"The current fight over how we should pay for affordable housing, and who will fund it, is beating on the wrong drum."

Social and environmental impact investing and businesses continue to capture the interest and imagination of the Pacific Northwest, part of a broader global trend. Local early adopters affiliated with Element 8, Impact HUB Seattle, Seattle Impact, Mission Investors Exchange and other institutions and individuals have forged impact investment paths that many others now find themselves traveling. It’s exciting to see the local impact investing ecosystem and communities flourish. However, a market imbalance persists with more impact investor dollars available than the limited number of qualified investment opportunities can absorb. Fortunately we’re seeing signs that the supply of impact investment opportunities is starting to catch up with demand from impact investors.

Green Canopy is an example of an impact-investor funded company that has been fueled by local early adopters. The company operates in a commodity industry: designing and building single family homes. However, we have been fortunate to attract thoughtful, impact-motivated equity and debt investors, due in large part to our mission, vision and values focused on achieving long term positive environmental and social change while simultaneously pursuing solid financial results.

Since 2011 Green Canopy has acquired nearly 90 projects; steadily building a community of homeowners, real estate agents, employees, shareholders and fund members that share our passion to inspire resource efficiency in residential markets. Importantly, we pursue our mission while being uncompromising in achieving key sustainability metrics, paying our employees a fair wage, selling our homes at fair market prices and generating long term shareholder value. Green Canopy has an opportunity to demonstrate it is not only possible, but highly rewarding for all involved to create and operate under a business model predicated on shared, blended value creation.

Similar opportunities are emerging across a wide spectrum of investment strategies that seek to satisfy growing consumer and investment demand for highly impactful market-driven solutions. As Seattle continues to attract tens of thousands of employees each year to fill quality jobs at companies like Amazon, Nordstom and Microsoft, our entire region feels the benefits. And yet, we are all faced with the unintended consequences of the additional infrastructure needed to support increased demand for critical services, including affordable workforce housing. The current fight between the City and the Coalition for Sustainable Jobs and Housing over how we should pay for affordable housing, and who will fund it, is beating on the wrong drum. Neither side seems to be asking the right questions or putting forth a broadly acceptable or effective solution for quickly increasing the supply of affordable workforce housing. 

One example of an alternative solution is Bellwether Housing’s recently launched Seattle Futures Fund. Bellwether has successfully developed and managed affordable workforce housing in Central Seattle for 35 years. However, as affordable housing has become an increasingly rare commodity in the communities Bellwether serves, the organization has had to innovate how its projects are financed; necessity = the mother of innovation. Through the Seattle Futures Fund, Bellwether believes it will more rapidly scale the number of units available to house social workers, teachers, baristas, police officers, firefighters, government workers, data center workers and others that serve our communities. A potentially wonderful, local example that attracts private capital as part of the solution to develop housing that is affordable and accessible to our urban working families.

As a community, we must collaboratively develop innovative, smart, market-driven solutions to problems that impact a wide range of constituents. Hopefully, a greater supply of viable impact investment opportunities for investors to assess, like Bellwether’s Seattle Futures Fund, will be forthcoming in the near-term. In the meantime, we would encourage investors and entrepreneurs alike to continue viewing our social and environmental problems through the lens of impact opportunity.


Contributed by Kyle Mylius, Board of Directors for Green Canopy, Inc. & Aaron Fairchild, CEO of Green Canopy, Inc.

Recently I was asked by a neighbor if I knew any custom green builders. Ahem! I proclaimed - I just so happen to work for one! What can I do for you? They were interested in building their very own green home in the near future and were currently saving to buy property on Bainbridge Island. Great! Let me know when you're ready, I said - and I can get you started. 

My neighbor's next question is one that we get often. How do I know if a builder is a green builder? Do they have to be LEED Certified? To which I replied... first of all - buildings are certified, people are accredited. What you really should look for when searching for a green builder is whether or not those sustainable business practices are embedded in the culture, their people and their product. But also - LEED, while it is an incredibly robust program, is not the only green building guideline out there. In fact - Built Green carries many advantages in our region. It's tailored to the needs of the Pacific Northwest - and is incredibly in tune with the builder community here.

Of course my neighbor had never heard of Built Green - which goes to show that the USGBC has a great marketing budget and a good hold on the market. Still - any green builder should be familiar with both - and that was my point.

In light of the conversation with my neighbor - I decided that I would post our latest Built Green Case Study that was submitted to their newsletter. Every Green Canopy Home is Built Green Certified, but this one was a particularly amazing rehab project that presold in Ballard. We were happy to work with Evergreen Certified to get the job done and truly believe that Built Green is a critical brand and program in the Pacific Northwest.

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CASE STUDY
ARABELLA: 6527 5TH AVE NW

What can you do with a harsh, stucco-clad bungalow in Ballard? This 1911 home was thoughtfully reimagined by Green Canopy Homes and reconstructed into a charming yet modern home with light and bright spaces, a stunning communal kitchen addition and vestiges of reclaimed features throughout.  

This 4 star Built Green Home, nicknamed Arabella, was gutted and rehabbed – maintaining 75% of the original structure. The project was carefully deconstructed, with building materials source separated and recycled on site. This process allowed the team to harvest framing lumber to reuse as a feature wall – highlighting the history of the original home. 

Arabella was in desperate need of systems upgrades and originally tested in at an EPS score of 37,000kWh per year – nearly 10,000kWh over the Seattle average. Green Canopy replaced each system, incorporated a ductless heat pump, rigorous insulation and air sealing as well as spot Energy Recovery Ventilators to maintain fresh air in the new super tight envelope (3.7 ACH @50 Pascals). The project finished out with and EPS score of 16,000kWh, reducing energy costs by over $1,400 a year!

In addition to deep energy efficiency upgrades, Arabella exemplifies intelligent site design and finishes. Drywells and a rain garden infiltrate 100% of storm-water on site, and the new addition’s low impact, post & pier foundation minimizes site disruption.  Arabella’s stylish “pickled” cedar siding was dipped in a natural wood treatment that never has to be reapplied and patinas for protection. Better for the environment, and less hassle for the happy new homeowners!

