Sustainable Built Environments Senior Capstone Project / In today’s market there are two major categories of home features that home buyers choose from: sustainable or aesthetic. In a residential housing context, sustainable home features are considered as those that reduce the energy consumption of the home while aesthetic home features do not have an effect on energy consumption. While there have been several studies conducted on appraising sustainable or aesthetic features alone this research aims to directly compare the two through a sales comparison approach of Taylor Morrison and Meritage Homes new construction comparable sales homes in the Queen Creek subdivision of Victoria Estates. A sales comparison approach enables each feature type to be analyzed individually for how it affects the pricing variation of a home with its implementation through comparing comparable sales homes to a subject home without the feature type that is being valued. Through this methodology the pricing variation of homes with the inclusion of sustainable features alone was found to consist of an average pricing increase of $39,117 for Meritage homes and a $17,861 increase for Taylor Morrison homes in comparison to aesthetic and sustainable features at an average $47,817 increase for Meritage Homes and $26,561 for Taylor Morrison homes. This research lends itself to providing prospective home buyers with guides on what home features will actively make their homes investments such as MERV 8 filters, a HERS rating of 58, among other findings. In addition, the research highlights which standard, included sustainable and aesthetic features increase the pricing variation of a home from each homebuilder and should be prioritized in being offered as included based on their investment value to home buyers.

Real estate professionals, such as investors, owner-occupants, and lenders who are involved in the investment decision-making process are increasingly interested in sustainability and energy efficiency investment. However, current tools and techniques, both technical and financial, typically used for assessing sustainability on their own are unable to provide comprehensive and reliable financial information required for making high-quality investment decisions. Sustainability investment often includes non-cost benefits, value implications, as well as substantial risk and uncertainty that current methods do not simultaneously incorporate in their assessment process. Through a combined quantitative and qualitative approach, this research creates a new systematic assessment process to consider both cost and non-cost savings and therefore the true financial performance of a set of sustainable options in the context of value and risk, while explicitly deriving and including various uncertainties inherent in the process. The framework integrates assessment tools of technical decision-makers with those of investment decision-makers into a single platform to improve the quality of financial performance projections, and therefore, investment decisions concerning sustainable options in real estate. A case study is then conducted to test and demonstrate the numeric application of the proposed framework in the context of a non-green office building. The case study presents how to connect the technical outcomes to financial inputs, present the information, and estimate the true financial performance of a green retrofit option, where incremental value and uncertainty have been modeled and included. Three levels of financial analysis are performed to estimate the distribution of financial outcomes including: 1) Cost-based level-1: only energy related costs savings were considered; 2) Cost-based level-2: the non-energy cost savings, including heath and productivity, were also considered; and 3) Value-based level: the value implications of the green retrofit option were considered in addition to items in level 2. As a result of applying the proposed framework when evaluating sustainability investment options, many investment opportunities that were otherwise ignored may be realized, and therefore, the breadth and depth of sustainability investment in real estate will increase. / Ph. D.