Green is no longer the color of trees; it’s now the color of money.

Public giants Meritage and Beazer are investing huge sums to totally change the way they build houses, and these new housing products are so much better than their old ones that it will be increasingly difficult for anyone to sell against them without a HERS score below 40.

The Housing Energy Rating System pegs a house built to code at 100. An Energy Star house scores 85, meaning it uses 15 percent less energy than a code house. But the homes Meritage is now selling at its landmark Lyon’s Gate development in southeast suburban Phoenix (Gilbert, Ariz.) boast HERS scores in the 20s and 30s, saving close to 80 percent in operating costs over a similar code-built home, and boasting air quality so pristine they are virtually dust-free. Now the killer: they are priced from $176,900 for 1640 square feet to $231,900 for 3062 square feet.

Not surprisingly, these houses are outselling conventional new homes elsewhere in the Valley of the Sun at a rate of 3 to 1. Lyon’s Gate has sold 27 homes since models opened in late June.

Ian MCarthy’s Atlanta-based giant Beazer Homes has already moved to meet the competition of Steve Hilton’s Meritage Homes, based in Scottsdale, Ariz. How long will it be before Pulte, Lennar, Horton, KB, and Hovnanian follow suite? When they do, home building becomes a whole new game: you’ll have to ante up or fold.

Meritage’s Arizona homes at Lyon’s Gate (top) and Verrado set a new benchmark for quality and value in production-built American for-sale housing.

This Changes Everything

It’s one thing when a custom builder goes green and offers homes that approach zero energy consumption to one buyer at a time, but quite another when a big public builder, with operations across the country, does it in production-built subdivisions, and offers this level of energy efficiency as standard, rather than an option, in homes carrying entry-level pricing.

This product will move the market, and even affect the pricing of existing homes. Only the best-located of those will be able to sell without a discounted price, when they can’t come close to matching the operational efficiency of Meritage’s product. Take note that Meritage markets saving its customers money in operating costs — which they can easily calculate — rather than saving the planet from greenhouse gases. Green is not for sissies anymore. Meritage is playing hardball.

The firm says it is offering customers $50,000 worth of energy-saving systems, materials, and building science in each home at no additional cost, in homes buyers carry for $1,335 to $1,732 a month. Whether the company is making money at this price point is irrelevant to buyers. However, builders in Arizona have to cringe at competing with this product, which also qualifies for $6,700 in federal and state tax credits.

And it’s not just one project. Meritage is offering similar systems and building science at 12 communities in the Arizona market, but Lyon’s Gate and Verrado, in far western Buckeye, Ariz., were the first to open for business. Verrado employs a slightly different wall system from Lyon’s Gate’s over-the-top, 9-inch-thick walls, but comes within 5 percentage points of Lyon’s Gate’s energy performance. And Verrado is outselling Lyon’s Gate, even though it is a master-planned community of move-up and luxury homes, boasting one of the top-rated golf courses in Arizona. The Verrado homes range from 1902 to 3391 square feet, priced from $194,900 to $249,900. Models opened August 28. By late October, 17 sales were on the books, in a depressed Arizona market riddled with foreclosures.

How Meritage Builds

What Meritage is doing in Arizona, it will soon match in California, Texas, Colorado, Nevada, and Florida, although it may employ different building technologies to reach its stunning levels of energy efficiency in those very different climates. And in every market, the new building science will be used in all homes the firm builds, not just offered as an option. Meritage is done with building two-by-four walls stuffed with fiberglass batt insulation, although some of that product is still in its offering today.

80% Energy Cost Reduction

C. R. Herro, Meritage Homes' vice president of environmental affairs, explains one of the Meritage Green wall systems. All walls and undersides of roofs are sprayed with polyurethane foam insulation. Wall systems at Mertigage's Verrado community are 6 inches thick, and they are 9 inches thick at its Lyon's Gate community. Wall systems help Meritage Green homes realize an 80 percent reduction in energy costs.

Meritage Green homes include the Echo complete solar system, manufactured by San Francisco-based PVT Solar. Echo is a computerized system that uses photo-voltaic solar panels on the roof to generate energy for home heating and air conditioning.

 

The Lyon’s Gate homes employ what Meritage markets as a 9-inch-thick wall, made up of interior and exterior 2X4 walls separated by a 1-inch air space. (It’s splitting hairs, but we must point out that a 2X4 is not actually 4 inches wide, so the wall is really more like 8-3/4 inches thick.) All the walls, and the underside of the roof, are then sprayed with polyurethane foam insulation. The attic is sealed, semi-conditioned space only 5 degrees warmer than the interior of the home. Tightly sealed air conditioning ductwork runs through this space, quite a contrast from most Arizona attics, which often reach 140 degrees in the desert summer. (Most builders are still running their ductwork through that heat and losing a lot of air conditioning efficiency in the process.)

The homes also employ the Echo complete solar system, manufactured by San Francisco-based PVT Solar, which is computerized (smart) and uses photo-voltaic solar panels on the roof to generate energy for home heating and air conditioning. Additionally, it also captures heat from beneath the solar panels and stores it in a 125-gallon water tank, which — under typical usage — provides all the hot water required for the home. The system monitors both indoor and outdoor temperatures, and it filters and turns the air in the home as needed. It produces up to 10,000 kWh annually in solar electricity, solar thermal water heating, and solar thermal air conditioning, which is about half of what a typical home uses each year. The monitoring system allows home owners to adjust and program energy consumption while they are at home or away.

The Meritage homes also feature high-efficiency 14 SEER air conditioners, high-efficiency double low-e windows, and 80 percent of the lighting is compact fluorescent (CFL), which uses 75 percent less energy and generates 25 percent of the heat of a standard light bulb. LED lighting, which is even more efficient, is offered as an option.

Meritage uses water-efficient plumbing fixtures that reduce water use up to 50 percent, including dual-flush toilets that offer the ability to reduce water use by 70 percent compared with a typical toilet. The homes also have weather-sensing irrigation systems that meet new federal Environmental Protection Agency WaterSense guidelines.

Perhaps the most impressive aspect of what Meritage is doing is that this building technology is not just thrown at a wall to see what works. Each element is carefully integrated with all of the others to design a home that works as an efficient system, in a given climate. C.R. Herro, Meritage’s vice president of environmental affairs, is the mind behind the Wizard of Oz curtain. He’s spending much of his time on airplanes these days, working with public utilities across the country, many of which provide subsidies for energy-efficient building that help to defray the costs of the learning curve Meritage must buck, changing the way it builds homes in such a profound way. (Just think about what it costs to retrain trades to build those 9-inch walls, or the 6-inch-thick ones at Verrado.)

Stay Tuned for More

This is just the beginning of our coverage of Meritage and its paradigm-shifting housing products. Keep checking back with AvidBuilder.com, as you will soon see video tours of the homes at both Lyon’s Gate and Verrado in Arizona, as well as interviews with the people who are contributing to this mind-bending change in how homes are now being built.

You won’t want to miss our interview with C.R. Herro, as he walks us through the demonstration home and models at Verrado, talking about how each element of the building technology contributes to produce homes that are not only extremely energy-efficient, but also quiet and virtually dust-free.

Bill Lurz has been reporting on every aspect of the home-building industry since 1970. A former editor-in-chief of Canadian Building and senior editor of Professional Builder, Bill is currently editor-in-chief of AvidBuilder.com. He can be reached at bill.lurz@avidbuilder.com.