Whether you are in the market for a green home, interested in building your own - or just looking for builders - it might be important to know whether that builder is leading the movement - or just following market trends. All green builders in the area should be keenly aware of the certifications, accreditation, and sustainable business practices such as deconstruction and recycling. The kinds of homes we build and the intentions of the people who build them impact our community, so ask questions

Contributed by Krystal Meiners

Good conversations are typically born in the company of good people. 

That was the driving thought when we created the Empower Happy Hour at the beginning of 2014. We wanted to have good, meaningful conversations with people outside of our own organization (because frankly we were all preaching to the choir internally and were probably consuming too much booze just to keep things interesting). What we didn’t want, however, was to host a formal event, or a networking opportunity. We wanted to have real conversations with interesting people, so the Empower Happy Hour was born.

The format of these events have always been the same… low key, in a bar, no nametags, no soapboxes, no formally led discussions – just a topic to unite us, an amazing sponsor and an impactful non-profit. Each event has been unique – but the most recent one in Ballard was especially inspiring and a great indicator for successful future events. We are truly thankful for the opportunity to have hosted with Sustainable Ballard and we were especially grateful to our sponsor Redfin Builder Services.

While this event was a bit different from our other Happy Hours - there were a couple of key ingredients that helped mold it into something very special and eye-opening.

1. An AMAZING question. 
Our non-profit cohost has always provided a topic of discussion for our happy hours – and Sustainable Ballard really hit it home with their topic.

a. Does Density = Sustainability?
b. Does Sustainability = Density? 

This two-parter really has a huge impact in Seattle right now and is on the tips of everyone’s tongues. Despite the "breathing room only" crowd – the quality of conversation was fascinating. Not everyone chooses to talk about the topic during our happy hours but this really captured the attention of many including Councilman Mike O’Brien who was discussing Ballard’s new apodments – considered both a scourge and blue-sky solution to housing in Seattle.

The rest of the conversations spanned walkability (a fun topic in light of Redfin’s recent acquisition of Walkscore) – as well as Ballard’s most recent developments and the addition of quality locations to eat, shop and sip. The idea of a “carless lifestyle” as the new definition of luxury was a spirited thought when considering the changing mindset toward livability in times of climate change and a return to urban living.

Not all of the conversations were light-hearted. Serious attention to community wants and needs and the impact of more density on transportation was a common topic; as was the builder-bad-guy issue with neighbors. Not everyone loves the way development looks, feels and changes a neighborhood – so thoughts on working with community were abundant. In particular - discussions around Green Canopy's new Neighborhood Design Survey and community meeting approach were inspiring to neighbors that had visited the event.

2.  Another key ingredient to the success of this specific happy hour was the LOCATION. 
We went against our own rules and decided to host the event in a small event space – but to keep it lively, we started off with drinks at the nearby Skillet – and then moved indoors. While it may have been difficult to corral folks - no one was lost and the “bar-hopping” effect made the event feel less stiff. 

Aside from just the venue – the fact that the event was held in Ballard – a community common to our hosts, co-hosts, sponsors and mired in the topic at hand – made it easier to talk about density relative to where we were all feeling excitement and pain. The Greenfire Campus was a perfectly inspirational space with only enough room to kiss or kill whoever you were speaking to. Skillet made for the perfect pre-funk, and Parfait made for the perfect after-hour snack.

We were very excited to host this event with Sustainable Ballard and Redfin. The event lasted well past our 6:30 cutoff and folks lingered having friendly discussions. While there was no Bocce, like our previous event at Von Trapps, and there was no policy big-wigs like our event with Climate Solutions – it was intimate, refreshing and exactly what we could have hoped for.

We definitely look forward to hosting many more Empower Happy Hour’s, and aim to keep them simple, sexy, and substantial. We hope you will join us the next one to help ADVANCE THE DISCUSSION.

The Empower Happy Hour is a quarterly event hosted by Green Canopy Homes. If you are interested in sponsoring the event or if you belong to a non-profit that is interested in co-hosting, please contact krystal@greencanopy.com . If you are interested in joining the event – please sign up for our Newsletter to receive updates on event dates and venues.

Contributed by Krystal Meiners

As we gear up for the November Empower Happy Hour, I am excited to write an article that relates to the topic of Density.

Density is one of those subjects that can be mired in analytics – but it is also a very real phenomena that hits many hearts and can have an extreme impact on the life of a community. It has the capacity to improve or ruin neighborhoods – so it can be especially hard to know if you are doing it right.

One of my most recent and favorite density conversations was this past September at the Built Green Conference. The discussion was focused on enhancing Walkability in the suburbs by increasing the number and quality of connections between where people lived and where the wanted to go. The reason that I loved the conversation so much was because it completely challenged the notion that density does not exist in the suburbs.

Niko Larco, a professor from the University of Oregon and author of the book Site Design for Multifamily Housing: Creating Livable, Connected Neighborhoods, was the conference keynote. His address proposed that we take a new look at suburban density to see how we can make improvements in the walkability of what is currently existing. What he wanted to challenge was the idea that “No one walks in the suburbs”. Because, seriously… no one walks in the suburbs right?

When people think about the suburbs – they often think of sprawling single-family homes and whirling subdivisions that have no exits. It is true that this landscape exists a great deal in the suburbs and that this low-density development tends to blight  the countryside.

What we often glaze over, however, is the existence of real density. What Larco showed in his presentation was that DENISTY DOES EXIST in the suburbs. Maybe not in the single family housing that we are so familiar with – but perhaps somewhere else. What we are missing is that medium-density apartment developments are also a huge part of the suburban landscape and have been since the 70’s. While the analytics of density might point to extremely low ratios in the suburbs – the fact is that there are dense micro-developments that rival even the densest downtown core.

In fact, Larco and his students did a great study on walkability in the suburbs and surveyed hundreds of residents that live in apartment complexes throughout America. What they found was that, absolutely, people do walk in the suburbs. They walk to the convenient stores, they walk to the grocery store (even if it is through paths paved from hundreds of trips through the buffer zones), and they even knock down fences in an effort to get from point A to point B.

