By Kyle Mylius | Director of Investor Relations and Strategy | Green Canopy

Part one of this two-part series highlighted why now is the time to use business as a force for good?

In the last several months, investors have asked about the prudence of investing in a “hot” Pacific Northwest real estate market — a market that has experienced significant home price appreciation since 2013, with Seattle seeing an average 20% increase in the last year alone.
 
Green Canopy's response is emphatic. A multi-faceted housing crisis has created a compelling financial, environmental and social investment opportunity. Not just now, but for several years to follow. Understanding the market fundamentals and deciding how best to manage the inevitable risks is essential to any sound investment strategy — as a developer, as an investor, and as community leaders.
 
"It’s essential for investment success that we recognize the condition of the market and decide on our actions accordingly." — Howard Marks, The Most Important Thing: Uncommon Sense for the Thoughtful Investor

Howard Marks is one of the most successful investors of our generation, known for being an astute observer and risk assessor. Marks strategizes with the understanding that regardless of the economic cycle, there will always be risks with investing — and pockets of opportunity are also ever present. Those who take a contrarian view, seeking out less-obvious and more-manageable risk exposures, with smart and flexible investment structures, are rewarded by opportunities unforeseen and even derided by most.
 
“The trend is your friend” is a common investor phrase and useful tool for evaluating where to invest, or not. A visible trend in the Pacific Northwest is that the inventory of homes for sale remains at an all-time low while demand continues to be high. This is evidenced in several ways including the number of days homes are on the market before being sold and the persistent growth in home prices throughout our region.

At the same time, the Pacific Northwest continues to attract more highly-paid workers looking to relocate. This isn’t just the Amazonians, but many of the major Silicon Valley companies whose employees can sell their homes for a high price in California and buy at a lower price in the PNW. While Seattle’s median home price exceeded $750,000 recently, the market is a relative bargain compared to median home prices in neighboring West Coast cities: San Francisco ($1,200,000) and Vancouver B.C. (US $2,400,000). Portland has also experienced significant appreciation over the last five years, though the median home price is substantially lower,  $440,000 according to Redfin.
 
If demand growth begins to slow, there are a number of factors that will cause gross demand for homes to continue outpacing gross supply. For example, home supply tends to lag behind demand as it typically takes 12–15 months to acquire, build, and sell residential development projects. And in Seattle, the number of new construction home sales has not come close to the number in demand, even with the amount of population growth multi-family apartments and condos are absorbing.

Data Source: NWMLS and U.S.Census Data 
Public agencies are working to adjust policies and support the high volume of new construction permitting requests, but bottlenecks still remain. Lenders continue to be conservative in extending credit against real estate. The construction industry across the U.S. has only recovered half of the skilled labor lost during the great recession — and many homeowners in the PNW are unwilling to sell. Despite having substantial home equity, PNW homeowners are not motivated enough to sell when they will be faced with the high costs to switch and the lack of options to upgrade.
 
The regional housing market imbalance of supply and demand may not be able to achieve equilibrium in the next year, or two or three. But it will eventually. Investment and development strategies focused on the single-family residential market must be structured to nimbly capitalize on the near term upward pricing trend and well-positioned to respond to inevitable cyclical shifts further down the road.

By Susan Fairchild | Director of Investor Relations & Impact | Green Canopy

Those who visit the Green Canopy Headquarters will find, in our entryway, a reminder handed down by our CEO’s father. It’s a framed quote by the baseball legend Yogi Berra, reading— “If you aim for nothing, you’ll hit it.”

At Green Canopy, we’re always looking to identify and clearly articulate the direction we’re headed. By doing this, our team and stakeholders come to a shared understanding of goals. We can all take ownership of these goals, and then create a plan of action to make them happen. One way we’ve done this in the past year, is by mapping out our specific “Theory of Change”. A Theory of Change provides a visual roadmap to creating the change we want to see in the world, and provides a target through which we align our strategies, outcomes, and goals.

Green Canopy began this process with the guidance from Jane Reisman, a Social Impact Advisor with over 29 years of experience in strategy and evaluation. Jane has dedicated her life to empowering non-profits, foundations, and systems thinkers with the tools to significantly increase the probability of achieving their desired impact.
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As we embraced doing the deep work* with Jane, the benefits to engaging in the process of developing Green Canopy’s Theory of Change became quite clear:

• Impact Alignment: Key stakeholders buy into and align towards our shared purpose and desired impact.

• Shared Language: Shared language enables key stakeholders – employees, board members, investors, vendors, homeowners, and others to speak with a common voice.

• Metric Alignment: Provides additional structure to which we can align our impact metrics to measure our progress, and learn from both our successes and shortcomings.

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We are pleased to share Green Canopy’s Theory of Change publicly for the first time. We believe in a better future. We invite you to be a part of it. 

Aaron Fairchild, Green Canopy’s CEO recently detailed the Theory of Change at an Empower Happy Hour. Watch Aaron’s presentation here. 

