The inaugural Policygenius green homes index. Where does your state rank?
Updated|7 min read
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Table of contents
Table of contents
The housing industry has a massive impact on the economy, with residential investment and consumption contributing around 15% to 18% of the annual gross domestic product (GDP) in the U.S. That contribution is only increasing thanks to a construction sector that is projected to grow by 11% from 2016 to 2026, according to the Bureau of Labor Statistics. With 747,600 new jobs expected in that timeframe, that makes residential and nonresidential construction the fastest-growing occupation.
But homes are also one of the major contributors of greenhouse gases, with single- and multi-family homes responsible for around 17% of total emissions in the United States. Considering that the average lifespan of an American home is around 70 years, the way homes are constructed has critical and far-reaching implications. As global climate change accelerates every year, the green home movement has picked up steam as well.
In addition to reducing your carbon footprint, making your home green has a number of other perks: it can reduce utility costs, make you eligible for financial incentives, lower your home insurance premiums, and potentially increase the resale value by 8-30% compared to standard homes. With eco-friendly home construction increasing in popularity, a number of states across the country are leading the green home revolution.
Which states are propelling the green home movement? And which states have some catching up to do? Keep reading to find out.
New Inflation Reduction Act can help homeowners save even more by going green
With the signing of the historic Inflation Reduction Act, homeowners will receive thousands of dollars in tax incentives to improve their home’s energy efficiency in 2022 and beyond. And even if you don’t take advantage of the tax credits yourself, it’s predicted that the average household will save $170 to $220 per year on electric costs.
Before we dive in, let’s briefly go over what exactly a green home is. According to the U.S. Environmental Protection Agency (EPA), green home building is the practice of using environmentally responsible and resource-efficient building methods throughout the home’s life cycle — from design to construction to renovation and deconstruction — by focusing on the following areas: site, water, energy, indoor air quality, materials and operations & maintenance.
To determine the best and worst states for green homes, we ranked each state based on five key factors:
Green home incentives and policies: Each state’s combined total of green home financial incentives (tax credits and rebate programs) and regulatory policies (energy ordinances, easements and net metering), using Database of State Incentives for Renewables & Efficiency (DSIRE) data.
Solar energy ranking: Where each state ranks in terms of the strength of their solar industry. States were ranked based on the total number of solar companies, the number of solar-powered single- and multi-family homes, and the total investment in solar, using Solar Energy Industries Association (SEIA) data.
Wind power ranking: Where each state ranks in terms of the strength of their wind power industry. States were ranked based on the total installed wind power capacity (in megawatts), the number of wind turbines, the equivalent number of homes powered by wind, and the total investment in wind, using American Wind Energy Association (AWEA) data.
The number of LEED-certified homes: The number of homes in each state with Leadership in Energy and Environmental Design (LEED) certification, using United States Green Building Council (USGBC) data. The LEED program is the most widely used green home rating system in the world.
Gross square footage of LEED-certified homes: The gross square footage of LEED-certified residential units in each state.
We then took the average ranking across those factors to create our index.
If you want to build green, look to the coasts. Of the 10 best states for green homes according to our index, seven of those states are located on the coast, and all seven rank near the top for green home incentives.
Incentives boost green home growth. Of the 25 states with the most green home incentives and policies, 18 of them also ranked in the top 25 for LEED-certified residences, signaling that there’s a correlation between green home incentives/policymaking and green home output.
Wind power doesn’t necessarily translate to a green home boom. Of the top five wind-producing states, three didn’t crack the top 20 of our green homes index, and two (Oklahoma and Kansas) actually found themselves near the bottom.
California easily takes our top spot, placing first in every category except the wind power ranking, where they still managed a respectable fourth. The median home sale price is $502,000 as of 2019 — far and away the highest in the country. Golden State homes with a “green label” were found to have an average selling price around 2% higher than similar homes without the label.