I recall this kind of “suburban connection” from my youth. Particularly one that connected the woods behind my grandmother’s house to the back of the Dairy Queen. If we would have taken the paved route to this coveted location, it would have taken us three times as long to get our frozen treats – so we blazed trails, we pulled apart the fence and trampled through the poison ivy.

Now – while this kind of density isn’t what you would normally think of, and this kind of Walkability isn’t the type of trip that will show up on Walkscore – what I do love about this conversation is that it is about something more organic. It is about community-driven design in a sense. It is about people letting designers, planners and developers know what they want and where they want it.

It is about taking charge of your community. And that is really what this density conversation should be about, right? How can we enable the neighborhood to take charge of their community?

Larco has recently began working with apartment developers to give them a “recipe” for creating successful connections in and out of their development. Where these developers once built with blinders on – they are now noticing that, “hey, I don’t have to put up a fence around the whole property because there is this Pizza place right behind us.” And that saves money right?

It should and could be the same thing in any neighborhood. At Green Canopy we have recently taken steps to develop more community-driven designs. Our community meetings have become more robust – and our feedback is really changing the way that we design and develop properties. It is hard to marry what the neighbors want with what the market wants – but at the same time – there is no need to knock down fences, right?

By Aaron Fairchild, CEO/Chairman of Green Canopy Inc.

The outcry against residential in-fill has reached a fevered pitch in Seattle. Neighbors are yelling at homebuilders, each other, the city, and anyone who will listen. The themes are relatively consistent; opposition to modern homes, bigger homes, added density, or the fact that projects are unaffordable to existing residents. Builders, on the other hand, are simply trying to build what the market demands – and that may well conflict. But, is the fevered pitch, and ill will around new in-fill developments in the Seattle area necessary, or is there a way to work together?

As someone on the front lines of the neighborhood hostilities trying to do business in a new way, I think there is.  By engaging with (and listening to) neighbors and being transparent about planning and decision-making beforehand, infill housing can become a welcome and community-forwarding endeavor. 

Having heard the angry outcry, and with a focus on continuing to build a human values-based business that contributes to communities, here are a few ideas for how this could be done: 

• Listen, really listen, first. Changes within a neighborhood can be emotional for many. When you recognize that going in, even hearing concerns starts to build a trust pattern. While plans are still conceptual, hold a community meeting to receive input on the direction of your design.

• Engage along the way. Especially with topics like sidewalk closures, site work, paint colors, etc. (We use Tumblr quite a bit on this front) Updating the community using a community blog demonstrates awareness that the developer is entering into an established norm of how the neighborhood functions. 

• Acknowledge feedback and make Changes. When neighbors really see a result of their comments, whether as acknowledgement or in changes to the plan, trust is solidified, paving the way for the best possible relationship with the community throughout the construction process, and helping the new homeowner receive a much warmer welcome.
  

How is this good business? Engaging the community while building in close quarters with neighbors helps minimize angry calls and letters to the city, intense verbal discussions with subcontractors, and creates a much better work environment for everyone. By approaching our own projects in this manner, we’ve had neighbors bring us warm coffee, cookies, and offer to help. Our homebuyers are a welcome addition to the neighborhood versus being seen with skepticism and mistrust by association. All of this work helps create positive association with our company name and ultimately helps sell our homes.

In this day and age of transparency, builders really can’t “bulldoze” their way into a neighborhood.  If neighbors and builders alike can remain open to each other, listen and engage, we should all be able to learn together how to effectively rebuild our aging infrastructure, honor our past and lay the groundwork for a thriving future in Seattle.

This piece was written in response to a thoughtful article from Seattle Weekly entitled "Boomtown Brawls" by Nina Shapiro. 

Contributed by Aaron Fairchild, CEO of Green Canopy, Inc.

We work with hundreds of Real Estate Brokers in the Seattle market to efficiently rebuild our city from the inside out. Internally at Green Canopy we consider the Real Estate Broker community to be Agents of change and transformation. We offer monthly education for Real Estate Brokers to not only help them understand the benefit of resource efficient homes, but to also help them understand the importance of the global and national challenges we are combating through our collective work together. Together, we sincerely and ideally believe that we can change the face of our city and the nation for generations of residents in the years to come.

To increase the awareness of this highly important work, we created the Green Genius Awards. These awards recognize the top ten Real Estate Brokers in our community that have transacted in the most certified green home sales over the course of a year. The Green Genius Award itself is given to the number ONE Listing Broker and the number ONE Selling Broker that represents buyers of certified green homes. We do what we can to promote these award winners throughout the community and create awareness for their Green Genius prowess.

This year’s panel of judges include Maryanne Coffman from 1st Security Bank, Sarah Ealey from Built Green, Kevin Peterson from Puget Sound Energy, Ann Sammon from Green Canopy Homes, Dustin Van Wyck from Windermere, and Ben Kauffman from KW GreenWorks.

Each agent was assessed based on 5 things:

• Total Number of Sales or Listings

• Project Impact: how important was that project to the neighborhood context, what level of certification did it complete, how innovative was the project, etc.

• Marketing & Awareness: How much exposure did this project get beyond the MLS? Did it include its certification level in the marketing remarks? Did the marketing include promotion of features beyond the certification and appliances to show value in the building innovation?

• Project Exposure: Are the projects and their brands highly visible? Did the builder also promote their own project and was it promoted on the BuiltGreen website?

• DOM: Days on Market. This is typically a good indicator of increased awareness and anticipation of a project. For a Selling Agent, however, we did consider the extra effort that needed to go into selling a green product that may have sat on the market either due to neighborhood sales velocity or poor pricing.

Green Canopy is especially proud of all of the agents that have made the Top 10 this year and the agents who continue to work toward a greener and more sustainable community. This year the #1 Listing Agent and the #1 Selling Agent will win several exciting prizes.

TreeHouse Point B&B, Issaquah WA
The award prizes will include:

• A 2 night stay at TreeHouse Point in Issaquah; a unique Bed and Breakfast with Treehouse cabins

• Dinner with the CEO of Green Canopy at a local Pacific Northwest Restaurant

• A $200 donation to Arbor Day Foundation in the Agent’s name; for every dollar donated, a tree is planted… that’s an entire forest!! Each tree represents 911lbs of carbon sequestration every year!*

CONGRATULATIONS TO THIS YEAR’S TOP 10!