​*“Deep Work” is a concept written about by Cal Newport that he describes as the ability to focus without distraction, master complicated information and produce better results in less time— providing the sense of true fulfillment that comes from craftmanship. 

“As impact investing grows exponentially, the IA 50 has remained a leading and trusted resource for impact investors of all experience levels,” said Jed Emerson, ImpactAssets Senior Fellow, and IA 50 Review Committee Chair.  “Our consistent and objective evaluation of impact fund managers is providing financial advisors and their clients with a starting place to make informed investment decisions.  And we are helping to catalyze the growth of impact investing by creating a centralized information source in a fragmented field.”

Green Canopy is honored to be featured on the 2018 IA 50 List as one of nine managers in the Real Assets category, one of 13 in Housing, and one of the 12 Certified B Corporations. See the press release here.

It's time to clothe my dreams in reality, to create a home for wanderers who cannot bow before the traditions of a single dwelling and a fenced yard. Who look beyond marriage and blood to gather brothers and sisters bound by more than custom and umbilical cords. Generous minds and loving hearts, laughing eyes and simple tastes who know that serenity at sunrise and peace at sunset are worth more than the treasuries of kings and IRA security. It's time to clothe my dreams in reality, to gather together kindred spirits. Who look beyond what is and was to understand what can be, who know that love and compassion, joy and peace are our birthright stolen by a culture's madness and to band together the manipulations of frightened lives, wise minds, and bruised hearts, daring souls and brave spirits who know that love is worth the stars and friendship does not hide it's private anxieties behind sophistication and steel symbols. It's time to clothe my dreams in reality, to move beyond jealousy and possession, isolation and imprisonment. To confront boredom and loneliness, sadness and lovelessness, to make known my secret needs and reveal my hidden yearnings, to risk self exposure as the only path to final freedom, to surround myself with the energy flowing from the earth's core, the passion of rivers and resilience of trees, and thus to clothe my dreams in reality! —James Kavanaugh | It's Time

​Green Canopy is feeling happy and empowered from Empower Happy Hour this month— thankful for all presenters, sponsors and stakeholders who came together with us to celebrate Sightline Institute: a local, independent think-tank, who envisions an economy and a way of life that is environmentally sound, economically vibrant and socially just. Here are some highlights from the presenting impact organizations:

Keynote | Ryan Honeyman | Lift Economy
Ryan gave a synopsis of his background including his start in psychology and criminal justice and a passion for "reforming the criminal justice system and prison reform." While reading some of his brother's Environmental Studies books, Ryan grew excited by the idea of using business as a force for positive change.

Lift Economy began by "wanting to help existing companies scale their impact." Ryan explains... "We started to realize that while it's great to do consulting work with companies, many companies are categorically excluded from access to capital— and especially women and people of color."

The Force for Good Fund created by Lift Economy, is a fund that is investing in women and people of color-owned enterprises. "How can we create an economy that works for the benefit of all life if we don't put more women and people of color in charge?"

Petra Franklin | Dwehl
"The Dwehl founders came together to solve a problem that has a massive impact upon America's future, home ownership... and in the process we realized this was a prosperous business opportunity, that was better for all stakeholders...

In America, there are more people renting today than anytime in the history of the US census. And, as it turns out, renting is not working in their favor. The average net worth of a renter is $5,000 whereas the average net worth of a homeowner is $225,000. In addition, renters can expect to spend 30–50% of their income on rent, whereas homeowners can expect to spend 15–25% of their income on their monthly payment. The GenX and Millennial generation have come of home-buying age. They have jobs and they pay rent. In fact, they pay $535 Billion dollars in rent annually and Pew Research says that 72% would prefer to buy a house than continue renting, but they do not qualify for traditional home financing...

We see this as an opportune time to reinvent residential home ownership and we want to ensure this solution is better for all the stakeholders. By verifying three years of rental history and using that number as the basis for a home ownership payment, we are able to offer ownership of highly desirable homes with no downpayment and 5% financing.  Equity starts accruing immediately!

The mission of Dwehl is to grow the net worth of our customers but what we realized was Dwehl also presented us with an extraordinary opportunity to upgrade America’s housing stock to net zero efficiency!”  

Kevin Bayuk | Force for Good Fund
"Lift Economy has been working with 100s of different social enterprises, mostly small-scale enterprises, trying to reinvent the economy— organizations that are trying to provide needed goods and services, but do it in a way that are non-compromising in terms of their potential social and environmental impact. These types of enterprises are chronically underfunded, under-resourced." 

Kevin went on to explain how Lift Economy saw a gap that needed to be filled, and thus created the Force for Good Fund as a way to fund B Corps who are seeking to model a more diverse and  inclusive ecomomy. 

"It's not traditional to be able to invest in the type of enterprises that we're prioritizing, wth the type of fund that we have."

Bec Chapin | NODE
"We're building radically-sustainable homes and we're delivering them through an effortless customer service process. And we're doing it because of climate change."

