By Gabrielle Fuerst, CAP Management
Sustainability is no longer just a buzzword in today’s real estate market. It has become a key factor significantly influencing property buying decisions. Understanding how sustainability initiatives impact property values has never been more crucial. Encouraging associations to pursue sustainability projects is not only ‘the right thing to do’, but is provides material financial benefits that result from energy - and water -saving projects. This allows HOAs to spend their money more wisely on preventative maintenance and other capital improvement projects, rather than excess energy costs. Additionally, projects associated with resource conservation tend to have short payback periods, often less than 10 years, especially if the association takes advantage of federal tax credits such as the Federal Investment Tax Credit for solar. As a result of the Inflation Reduction Act, this tax credit and many others are now available as direct payments to HOAs, whereas before, HOAs were not eligible.
A second, more intangible financial benefit can be found in the increased property value from these building improvements. Energy efficiency and renewable energy technologies may be expensive to purchase and install up-front, but they reap continuous benefits for the entire useful life of the equipment. These additions thereby offer added value to the resident, who will benefit from decreased energy costs and rebates for electricity production for years to come. These improvements prepare communities for the future and enhance their resilience in the face of an increasingly unpredictable climate. What do these increases in property values amount to?
The Value of Going Green
- Installing Solar Panels
- Energy Efficiency Improvements
- Green Building Certifications
- Electrification Programs
A property can see a 3%–4% boost in value with the addition of solar panels. This means that the value of a $300,000 home will increase by $9,000 - $12,000. Denver, with its ample sunshine and supportive incentives, is particularly well-positioned to benefit from solar energy. According to the National Renewable Energy Laboratory (NREL), solar installations not only lower reliance on traditional energy sources and provide long-term cost savings on energy bills, but they also make properties more attractive to environmentally-conscious buyers.
Upgrades such as high-efficiency HVAC systems, new windows, and advanced insulation can boost property values by 1% to 5%. Practically, this means an average home can see added value of $8,000 - $20,000. Cities that have strong energy efficiency programs like Denver report significant benefits from these improvements. Energy-efficient homes are not only more appealing but also promise lower utility costs—a major selling point for potential buyers (ENERGY STAR) (Energy.gov).
In Denver, LEED-certified properties can experience an 8% to 10% boost in value, as a result of the growing demand for sustainable and energy-efficient buildings. These properties often command higher rents and resale values, reflecting their enhanced marketability and reduced operating costs (Vert Energy Group) (Sysconverge) (ULI Colorado) (Rocky Mountain Institute).
Electrification measures, such as modern electric heating and cooking systems, can increase property values by 2% to 6%. In cities with advanced electrification programs like Denver, this impact is even more pronounced. By converting fossil fuel-burning appliances to electric power, homeowners can enjoy reduced utility bills and cleaner, more efficient energy use. This shift aligns with broader trends toward energy efficiency and sustainability, further supporting property value increase (Schneider Electric Blog) (Rocky Mountain Institute).
Why It Matters for HOAs in Denver
With these sustainability initiatives, HOAs can capitalize on the growing demand for green homes, improve marketability, and reduce operating costs through available incentives.
Sustainability is not just a trend but a strategic advantage in the real estate market. By investing in solar panels, energy efficiency upgrades, green certifications, and electrification measures, property owners and HOAs in Denver can significantly enhance property values while contributing to a more sustainable future. Stay informed about local market trends and available incentives to make the most of these opportunities.
Gabrielle Fuerst is the Chief Sustainability Officer of CAP Management and helps CAP’s properties navigate relevant legislation and implement resource-saving projects. Merihan Ahmed is an Impact MBA Fellow with Colorado State University’s Impact MBA program, which focuses on using the private sector for social good and proving the business case for sustainability.