Top 5 Selling Agents:

• Winston McClanahan Redfin Corp.

• Joe Hunt Redfin Corp.

• Matt Snell Re/Max on the Lake

• Jeffrey Parker Windermere R.E./ Capitol Hill

• Jane Maxson Coldwell Banker Bain

Top 5 Listing Agents:

• Jay Miller Keller Williams Downtown Seattle

• Susan L. Stasik Windermere R.E. Madison

• James Dainard Heaton Dainard LLC

• Kari Collins Keller Williams Greater Seattle

• Darcy A. Walker Conner Real Estate Group, LLC

*Carbon sequestration information available here

Contributed by Krystal Meiners, Marketing Manager for Green Canopy, Inc.

Even though I am the Marketing Manager for a builder (AKA the Marketing GENIUS or self-proclaimed M-architect) – I don’t pretend to know the many nuances and facets of the WORLD of real-estate marketing and I don’t pretend to assume that we do a great job of it ourselves. What I do know is that we try really hard, and working with agents has given us a 1-up. From what I can tell marketing for real estate can get pretty complicated – and the rewards of your efforts are not always measurable.

To do it well, real estate agents have to be graphic designers, web designers, bloggers, social media gurus, public speakers, PR aficionados, salesmen(women), community activists, construction experts, design experts, neighborhood experts… the list certainly goes on.

What I also know – is that Agents have a world of tech at their fingertips to make their jobs “easier” (harder) and “less complicated” (super complicated). There are a million different ways to connect with clients and my feeling (totally un-researched) tells me that most of this is happening online.

In an effort to understand this phenomenon and to try and keep up with our Agent associates I have been trying to do more research. One of our Certified Energy Agents recently kicked this my way, and I have to say – I LOVE IT! These guys are apparently pretty hot in the real estate biz and they host an outrageous Google Hangout (yes people use Google Hangouts! WTF) about Real Estate Marketing. Their live video chats and interviews have been translated into iTune’s #1 Business Podcast - and for good reasons.

Chris Smith is entertaining and whip-smart i.e. not boring at all. So, take a minute or 45 and Watch/Listen/Learn about what you could be doing to boost your marketing efforts from these pros at the WaterCooler. Their live show airs every Wednesday evening at 9:15 EST and if you can figure out your Google+ Account, you can join them or watch them here.

You can also catch all of the past episodes on their Youtube Channel.

I have been writing for months now about the lack of supply in our market. As a result of the limited supply the market made a radical shift around this time last year from a being a buyers’ market to being a sellers’ market. Currently it is not uncommon for us to receive multiple offers on our homes, or for them to sell over our original list price. This begs the question, how long can this last?
Inman reports that homebuilders are beginning to kick it up a notch and build more homes in response to the lack of supply, and yet 90% of home sales in the U.S. are existing home sales, or re-sales. It is my belief that, in Seattle, the market will continue its heated rate of appreciation fueled by the supply constraints; however it will slowly taper off as home values continue to climb. When existing homeowners begin to realize greater equity, they will begin to have the ability to sell their home and use the proceeds to buy a better home. As more and more homeowners contemplate selling and begin to take action, the lack of supply will gradually disappear and supply and demand will equilibrate. When that comes to pass home appreciation rates will level off and normalize.

Given that Seattle has an unemployment rate under 6% it is hard to say just when supply and demand will come into balance. This is still one heck of a desirable town to live in and it seems like the majority of our homebuyers are coming from out of town for job related reasons. As the local unemployment rate continues its decline toward full employment, home values will continue to rise fueled by more demand than supply. Given this influx of homebuyers into the area we could be realizing an appreciation trend line that will outpace the rest of the country for months to come.

We are proud to highlight a dialogue with two of our wonderful Energy Agents this month, Kris Murphy and Daniela Dombrowski. They will be listing our first ever NetZero homes, Sol and Solange!

1) Both of you have taken very different paths to becoming real estate agents. How has your background prepared you for this?

Kris – My degree and early work experience was in the hospitality field, so customer service has always been the central focus of my career. Following that I worked for a software development company in a client services capacity.  The technology and customer service skill sets have provided a very solid foundation for real estate.  The industry has become extremely “techy” in the past several years; however the need for customer service skills will never go away.

Daniela – My educational background is in art and architectural history as well as languages. However, like Kris I ended up in the software industry (12 years at Microsoft) working with vendors around the world on the internationalization of Microsoft Office products as a localization program manager. Therefore, Kris and I approach real estate very much from a very systematic project management method with the goal to let nothing in the complex web of tasks fall through the cracks. “Death by Flow Chart” if you get my drift …

2) What gets you excited about Seattle Real Estate?

Seattle is in the throes of change!  Between light rail, rezoning, new architecturally interesting dwellings and the whole “green” movement, there is never a dull day.  We pride ourselves in being Seattleites, embrace the urban village lifestyle, and are excited to be part of all the on-going and coming changes as the city continues to evolve. Growing up in Germany which is a model for green and energy efficient building methods, Daniela is excited to see these changes (finally) coming across the ocean.

3) How do you differentiate yourself and your brand?

Nothing gimmicky.  We have worked extremely hard to build the track record we have today, and pride ourselves in extremely high standards which are reflected in everything we do.  When potential clients see our on-line or printed materials, or walk through our listings, they immediately see the difference in both detail and quality.  We understand that leaving out small details can cost our clients many $$$ and we take that responsibility seriously.

Real estate to us is as much art as it is a science. Anybody can look up sales data, hire a stager and a photographer and put a listing on the MLS but to us every client and every home is unique and from the choice of the stager to the meticulous choreography of the photos - of the home as well as the surrounding area attractions such as parks, schools, coffee shops, grocery stores and coffee shops -we attempt to capture the essence of each home and the lifestyle that goes along with it.

At the end of the day, we pour our hearts and souls into what we do (sometimes to a fault ;-) and have a lot of fun working together – despite the sometimes heavy workload there is a lot of laughter around every day. This love & passion for what we do inspires & transpires to our work. So really our brand is who we are as people and human beings.