"75% of the buildings that we're going to be using in 2050 don't exist today. So right now, we're building the stock of that... and we have the chance to shape the future."

"We think this is the answer... It's buildings that give back more to the environment than they take. Buildings that become ecosystem services, not just extractions. They're regenerative."

"A company that benefits everyone is the only company we can see ourselves being a part of."

Aaron Fairchild | Green Canopy & Cedar Fund
"Imagine with me, if you will, a future where all of the energy needs in all of our homes, come from the sun...  where net zero energy homes are the norm. Imagine a future where issues of sustainability and poverty are inextricably linked."

"We have this impression that deep green, net zero energy homes are available only to the upper middle class and to those that can afford them. And these same homes (that are actually more affordable to own and operate through the energy savings) are not available to those that have the greatest need in our society...

Imagine a world where these good homes are affordable. Imagine a future with me where our wild lands are not fragmented by development... but rather our cities, through thoughtful design and density are the key to preserving our wild lands for all of life to thrive...

A future where we're not building regulatory walls that separate us— zoning and regulatory land use walls that create neighborhoods that are exclusive to only those that can afford to move in and have access to those amenities... 

A future of love and empathy for one another because we can see ourselves in the other. Because we live together. We're co-mingled and intermingled in diversity and by the way, we need that diversity of thought, history, perspective to be applied to finding solutions for that future that we envision... a future where our communities are resilient and vibrant because they're inclusive.

Imagine with me.. if you will.. where the hard-earned income that you generate through your labor, that you invest in your children and their future,  does not work at crosspurposes to that future that you envision. Imagine a future in which your hard-earned capital could accelerate and activate the future we envision and earn profits...

The Cedar Fund was designed to address these four issues: resource scarcity and global warming, the housing crisis of access and affordability, urban sprawl, and quality impact investment opportunities not reliant on direct government subsidies."

Bettina von Hagen | EFM
"Everything we need to do to combat climate change... is right in front of us...

It's not just about the climate. It's about social equity, it's about distribution of wealth, it's about how we relate to each other...

The good news is that climate change could be the stimulus, not just for addressing the climate, but for addressing the fundamental ills of society that we know and that we recognize...

Strategies that we employ in forests, changing the way that we manage them, can double the carbon storers while at the same time yielding this broad range of benefits...

We have the most amazing solar factory in the world, right here in our forests. The needles and leaves are solar receptors. The trunks and the branches are the batteries. These batteries last forever... for hundreds of years."

Alan Durning | Sightline Institute
Alan, the executive director at Sightline, touched on how the housing crisis today is a housing crisis of "cruel musical chairs... The only way to stop the rise of prices and of rents, displacing those with the fewest resources, is to provide enough chairs. We need more houses of all shapes and sizes...

The question is not, 'can we end cruel musical chairs?' The question is can we do it without sprawling... well, you can." Alan goes on to show how Tokyo, the biggest city in the world and more than 10 times the size of Seattle, has accomplished this by building more dwellings in the city. Vienna was another example cited by Alan.

"In every city where housing is affordable, the lesson is exactly the same for us in Seattle— you have to build enough housing for everyone who wants to be here."

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All photos by Reagan Ashley and videos by Kyle Porter of Porterworks

BY  AARON FAIRCHILD
I believe in a future where deep green and net-zero energy homes are affordable and the norm. A future where our communities are diverse, inclusive and resilient, and where people who believe and invest in that future earn profits. Being raised by an entrepreneurial single mother imparted on me the importance of caring and nurturing, while also working hard to provide. Since the age of 15, my labor has been built upon this foundation from my mother. I have stumbled and failed and made mistakes along the way. I have succumbed to fear and self-doubt. At times, the immensity of the challenges we face seem daunting and impossible to solve; like I am frantically shooting a toy water-pistol at a raging wildfire. But when I lift my eyes and look around, I see that I am not the only one trying to douse the flames of environmental destruction and social inequity. Intentional and like-minded people all around the world are forming companies to be used as forces for good. And these companies are changing the nature of work by holding each other up to realize the future we believe in.

I am grateful for the recognition by Goldman Sachs and to be associated with an organization whose people are recognizing their own interconnectedness, and working to create positive change from within. Goldman’s people are on the arc of transformation and by recognizing me, a founder of a certified B Corporation, they are linking arms with a global community of over 2,000 companies in 50 countries across 130 industries. Organizations like B Corp help bring companies together in community to advance our collective work of creating a more inclusive economy. Certified B Corp companies believe in creating immense enterprise value in order to make money work for positive change. We work to out-perform the current market, and collectively utilize capitalism to help bend the arc of history toward justice and a regenerated world in which all life thrives.
 
