The Impact of LEED Neighborhood Certification on Condo Prices

Abstract

The U.S. Green Building Council offers LEED certification for existing and new neighborhood developments that meet sustainable urban development standards. Features of sustainable urban development have been found to positively affect residential sales prices. We investigate whether the intangible labeling effects of LEED neighborhood certification add a premium to the sales prices of LEED and non‐LEED–certified condos. Using a quasi‐experiment, transaction data from Portland, Oregon, and a spatio‐temporal autoregressive (STAR) model, we find no evidence that the intangible labeling effects of LEED neighborhood certification directly or indirectly affect sales prices. Our results suggest that, contrary to LEED building certification, which we find adds a premium to condo sales prices, the LEED neighborhood label by itself fails to add value for condo buyers. Explanations for our findings include market acceptance, neighborhood delineation issues and the free rider problem as it relates to public goods.

Sustainability Attributes in Real Estate Development: Private Perspectives on Advancing Energy Regulation in a Liberalized Market

“…This latter aspect is especially relevant for the most exclusive homes because owning such a home could entail psychosocial rewards in their market niche. This kind of impact, however, has not been always find, as in the study by Freybote, Sun and Yang [70], where the intangible labelling effects of LEED neighborhood certification do not lead to a market premium (in opposition to the financial benefits of LEED building scheme, which effectively add a premium to condominium sales prices).…”

Green Buildings in Commercial Mortgage‐Backed Securities: The Effects of LEED and Energy Star Certification on Default Risk and Loan Terms

“…See http://www.everbluetraining.com/blog/cities-requiring-or-supportingleed-2015-edition. 5 It is also possible for an entire neighborhood to become LEED certified, although Freybote Sun and Yang (2015) found no effect from that on condos in their study of Portland, Oregon. seven topic areas.…”

“…It is also possible for an entire neighborhood to become LEED certified, although Freybote Sun and Yang () found no effect from that on condos in their study of Portland, Oregon.…”

Assessment of LEED Green Building Certificate Indoor Environmental Quality Parameters from the Perspective of Occupant Satisfaction and Cost Performance

“…Nyikos et al (2012) 33 analysed cost premiums associated with sustainable facility design. Freybote et al (2015) 34 assessed the impact of LEED neighborhood certification on condo prices. Kats et al (2003) 35 found that productivity and health benefits accounted for about 70 and 82% of the respective Net Present Value (NPV) when classifying LEED certification into two groups such as Certified/Silver and Gold/Platinum.…”