4) How does green and energy efficiency make an impact in your work as a Seattle Real Estate Agent?

We are always striving to expand our knowledge in these areas.  Once you learn about the impact green features have on an individual and a community there is no turning back.  We find that the green knowledge finds its way into all real estate conversations even if just advising a client on how to make their old drafty (yet charming) home more energy efficient and making them aware of the many resources, programs & incentives that are available.  We find we are a much more valuable resource to our clients and spheres having this knowledge and we feel very fortunate to live in a city that promotes and supports these principles politically and like to see Green Canopy pushing these issues forward.

5) What does success look like to you in this market?

That’s very simple: Extremely satisfied and happy clients that come to us with any real estate need, concern or questions they may have and that feel compelled to refer their friends, family and neighbors to us because of the great experience they have had in working with us. That’s why the majority of our business comes from personal referrals and we plan to keep it that way J.

6) You both think outside of the box. What are the most creative projects you have taken on and how have they panned out?

A few years ago, we had the opportunity to market a home of significant architectural history.  The home was built in the 50s by a visionary single woman who was the head of the Interior Design Department at UW for almost half a century (from the 20s to the 60s). She is credited with founding the Northwest Contemporary style by bringing “Modern” to the Northwest and merging it with local materials and Eastern themes.  She camped on the land for many seasons before breaking ground to find the perfect orientation of the home, and the finished product was very “Frank Lloyd Wright” in style. You felt as if the structure simply grew out from the ground; that’s how well it was integrated in the surrounding landscape.

This was a very unusual home for this particular neighborhood, so it was important that we ventured outside the usual channels to find our audience; and find them we did.  We had 60 brokers show up for our opening broker’s lunch/open house.  We took a chance, knowing this property was very special, and found ours comparable in different neighborhoods.  Our list price was approximately $300,000 over the neighborhood expert’s pricing recommendation and it sold almost at that price. But more important than the final sales price, it was a true honor and pleasure to have the opportunity to delve into such an important part of local architectural history. That is also why we love working with Green Canopy on their projects and see dilapidated properties restored and reinvented for the 21st century.

7) What do you see in the future of the Seattle Market and the real estate profession?

Smaller footprints, sustainable materials, low maintenance, simple clean lines, increased energy efficiency. “Green” will eventually go mainstream and become the new building standard. Clients are already asking for these features; they don’t want to spend their whole wad on their dwelling but also do other things such as travel or have another little cabin in the mountains or on the water, be part of an active community where they know their neighbors rather than being locked behind gates. At the same time, they want high quality materials that will stand the test of time and be responsible with the earth’s resources for a better future of the planet.

8 ) Please highlight a project you’ve done with us; whichever one you get the most excited talking about!

We are super excited about the upcoming Twins project in Tangletown.  Having a new construction, single family, net zero project in the neighborhood where we live and work, really gives us something exciting to talk about.  It involves more learning for us and in turn provides an opportunity to do educational community outreach about a deep green project powered by solar energy.  Sol and Solange we can’t wait to show you to the world!

Contributed by Sam Lai:

Is there such a thing as a Green Premium?This is one of the more controversial topics in the residential green development realm.  From the residential green and energy efficient advocacy perspective, we all want the answer to be unequivocally "YES!  There is a HUGE premium."  Numerous  consumer surveys comport that a majority of Americans want green homes.  But I’m not so sure the "Green Premium" is the most accurate way to describe positive consumer response.

Let's start from what most people think of when we say "Green Premium."  For example, Joe the builder just finished up on an Energy Star-certified and 4 Star BuiltGreen-certified home.  Joe's home is at the tip-top of the local market in terms of marketable appealand functional utility.  There are plenty of conventional high quality homes that have recently sold in the immediate vicinity of similar design, appeal & functional utility for $815k, $822k, $830k & the highest sale in the area $835k.  Joe and his real estate agent decide that the home might be worth about $830k if it wasn't green.  But they decide that because there is a "Green Premium" of 6% based on a recent research study, the market value of the property should be $880k.  The definition of "Green Premium" from this example is the premium a green home yields above the competitive market.  This is a great way to not sell a house.

The question of whether or not there’s a “Green Premium” reminds me of a scene in a mockumentary movie “Spinal Tap”, where guitarist Nigel asserts that his guitar amplifier goes to eleven.

Every market has an upper threshold whether you call it 10 or 11.  From a valuation or banking perspective, if a home is superior to the rest of its market it is overbuilt because at some point the market stops responding.  Although most consumers in America desire green characteristics in their next home today doesn't mean that they throw all other deciding factors aside.  Green characteristics are weighed alongside all other distinguishable marketable characteristics including price, functional utility, aesthetic appeal and quality.

Speaking of quality, how does the market distinguish quality in residential homes?  I would assert that our homes can be seen as an emblem of the leading cultural values of the moment.  In 1999, common characteristics for what was considered high quality new construction home would be 5,000 sq ft of living area, master suite with whale size soaking tub, “drive-through” shower and of course a gourmet kitchen with Viking range and Sub-Zero refrigerator.  Shifting values of our time are reflected in the kind of quality buyers are looking for today:  energy-efficiency, ‘quality over quantity’ and low-toxic finishes.

So, is there such a thing as a “Green Premium?”  Or, does it go to 11?  Sure, call the “tip-top” whatever you want.  We believe that green characteristics will continue to be the hallmarks of quality in residential homes into the future.  We just need to remember that people primarily buy homes for location and you can’t just slap on a “Green Premium” and expect the market to agree.   Do you agree?

Contributed by Aaron Fairchild:

Buckle up, there will be turbulence
“Plunge in Home Sales Stokes Economy Fears” WSJ article said the following about the national real-estate market on Wednesday, August 25, 2010:

• “Sales of previously owned homes fell 27.2% in July. . . Lowest level since (NAR) started tally in 1999.”

• “Economists say sales drop…means another drop in housing prices is on horizon.”

• “High unemployment and meager wage growth and falling home equity means depressed consumer spending.”