I am hopeful that this award will create greater awareness for companies like Green Canopy and the world we believe in. The founders of Green Canopy started with a shared set of beliefs guiding their entrepreneurial spirit. The shareholders of Green Canopy invested with these beliefs guiding their  decision. Our lenders provide debt to Green Canopy because they want to leverage these beliefs into shifting paradigms. Many of the stakeholders and subcontractors who we work with also share these beliefs. And, of course, our homeowners, after experiencing living in a Green Canopy home, deeply connect with these beliefs as well. It is a broad and diverse ecosystem that Green Canopy works within, and given this interdependence, the award is more about these relationships than any one link. Being a link in this chain requires a commitment to earning profits as a means to creating the future we believe in, not the other way around. 
 
Thank you, Goldman Sachs, for this award. I am honored and would like to use the recognition to acknowledge all of the people at work using business as a force for good. These purposeful people are standing shoulder to shoulder, laboring to ignite a new wildfire; A wildfire of hope and transformation which won’t be stopped until the deep work of creating the better world of our beliefs has been accomplished.

SEATTLE, Washington & PORTLAND, Oregon (October 4, 2017) – Green Canopy, Inc., a proven urban infill deep green homebuilder, announced the launch of its newest affiliate company, Cedar.

“Meeting the challenges of global warming and the housing crisis in our high growth cities requires us to develop disruptive, integrated, and inclusive solutions. We are proud to offer a for-profit model for building resilient, inclusive and sustainable net-zero energy micro-communities without reliance on direct government subsidies” says Aaron Fairchild, CEO of Green Canopy.

The Company will acquire, develop, manage and market third-party certified green built, net-zero energy residential homes over the course of a 7-to-10-year period in Seattle, WA and Portland, OR. A minimum of 25% of the homes in every project site will be reserved as affordable rentals to households earning 80% of area median income (AMI) over the life of the Company. A final disposition process will result in selling a minimum of 25% of the remaining portfolio into community land trusts, or similar model, to be held permanently affordable to households earning 80% of area median income.

“Ecotrust is delighted to be a shareholder in Green Canopy, Inc. The Team has been terrific and we look forward to seeing where they take walkable residential infill development in the years to come. Green building, along with regenerative farming and forestry, are promising potential ‘drawdown’ technologies that pull CO2 out of the atmosphere and help reverse the devastating trends of the Anthropocene,” says Spencer Beebe, Founder & Executive Chair of Ecotrust.

Green Canopy's Cedar is poised to act on this opportunity. The urban infill home-building market is a highly fragmented marketplace with hundreds of small, independent homebuilders in both the Seattle and Portland markets. The February 2017 McKinsey Global Institute report, Reinventing Construction: A Route to Higher Productivity, found that “$10 trillion (is) spent on construction-related goods and services every year. But the industry has an intractable productivity problem and ... an opportunity to boost value added by $1.6 trillion.” “Fragmented markets and inefficiency go hand in hand. Our team at Green Canopy has long been aware of these inefficiencies and has spent considerable amount of time developing the processes and systems to contain costs and scale,” says Aaron Fairchild, CEO of Green Canopy. He further adds, “This ability allows us to lean in further to our mission and bring to the market net-zero energy homes alongside affordable home ownership. As a for-profit company, this puts us in a unique position to not only drawdown carbon, but to also lift up our communities.”

Samantha Lamb, of Lake and Company Real Estate sees the company as an innovative leader.  “Green Canopy is indisputably one of the leaders in the Green Home movement in Seattle and beyond. It is founded by passionate people who truly want to make a difference in the world. They don't just go for minimal standards in Green Construction; they are actively educating the market and realtors about the benefits of building and buying Green,” says Lamb. As evidence of this, Green Canopy will amplify Cedar’s impact through an 18-member stakeholder group, calling it the Impact Collaborative. The Collaborative will bring greater transparency to Cedar – its processes, best practices and outcomes – then conduct research and broadly promote their findings and advocate for new and better approaches.  

​
About Green Canopy
Green Canopy, Inc. runs a homebuilder, Green Canopy Homes, in Seattle and Portland whose mission is to inspire resource efficiency in residential markets. Green Canopy Homes began building in 2009 and has successfully sold over 125 third-party certified, green homes with over $80 million in gross revenues. Green Canopy Homes has highly developed home designs, project management processes, checklists, and systems of cost containment specific to the challenges and needs of building attractive, resource-efficient, micro-communities in walkable, urban places.
 
Contact: 
Aaron Fairchild, CEO
206.792.7281
aaron@greencanopy.com
 
Andy Wolverton, CFO
206.792.7287
andy@greencanopy.com

Pioneers like Thomas Edison have been excited for decades about the use of solar power. “I’d put my money on the sun and solar energy. What a source of power! I hope we don’t have to wait until oil and coal run out before we tackle that,” Edison anticipated. Starting this Fall, the first of many Green Canopy's Net Zero Energy homes will be available on the market in Seattle - with a commitment to offering these high-performance homes at a price that is on par with code-built new construction homes.
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Green Canopy is a mission driven Portland and Seattle infill homebuilder. The Company has always built resource-efficient homes to a standard far beyond building code requirements, keeping our communities and planet in mind. In order to serve their mission, it is important to continually be changing, improving, and innovating. The Company has been conscious of this, and it is now advancing yet another significant step forward. 