Texas earns the number two spot, ranking first for wind power and having the second most LEED-certified green homes. The Lone Star State produces a staggering 25,629 megawatts of wind energy — almost three times the capacity as Oklahoma, the number two state for wind power. That wind power is able to power the equivalent of over seven million Texas homes, and with almost 150 wind projects currently in the works and the green home market in Austin skyrocketing, it looks like Texas will continue to come out on top.
Colorado holds down the third spot in our study, cracking the top 10 in every category except solar energy, and they still manage to be the 11th best state for that. One area where Colorado really stood out is the LEED-certified homes category; it ranked 5th, but it ranks 1st overall in LEED properties per capita, as five in every 1,000 homes in the Centennial State have been recognized as models of energy efficiency. (For comparison, about three in every 1,000 California homes are LEED-certified).
New York is one of the green energy leaders in the U.S. thanks to ambitious planning on the state level to all but eliminate greenhouse gas emissions by 2050. The Empire State, which has over 60 green home incentive programs and regulatory policies, has the third most LEED-certified properties in the country, behind only Texas and California.
Oregon rounds out the top five in our study, ranking in the top 10 in every category except solar power. The influx of green building in Oregon is due in part to the number of tax incentives and rebate programs available to Beaver State residents. Oregon features the third most green home incentives, behind only Minnesota and California.
Alabama cracks the top 30 for solar, but places last (along with nine other states that produce zero wind energy) for wind power. The median sale price for a home in Alabama is $152,600, among the lowest in the country.
Arkansas has the 24th most LEED-certified homes in the country, indicating that residents are doing something right. The problem is that they’re not getting much help from the government. Like Alabama, Arkansas is tied for last in wind energy, as they simply don’t produce any. Arkansas also offers very few incentives for folks interested in green building.
Alaska gets far and away the least amount of sunlight of any U.S. state, so it’s no wonder that solar power accounts for a paltry 0.1% of the state's electricity.
Rhode Island is somewhat hampered by the fact that it’s the smallest state in the country. But even when adjusted for population, Rhode Island is still lagging behind the rest, as not even one in every 1,000 homes is LEED-certified.
One of the biggest reasons West Virginia ranks last in our index is because they finished dead last in three of our five categories (green home incentives, LEED-certified homes, and gross square footage of LEED-certified homes). There’s hope for West Virginia when it comes to the wind industry, where they currently hold down the 26th spot in our study.
There are a number of factors that contribute to a state’s green home ranking: green incentives and grant programs, wind and solar infrastructure, and the number of homes with LEED certification. But there are other variables — namely a state’s climate and geography — that make it more or less difficult to become energy independent.
Other states simply don’t benefit as much from building energy efficient homes as others. For example, the higher your utility bills are (looking at you, California) the more opportunities you have to save by generating your own power. Conversely, if electricity prices are already low in your state, you’re not as incentivized to tap into cheaper and more efficient sources of energy.
But it is important that residents understand the long-term incentive of building green — both from an environmental and health standpoint. If your state’s electricity costs are cheap, that’s probably because its utility companies get most of their energy from cheap coal and other outdated sources of energy that do harm to both the environment and human health. And according to the EPA, indoor air is two to five times more polluted than outdoor air. Green homes are often designed with proper ventilation and high-efficiency air filters in mind, preventing asthma, allergies, and other respiratory issues.
There’s a lot of work to do to make green home construction the national standard, but the future looks bright. According to a recent survey of 2,800 residents by AMLI Residential, 84% of respondents said living in a sustainability-focused and eco-friendly building was important or moderately important to them, and 64% said they’d pay more to live in a green community. Considering that 59% of the respondents were under the age of 34, it appears the green home movement is alive and well.
Pat Howard is a managing editor and licensed home insurance expert at Policygenius, where he specializes in homeowners insurance. His work and expertise has been featured in MarketWatch, Real Simple, Fox Business, VentureBeat, This Old House, Investopedia, Fatherly, Lifehacker, Better Homes & Garden, Property Casualty 360, and elsewhere.
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