In the same WSJ issue the editorial page reported that national homebuilders’ stocks rallied on Wednesday as the news of the decline in home buying was announced.  Apparently investors believe the time for getting into the real estate market is now, when home prices and employment rates are at or near their bottom.

Is there really a “National Real-Estate Market”?
According to the Bureau of Labor and Statistics the Seattle area unemployment rate in June was 8.6% and holding steady.  Employment in our region is anchored by desirable jobs in growing sectors of the economy.  We live in a beautiful part of the world with plenty of water, mountains and forests.  People continue to move here as the map published by Forbes (June, 2010) illustrates below.  Red lines indicate a net migration away from the city, black indicates net movement into the city.

The last time we saw more people leaving than coming to our state was in 1982 and demographers expect growth in this region to continue as unemployment, poor economies, water shortages, and desertification continue to push people out of other regions of the country.  Additionally, homes in Seattle are more affordable today than they were during the period of our local depression, where 1 in 8 people were unemployed, from 1969 to 1973.

How does all this affect G2B?
Less Competition at Acquisition
G2B continues to believe that in the near to mid-term, property values will remain flat or rise only with the rate of inflation.  This will shrink margins for investors who look to buy and hold.   The uncertainty in our real estate market will continue to drive nervous investors and speculators to the sideline leaving less competition for acquisitions of fixer properties in neighborhoods where G2B thrives.

More Competition at Sale
This situation continues to play to G2B’s strength.  G2B differentiates its homes in the direction the market is trending.  G2B designs comfort, quality, energy efficiency, and green into existing homes in neighborhoods with a strong sense of community.  G2B’s differentiating design appeals to the values that homebuyers are demanding.  The current market conditions only enhance G2B’s edge when competing for precious homebuyers.

Knowing the Market with Deep Experience
G2B knows how to accurately value homes at acquisition and sale.  Having compared and evaluated over 15,000 homes in Seattle’s good and bad times gives G2B the strategic edge needed to exploit opportunity in uncertain markets and create additional value.

We are certainly living in interesting economic times.  Turbulence and uncertainty provides opportunity for smart moves and strong profits.  We are excited about this market and extremely well positioned to thrive!

Contributed by Sonja Gustafson:

This spring, after only 7 days on the market, G2B Homes entered into a sales contract for The Sequoia House!  The final sales price was within .05% of our listing price, so we essentially were able to command our price – an excellent indicator of market response to our product.

As a team, we couldn’t be more thrilled with the fruits of our efforts at taking a neighborhood eyesore and turning it into a lovely jewel of green and efficiency.  Not only is it aesthetically beautiful, the house was certified 4-star BuiltGreen and energy testing revealed a tripling of its per-square-foot energy efficiency!

I could go on and on about The Sequoia House (and encourage you to view our cool Before/After video here) and our innovative, sustainable approach to reviving homes in vibrant neighborhoods.

But what I’d rather reflect upon is the affect this project has had on our team and the full complement of specialists and tradespeople who worked on this wonderful home.  From our beginning “charette” meeting where we invited various experts to the house to give us their perspectives (captured in this KUOW radio story), to the local Eco-Building Guild seminar on air sealing, to the house color vote where 40+ votes were cast by engaged neighbors, the home became a place where people could come to imagine, design, learn, teach, and otherwise get involved in sustainable building. Some 86 tradesmen and women plied their skills during the course of construction, many of whom learned about advanced drywall approach, rain gardens, or solar hot water for the first time and can now employ these skills with future clients.

And it won’t be the last time.  Our team at G2B has proven to itself and to the market that our approach of turning existing homes green in healthy urban neighborhoods works.  It really works - seven days to sales agreement, solid pricing, happy homeowners, and energy savings of 15,000 kwH/year certainly support this point!

We are eager to get working on another home, and another, and another still.  Our team has spent the past weeks documenting best practices, finding ways to be even better next time, and getting ourselves ready to roll.  We are heading out to the investment community to raise the funds necessary to operate our company and bring it to scale.

And I just want to say what a joy it has been to work on this project with such talented and passionate people.   It’s a joy to make this one home consume a mere third of the energy it otherwise would.  It’s a joy to have created not just a house, but a home that a community has touched.  And it’s a joy to be working on sustainable, energy efficient housing in an era and community where these ideas matter.

Post contributed by Sam Lai:

If green, energy efficient homes are so hot right now, then why isn’t everyone doing it???

It seems like everyone’s going green these days.  When you buy your car, a tree gets planted in honor of your purchase, or the chemicals used to dry clean your shirts are “less toxic” than normal.  With every industry scrambling to get to the front of the green line, you would think that the housing industry should be no less affected.  And, with the amount of media attention on green, it would seem to indicate that we’ve reached a saturation point in every sector of society.  However, the availability of green housing seems relatively scarce even in the greenest corner of the left coast.

A recent report was published called the Green Building Value Initiative –Assessing the Market Impacts of Third Party Certification on Residential Properties by Earth Advantage Institute.

The report analyzed the market performance of third-party certified homes in the Portland and Seattle metropolitan areas.  Green homes are commonly recognized as homes that demonstrate a certain level of energy and water savings, CO2 reduction, improved indoor air quality and stewardship of resources.  Prior to the development of any certifications standards, consumers were left in the dark about the actual performance and attributes of homes which were being marketed as green or “sustainable.”  The analysis reports that certified homes in the Seattle metro area sold at a price premium of 9.6% and a 3 to 5% premium in the Portland metro area as compared to non-certified counterparts.  If this is the case, why don’t we see more available green housing stock in our Seattle metropolitan market?  Here are a few thoughts from the perspective of a certified residential appraiser in Seattle (me):

*Green Equals New

Although third-party certification of green homes has been an effective means to differentiate new construction green homes with a greater assurance of quality, certification of the refurbished existing housing stock has been non-existent or extremely uncommon.  Of the 500 homes sold in Seattle in the last 12 months that were marketed as being “green,” only 6 were built prior to 1990.  Of these 6 homes only 1 home was certified as green.  The other supposed “green” homes built prior to 1990 were marketed as having one or two marketable “green” characteristics such as low voc (volatile organic compounds) paint, non-toxic finishes, double-paned windows, energy star appliances, bamboo flooring, tankless hot water heater and energy efficient heat pump.  While many of these characteristics are certainly found in homes that are green, it is self evident that installing bamboo flooring is not enough to transform a conventional house into a “green” house.  One agent went so far as to write on the NWMLS marketing description that the house was “essentially like a brand new 3-star Greenbuilt home.”  In other words, “it’s not new or 3rd Party Certified, but trust me, it’s still green.”