Zero Energy Bills, Less Negative Impact on the Environment
Net Zero Energy homes are revolutionizing green housing. Every Net Zero Energy home is modeled to produce as much power as it consumes over the course of a year using solar energy. They typically look like  other modern and minimal homes except that they come with an abundance of benefits many people don’t realize. The thought of buying a house that is modeled to cover the electricity bill is cool, particularly in hot housing markets that feel hard to keep up with, like Seattle and Portland. By soaking up the sun’s rays these homes generate enough electricity to power the home over the course of the year. Solar panels on each roof are among the many applications that make this possible.
 
Higher Level of Comfort and Less Expensive to Own
Net Zero Energy homes are also more comfortable because their high-performance envelopes (the wall, roof & floor systems) are ultra-efficient; The cold spots and drafts common in simple code-built homes tend to disappear. Furthermore, the advanced appliances and ventilation systems help to ensure evenly displaced temperatures throughout. Due to the intense efficiency and solar power generation, these homes cost much less to operate, offering homeowners, even in the PNW temperate climes, hundreds if not thousands of dollars in savings in their electrical bills.

Understanding the Challenges and Breaking Through 
As one would expect, building Net Zero Energy homes require a dedication to mastery. Most importantly, the roofs must be designed large enough to fit all the solar panels needed to offset the amount of energy needed. Additionally, most housing envelopes aren’t efficient enough so achieving net zero energy isn’t possible in most existing homes in the PNW climate. For example, the average Seattleite’s home has roughly 1,500 square feet and three floors and consumes about 28,000 kilowatts per year. To fit around 100 solar panels needed to offset the energy consumed by the average heat-leaking, Seattle house, it’s roof would need to be four times larger. However, if a 1,500 square foot Net Zero Energy home consumed </= 8,000 kilowatts a year instead, it would require roughly only 32 panels for the net annual energy consumption to be zero. Getting to this level of efficiency and performance requires a thoughtful and dedicated approach. To accomplish it, Green Canopy had to recalibrate several of its processes and checklists relating to feasibility, designs, estimating and purchasing, and project management.
 
Other builders have risen to the challenge over the years. However, a search on the Northwest Multiple Listing Service, revealed only five (5) of the tens of thousands of homes sold over the last 20 years have claimed to be a Net Zero Energy home. Though custom homeowners have built more Net Zero homes, they very rarely enter the market for sale. The building science and technology needed to make Net Zero Energy homes possible has finally caught up to the times. As a result, these homes will likely be available to buy at a far greater rate than over the last 20 years, and Green Canopy is set on blazing the trail to help transform the market as quickly as possible.
 
Green Canopy itself has built several certified Platinum LEED for homes, Earth Advantage Platinumhomes, Built Green homes, and Net Zero “ready” homes in the past. Net Zero “ready” homes are efficient enough to be Net Zero if the homeowner installs solar panels—the most obvious and expensive part— after buying the home. Additionally, on occasion, a home will be built to offset the electricity use but not the natural gas used for heating, cooking or domestic hot water heating, so the homeowner stills pays for non-renewable energy.  
 
Net Zero homes are the future of home construction and ownership, and Green Canopy is determined to accelerate their arrival on the market. Evidence indicates that Seattle and Portland homebuyers are early adopters, technologically savvy, educated people who care and think about the environment and their long-term, financial investments. The Company’s commitment is to offer Net Zero Energy homes not just to higher-end markets but also to markets that young families and first-time buyers can afford, priced on par with new construction, code-built homes. “We aren’t looking to offer our homes outside of the current market’s range for homes,” Co-Founder, Sam Lai, states. “In every market area, there are run-down homes with single-pane windows and oil heat furnaces that sell for less than average. Likewise, code-built, new construction, well-designed homes with high-quality systems are selling for higher than the average at each price point in the market. We believe our Net Zero Energy homes will demonstrate enough benefit and value to homebuyers that they will be excited to experience the lifestyle, while being able to acquire them within the market range.”​

The New Standard
Green Canopy’s first Net Zero Energy home represents the future for the Company as it rotates its entire pipeline to build only Green Canopy Net Zero Energy homes in the coming months and years ahead. This wouldn’t be possible if it weren’t for the dedicated team and partners such as Evergreen Certified, Van Wyck & Porter, and Northwest Electric and Solar. This is also made possible due to the Green Canopy design, purchasing, and project management teams that are so efficient the Company is able to maintain cost control far beyond industry standards. The Green Canopy team is a highly motivated and passionate group that follows a tight, quality-control system performing more than 50 quality inspection checklists throughout the time of construction. This ensures that Green Canopy’s homes are quality built, focused on craftsmanship and sustainability both inside and outside the walls.

