ya.

Vihar Sheth just moved into a platinum-certified LEED home in south St. Louis. At over 3,000 square feet, the house is big by any standard, but this is no McMansion.

Sheth: Almost everything we picked was green. The exterior is a fiber cement, which is a recycled product. The windows are all super energy efficient, all the paint is no-VOC, so there's no chemicals. All the cabinets are made locally with soy-based and water-based stains.

Sheth's house cost nearly twice as much as similar-sized properties on his block, but he's hoping that the upfront costs are worth it in the long run.

Sheth: It's more expensive, but you know, what you're paying upfront is for the soundness of the structure, for the greenness, for the lack of thermal breaks and the tightness of the building. And so hopefully, you will recoup that through energy savings.

That is precisely the attitude that home builders are hoping will gradually push energy efficiency into the mainstream. In the meantime, all those faux chateaus that seemed like such a bad idea at the peak of the housing crisis, well they're still here.

Steven East: There has been a lot of talk in the press that the McMansion is dead and consumers are now permanently wanting smaller homes, etc. There's nothing in our research that indicates that's the truth.

Steven East tracks national home builders for Ticonderoga Securities. He says that by and large, home builders are not willing to trade upfront cost for long-term savings.

East: The sweet spot is anywhere from two to five years. If they can't see a legitimate payback in that time, they won't do it. They would much rather go toward the granite countertops. There's just not a big enough green push in the U.S. for people to pay out of their pocket for it.

Still, East does agree that as costs come down and building codes get tougher, energy efficiency will become the standard.

And if you don't believe him, just ask Martha Stewart. The domestic trendsetter is collaborating with KB Home to offer a line of environmentally friendly houses, complete with solar panels, compost bins. There's even an option for an electric car charger.

In St. Louis, I'm Adam Allington for Marketplace Money.

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