*Live in a townhouse OR drive green?

The scarcity of available virgin home sites in these metropolitan areas also regulates the diversity of design characteristics of new homes that can be built.  Seattle is comprised of housing stock that was primarily developed prior to 1955.  While green/efficient housing is best fit for close-in metropolitan housing markets, these areas are typically already built-up of older housing stock with few development sites available.  The result is, of the 500 self-declared “green” homes sold in Seattle in the last 12 months, 442 were townhouses or ultra compact zero-lot-line cottage homes.  Would-be buyers of green homes are frequently forced to choose between a historic energy sucker built in 1926, a green triple level 2 bedroom townhouse designed for young professionals with no kids and no arthritis, or move to a “green suburb” and spend over an hour in traffic every day.

*New Equals Green

Seattle Department of Planning and Development has a reputation for being one of the most stringent energy codes in the country and is touted as achieving potentially 10-20% energy savings over ASHRAE/IESNA Standard 90.1-1999 and Standard 90.1-2004 respectively.  I’ve heard numerous builders, developers and buyers say, “Yeah, if you’re looking at a new house in Seattle, you’re already looking at a green house.” Right or wrong, there’s a pervasive perception in the marketplace and in the building industry that new homes in Seattle have already undergone a high level of scrutiny to pass Seattle’s increasingly strict energy codes.  Therefore, the perceived delta between the efficiency of a Built Green certified home and a conventional new home in Seattle may seem diminished both for developers and consumers.  

*Green Is Custom-Built

When asked about the current trend of deep green projects being developed and certified in the Puget Sound, the program manager at Built Green, Koben Calhoun, responded:  “We are pleased with the number of projects we have seen come through at the 4 and 5-Star levels. Particularly in the past two years the number of 5-Star projects has increased dramatically. At the end of 2007 we had around 16 or 17 5-Star projects (the 5-Star program started in 2004 so in 3 years we had that many), and now in the past two years we have added about 50 more 5-Star projects. It is definitely exciting and I am hoping we can keep the trend headed that way.” While the numbers for 4 and 5 Star homes seem encouraging for the green market as a whole, many of these deep green homes are custom built, luxury quality and not available for middle market buyers.

*Green – It’s For You, Too

Where will the next wave of certified Green/Energy Efficient housing for the masses come from?  I think the answer is right under our nose.  Existing housing stock in major metropolitan cities across the country can be refurbished and repositioned in the market as certified Green and Energy Efficient housing.  According to the U.S. Department of Energy, almost 75% of the buildings in the country were built prior to 1979[1].  Refurbished Green/Energy Efficient housing resonates with the values held by consumers in metropolitan markets on a number of levels:

*Reduce/Reuse/Recycle – nuff said

*Green home buyers can select close-in neighborhoods in walk able/bike able proximity to employment & goods/service centers

*Reduce greenhouse gas emissions from some of the guiltiest perpetrators (old residential housing)

*Existing housing stock is plentiful and allows for a much more diverse & cost effective Green/Efficient housing options

*Homes built in the 1950’s and earlier are 50% more compact than average new homes today.

More to come…

Post contributed by Aaron Fairchild:

The same day that I received an email from a friend saying that he thought G2B Ventures just might be too early in the space and ahead of the market, I read an article in the Harvard Business Review about how, “smart companies now treat sustainability as innovation’s new frontier." There were a few articles in the September 2009 issue relating to green and sustainability. The lead article says that companies won’t grow unless they throw themselves entirely at green initiatives. I am in the thick of establishing the Efficient Real Estate Investment Fund, so naturally I tend to side with HBR over my thoughtful friend. Frankly, it is just amazing to observe how far we have come in the green and sustainability business world. We couldn’t have done what we are attempting to do in green real estate 5 years ago, but today it just makes sense.

When Harvard is saying the business world MUST go green to grow, you've got to think G2B is in the right space and at the right time, not just because we are doing good for the environment and society, but because we can make money at the same time.

Post contributed by Aaron Fairchild:

Welcome to the residential world of green home living.  You can now buy a green built home with a variety of different certifications. From LEED for homes to Built Green 3, 4, and 5 stars to Earth Advantage homes, environmentally green homes are more and more available to interested home buyers. In fact, in the Seattle region 25% of all new residential home construction is built to a green building certification. But what about homes for rent? While there has been a lot of attention paid to “green leases” in the commercial real estate market, if you are in the residential rental market, and concerned about your utility costs and environmental impact, there are next to zero green rental options available to you. What gives?

The issue of “split incentives” is the culprit. In a capsule the issue is that the landlord generally doesn’t pay the energy bill and wouldn’t benefit from lower energy costs that come from investing in enhanced energy efficiency, and the tenant doesn’t own the home and is therefore unlikely to invest in energy efficient appliances or systems. This issue is of particular interest to me.

I am the Managing Partner at G2B Ventures, LLC. G2B is establishing an energy efficient residential real estate investment fund. The Efficient Real Estate Fund will buy primarily single family homes at deep discounts and then refurbish them with an eye toward energy efficiency. Once the investment properties are acquired and refurbished we will be renting them out to capture rental income during the life of the Fund.

Our property management team will tell you that newly refurbished or constructed homes generally command higher rents. While this helps us at the Fund, we will eventually recapture all of the costs of energy efficient and general improvements when we sell the properties.  But how do we increase our rents to help recapture the costs of energy efficient up-grades more quickly?

We are currently developing a model that shares the benefits of energy efficiency between the landlord, which in our case is the Fund, and the tenants. Here is what we are working on:

Step 1:

The landlord must start with an understanding of the energy costs associated with normal or average energy consumption and then baseline the property. For example, the landlord determines that during the winter months the average utility bill runs roughly around $250 and in the summer the rough bill is $200.