For these reasons, Green Canopy Homes is proud to now be able to call themselves today and moving forever forward, Net Zero Energy homebuilders. "Our vision is to help make Net Zero Energy homes the new standard and broadly accessible across the income spectrum." – Aaron Fairchild, CEO.

Green Canopy is a Portland and Seattle urban infill homebuilder, developing environmentally advanced and thoughtful homes for sale to a broad range of communities and income levels since 2009. It is a certified B-Corp company with the impact investing community making up 100% of shareholders in support of the movement. Their mission is to inspire resource-efficiency in the residential market, with a vision to transform homebuilding and urban communities across the nation.

IMPACT INVESTING IN GREEN HOME DEVELOPMENT AIMS FOR PROFITABILITY ON A TRIPLE BOTTOM LINE

FOR IMMEDIATE RELEASE:

SEATTLE, Washington (December 22, 2015) – Green Canopy is excited to announce that we have eclipsed a major milestone with our second Impact Debt Fund. The Alder Fund is a Real Estate Impact Investment Fund that is managed by Green Canopy and designed to lend on the development of certified green and guaranteed efficient homes. It has now issued its last loan and will begin winding down – issuing distributions as loans repay over the next 6-9 months.

With the help of the Fund and all of its participants, Green Canopy completed 50 high efficiency homes across Seattle, reaping a total energy savings of 532,000 kWh per year.  “We have mitigated over a million pounds of carbon in the last two years by building Green Canopy homes. That’s the equivalent of planting nearly 30,000 trees every year,” says Sam Lai, the CMO of Green Canopy. “These are metrics that our investors look at when they consider putting their capital to work for a cause. Of course it is also about returns, but not just so.”

The Alder Fund launched in October of 2013 with $7.7MM. Of the 50 Green Canopy homes that were built, nearly 25% of them were sold at price points below $450k in an effort to attract middle and lower income buyers in the Seattle market. These pricing targets were set by Washington State Housing Finance Commission, who partnered on several projects with Green Canopy with the hopes of providing green and energy efficient homes to buyers who also qualify for the Commission’s down payment assistance programs.

“This Fund, which eventually lent over $29MM for the completion of 50 homes, has been especially prosperous, and is an indicator of what mission aligned and market driven capital can accomplish,” said Andy Wolverton, the Fund’s manager and CFO of Green Canopy Homes. “The Alder Fund’s success is certainly reflected in our triple bottom line – and brings more than just monetary returns to our investors.”

The return profile for the Alder Fund is 9-12% annualized - and so far it is on target to achieve that goal. Over 50% of the investors have reinvested in the Birch Fund, Green Canopy’s third Impact Investment Fund which began raising capital this summer. The Birch Fund is targeting a total raise of $20MM and hopes to increase the number of affordable homes for sale here in Seattle and in Portland.

FOR MORE INFORMATION PLEASE CONTACT:
Andy Wolverton
andy@greencanopy.com
O) 206.792.7283

What impact could we have if we were all just a bunch of tree huggers united under a green canopy? Our logo is definitely symbolic of the work that we are doing to change the course of climate change - and certainly everyone knows that we have sang our share of kumbaya - but it's the fast, hard data that delivers our projects and helps us work toward improvement at Green Canopy.

Decision making and benchmarking frameworks are integral to Green Canopy’s operations. Our acquisitions team uses a data driven framework and metrics to identify and purchase attractive development properties. Our project managers use a framework for guiding construction related decisions from start to finish. The reporting outputs are used to inform and manage future acquisitions and projects.

These carefully crafted systems support us in driving toward consistent execution and continuous improvements. We learn from the successes and failures of our decisions by establishing baseline metrics and measuring and reporting against them. This ultimately makes Green Canopy a better homebuilder. And importantly, creates a stronger and more resilient company, reduces risk for our debt fund members and builds a more valuable brand for shareholders.

Investors face similar challenges, especially those pursuing positive social and environmental impacts alongside financial performance. Without a guiding framework, impact investors are left to untangle a confusing mix of information and options. An impact framework can be a transformative tool enabling investors to move beyond intuitive guesswork toward more systematic and objective decision making.  

We hope you will join us in attending an event, Impact Investing with Purpose, being hosted by The CAPROCK Group and SNW Asset Management on Tuesday, October 20th, 6 to 8 PM at Seattle Impact HUB. Green Canopy board member Kyle Mylius will moderate a panel exploring the evolution and use of impact investing frameworks and metrics. Panelist Luni Libes, a familiar face to many of you from Fledge and Pinchot University, will offer insights into The Pinchot Impact Index, the subject of Luni’s recently published book. The event will close with a preview of CAPROCK’s iPAR impact investment framework and evaluation platform.

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

I have often cited Daniel Goleman to explain a consumer’s desire to make an impact with his or her invested dollar. In Ecological Intelligence, Goleman explains that consumers will always buy what they perceive to be a less toxic or more environmentally friendly product given price parity with a competing product. While the consumer may not be buying the perceived “better” product to make a positive impact in the world, they are likely buying it because they view the product healthier or better for their family. 

This consumer behavior pattern offers a direct analogy for financial investors. It goes without saying that investors invest capital to generate a return. If an investor can invest in an opportunity that generates a similar risk-adjusted rate of return to competing investment opportunities yet the investment will also deliver outcomes that better align with their values, then the investor will likely choose to invest their capital in such a value-aligned opportunity. 

Enter Green Canopy. Our mission is transformational; our company was deliberately created with the mission to inspire resource efficiency in residential markets. We have two impact product offerings for consumers to buy.

Our primary impact product is our homes. We build homes that are more environmentally sustainable than what is required by city code and  have third party  audits  verifying our homes meet or exceed a local or national green building standard. In other words, a Green Canopy home is healthier for the planet, consumes less energy to operate (we guarantee that), and is simply a better home than the comparable code-built home. The kicker: we price our homes for sale on par with other homes on the market. We have to price our homes competitively with other homes because if we don’t, buyers would choose to acquire the less expensive yet comparably located and sized home. So buyers of our homes acquire a Green Canopy home at a competitive price that delivers outcomes that align with their needs and values. 

Our second impact product is our real estate fund offerings. We currently manage two debt funds that generate competitive returns for investors. If it were not for these funds, we would not have enough debt financing to build more environmentally sustainable homes at our current scale. Investors in these funds buy membership units that are designed to generate competitive rates of return and deliver outcomes that align with their values. 

I believe the United States has entered a relatively new era where the general market is looking for values-aligned solutions. I witness this daily in both of our product offerings. However, most consumers and investors remain price sensitive and will continue to be so. This is where many people believe the government and foundations can play a role. However, I don’t believe it is incumbent on the government or others to subsidize product offerings, or for that matter the market to simply accept the market-price mismatch. 

Entrepreneurs innovate. The role of being an entrepreneur is to figure out how to bring new product to market in such a way that the market is willing to pay for it. Government incentives and infrastructure are helpful catalysts and support structures for market change. But the role of efficiently bringing new product to market is ultimately the role of entre- and intra-preneurs. 

Additionally, foundations, the government and other mission-driven sources of capital can aid in providing lower cost of capital to kick-start product offerings and help stimulate demand (think of the Bullitt Center or the ZHome development). However, values alignment should not be seen as an impediment to bringing socially and environmentally impactful product offerings to market—it should be used as a competitive advantage. Sound business people focused on values-based product offerings will continue to innovate within the cost/price constraints of the market and ultimately bring more and more highly sought after product to meet consumer demand. Impact alignment and the balance between supply and demand are really just a matter of time and innovation.

"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.

"The more alive values are within a group the stronger the bond and the greater the resiliency of that group. It’s about so much more than happy hour beers."

Contributed by Aaron Fairchild, CEO of Green Canopy Inc.

Have you ever heard ANYONE say after coming back from Europe, “I had a great trip, but I just hope those Brits/Germans/French don’t lose their culture?” The very notion of a nation losing its culture seems silly. Sure cultures change, but they change over time. National cultural changes happen slowly and change is usually driven by a shock to the current way of life. 

For whatever reason, corporate culture doesn’t seem as “fixed” as national culture. Nations lose their leadership, have lots of turnover and people come and go all the time. And nations are influenced by other nations in ways that it is hard to imagine might happen in companies. So what makes company culture more susceptible to change? 

Fast Starts and System Shocks

I recently spoke with David Norris, CEO of MD Insider. We both agreed that companies tend to start-up rather quickly. People come together in the beginning more out of chemistry and shared excitement about the opportunity surrounding the product or idea. More often than not, they share a common national cultural framework so they already have a great basis to begin working together. They also have a shared language, and typically share the same historical perspective, political and economic frameworks (socialist, democratic, capitalist, parliamentarian), etc. Layer chemistry on top of a similar national cultural framework, and that can take the newly formed company down the road a fair bit.

The breakdown typically comes, just like with a nation, with a shock to the system. For a company this could mean jumping from four employees to twenty in less than one year, and then from twenty to forty in another six months.  When countries are merged together for one reason or another, we often watch as the individual cultures tear them back apart... Infighting can happen as larger and more powerful countries begin to dictate terms. Just bringing a similar currency to Europe has been challenging since adoption of the Euro. In the same way, with companies experiencing rapid growth, bigger personalities typically dictate cultural norms, and when those personalities move, for good or bad, so goes the cultural dictator.

Core Values As Cultural Seeds

To help ensure your corporate culture isn’t encapsulated and controlled in one or two, or even just a few key personalities, consider what is at its core. Culture can be defined as the shared values, language, beliefs, and customs of a group. At the heart of culture is how we interact and behave together. At the heart of culture is how we interact together and behave together… David referred to our shared set of core values as the seeds of culture. As the seeds of culture take root in your workplace, your teams will thrive and productivity will increase. 