I am using easy to absorb numbers and I know this is a rough analysis so read on…

Now the landlord does the energy improvements and using the kWh savings for every measure installed she can easily calculate the monthly cost savings. Using our data for the Seattle area we roughly calculate that a smart $10k investment in energy efficiency can save roughly $50 per month. Using a $50 dollar per month savings we can now assume that during the winter months the average home occupant will spend $200 per month and during the summer he will spend $150.

Step 2:

The landlord will now offer the home for rent that includes the utilities within the rent payment. The rental rate is determined based on market rents plus the pre-retrofitted utility cost projection.  Rent including utilities is normally avoided because the tenant is not incentivized to conserve energy, which could end up costing the landlord dearly. However, in our model, if the tenant uses less than the baseline utility monthly expense ($200 in winter and $150 in summer), the landlord will share the savings with the tenant 50/50. Instead of a split incentive, we are aiming for a “shared incentive.” For example, if the tenant’s bill in the month of January were only $150, the tenant would receive a check for $25, and the remaining $25 would go back to the landlord.

Clearly this model requires enhanced sophistication on behalf of the landlord. Good tracking systems and transparency are absolutely necessary. However, the benefit is clear for the landlord…

Cons

•    Difficulty tracking
•    Cost of retrofit
•    Calculating the savings borne through efficiency

Pros

•    More quality tenants
•    Better relationship with tenant
•    Enhanced property cash flow
•    Enhanced asset value

…and for the tenant.

Cons

•    Generally higher rental rates
•    Landlord knows the utility consumption behaviors
•    Greater interaction with the landlord

Pros

•    Newly refurbished / clean / healthier rental
•    Rental characteristics align with values
•    Ability to receive energy savings checks every month the energy costs are below baseline.
•    Greater interaction with the landlord

by Aaron Fairchild:

You can’t go to a cocktail party these days without someone saying now would be a good time to invest in real estate. Of course, one question that always arises is, “When are we going to hit the bottom?” This is a question my father and I have been debating for the last several months. He owns and runs a local bank and my partners and I invest in real estate. He believes that the bottom is still out a fair bit, whereas I see clues that the bottom will be sooner than later. He is fond of telling me stories from the early to mid-seventies; these stories inform both of our opinions. To him, they indicate how bad it could get, and to me, they form a stunning contrast to today’s current market realities.

Let’s take a look at some of these historical clues that indicate the health of the Seattle market.  The first set of clues to examine appeared during the period from the mid 1970’s through the first quarter of 1988.  This period represented 13 difficult and depressed years in the region; the regional economic gorilla was Boeing, and they had just eliminated over 60% of their workforce, 64,000 people. According to my father, “during that time loan officers carried around quit claim deeds in their briefcases to take control of homes that laid-off Boeing engineers could no longer afford.” Furthermore, during that time he was typically lending to single-income households. There were fewer women in the workplace than today, and even if a woman wanted her income to count, FHA underwriting guidelines required a letter stating that she was using contraception.  Loan officers called it the “pill letter.”

Another story from my father relates to local consumer confidence.  At that time, he used to tell his loan officers that one of their jobs was to convince depressed real estate agents that they could actually find a client to help buy or sell a home.  People were leaving Seattle in droves, and driving past the famous billboard that read, “The last person to leave Seattle, turn out the lights.” It is hard to imagine how low consumer confidence really was, when today Seattle has far more employers than it did back then, and attracts a steady and diversified flow of employees capable of home purchases. The last time Seattle saw more people leaving than coming was in 1982.

Now let’s look at further clues that arose after the “Boeing Bust” that show what a sustainable real estate market looks like.  For the most part, my father and I agree that from 1988 until late 2000 was a period of stability in the market. Interest rates dropped into single-digit ranges, allowing homeowners cheaper and easier access to mortgages.  Inflation was low, and the economy in general was moving along steadily.  Most importantly, incomes were able to keep pace with increases in home values; as more households took on second incomes, there was more money in the household to buy or upgrade homes.  Fortunately, while there was easier access to capital than in the 1970’s, underwriting guidelines remained conservative.  To put less than 20% down on a property, you generally needed to purchase Mortgage Insurance and stringent debt-to-income underwriting ratios provided sustainability in an otherwise solid real estate market.   During this time, the correlation between incomes and housing prices remained generally constant.  This was a time of prosperity and sustainability where housing values increased at a rate of roughly 5% per year between 1990 and 2000.

The run up in property values between 2000 and 2007 provides a dramatic backdrop to where we find ourselves today. The incredible rise in property values came as a result of easy access to capital due to lax underwriting guidelines. These loans were unsustainably constructed by banks to sell into profit-thirsty debt markets.

The result in this chaos is, of course, the recent reckoning where mortgages defaulted, banks were forced to write off huge amounts of bad loans, and a glut of homes fell in foreclosure precipitating a concurrent drop in housing prices.  Now we see our final clues to indicate the market has or will soon reach bottom: we observe a return to rational lending practices, an end to wanton speculation, and unprecedented government intervention in stopping the flow of home foreclosures and increasing consumer confidence.  Finally, the real estate market is now showing signs of normalizing to more predictable, rational levels as they relate to income levels and affordability.  The Seattle housing market has not been more affordable anytime during the last thirty years.

Although it is too early to tell who will win our debate, my father and I agree that the factors which drove down housing prices are finally correcting.  Time will tell where the bottom of the market is, but the question still remains at the heart of our debate, “Could it get as bad as it was during the depressed time of the early-to-mid 70’s?” My father’s stories create the backdrop to my outlook on our local real estate market and provide valuable insight and lessons; however it is hard to imagine going back to a time where Seattle experienced negative population growth, 12% unemployment, with predominately single-income households, and only one major employer.

The clues of contrast examined through his stories and prior economic indicators provide us with lessons from our past and demonstrate just how far we have come over the last 35 years. We have certainly made mistakes and have been guilty of greed, and as a result we have paid the price in a substantial drop in property values and the vaporization of wealth borne from home equity. However, when contrasted with the clues from our past, returning to the market conditions that existed in the 1970’s seems unlikely. I believe we are likely near the bottom of a fundamentally sound Seattle real estate market.