If a group of people has a shared set of values, they can be pointed toward any mission or vision, and as long as they buy into the mission and vision, they will excel.  Core values incorporate our language, what we celebrate, how we develop, our rights of passage, and how we interact. For a country, these things may seem obvious. For companies, it seems less than obvious for many leaders.  In fact, I’ve heard more about the importance of the boss taking people out for beer as a means to “create culture”, than working on our values to create culture. Hmmm.

Whether a company’s values are implicit or explicit, they exist. The more explicit the shared sets of values, the more that group of people “live” their values. The more alive values are within a group the stronger the bond and the greater the resiliency of that group. It’s about so much more than happy hour beers.

Every Day Values

Companies often explicitly state their values on their websites and in promotional material, creating a veneer of credibility and sincerity. One of the most infamous examples of this is Enron’s four capital V Values: Respect, Integrity, Communication and Excellence. Clearly this broke down long before the company failed. So if our values are the seeds of culture then nurturing and cultivating these values throughout every day will help to keep them alive and healthy, rather than stale and static on a corporate website.

For a traveler, there’s a difference between that sense of “Love this place, but wouldn’t want to live here” and “I would love to live here!” It’s the same in companies. Living your corporate values and keeping them alive and healthy within the company means the right people will find they’d “love to work here”, and the “wrong” people will move along. A company whose employees work to keep their shared values alive within the organization will allow the company culture and the team to thrive through down times and times of change and growth.

When the founders of Green Canopy first launched a homebuilding business in 2009 in Seattle, the temperature of the room was tepid to say the least. Presenting a real estate venture in the middle of a recession doesn’t exactly make you look smart, even if you can say it with a straight face. But, what may have seemed like a huge risk then, was also humbly presented as having its rewards. The rewards were transformational, the cause was inspirational and the drive to create a deliberate and intentional homebuilding business that could move markets and protect mountains – somehow made it worth the risk.

Green Canopy recently closed on our first Portland project in the Arbor Lodge neighborhood of North Portland and we are incredibly excited for our expansion. We will be launching a Portland-centric real estate debt fund in the coming months so stay tuned. This is our climate change solution and we are making it happen! You can read more about our Portland Expansion by downloading our official press release here.

Contributed by Krystal Meiners

Recently, our CEO wrote an article in which he mentioned that “at Green Canopy, we recognize that we are firmly planted with everyone else somewhere along the spectrum of hypocrisy.” He was talking about how it is very easy in this industry to not be “green enough” – and how, when you are dealing with market-based realities, you can’t always make the most climate sensitive decisions.

This is hard for our team. It’s hard for any values-based organization.

Despite that - we do our best. If we can’t do the best thing – we will always do the next best thing. And we never stop innovating. Nor do we give in to the status quo.

Most recently our team had to cut down a towering Blue Atlas Cedar on one of our project sites. How could Green Canopy – whose very logo is a stately tree – cut down trees?! Sure there are plenty of design opportunities for homes built around trees, on top of trees, in trees – but the fact was, this was not a custom home and design dollars had to be spared for other resource efficiencies.

This Blue Atlas will not go to waste though. We spend a great many hours and dedicated brain power to ensure that we limit our waste streams as much as we can. Instead, we milled the wood on site and we will incorporate it into design features in our future projects.

The arborist that we use in Seattle is Treecycle and the mobile miller is AJ’s Custom Portable Saw Milling; their services include felling trees and onsite milling into usable lumber – or in our case - into live edge slabs. It is an amazing process to see – and our PM Ryan Nieto was gracious enough to capture it last week.

Below is a time lapse of the milling. You will likely see this noble tree in the near future in a few of our homes or in other projects after it cures. Similar to this Blue Atlas, we have another cedar that we milled a few years ago. It will be used for this year’s BuiltGreen and Green Genius Award plaques – celebrating the region’s most sustainable projects and people.

We made similar plaques last year for the Green Genius winners and are excited to be working with Built Green to craft all of the awards this year. It is great to have these trees come full circle as a reminder to all builders about the use and reuse of this world’s incredible resources.

To hear more about our reuse and the deconstruction process, join us for this year’s Green Genius Awards and the Built Green Conference on September 18th. Justin Hooks will be a session speaker and Green Canopy is the Reception Sponsor. Click here for more info about the conference.

I met my wife, Susan, 14 years ago at a Chamber of Commerce meeting. I was a banker and Susan was forming a non-profit mentorship program for at-risk youth in south Seattle. She was attending the meeting to recruit mentors and came away with a lot more than she anticipated. We lived very different lives at the time however we shared similar values of social and environmental justice.

Over the course of the next several years I continued to feel juxtaposed in life. I was working to make money, and really wanted to be making a difference. The juxtaposed feeling culminated in meeting another couple on a hiking outing in 2003, when I was asked what I did for a living. When I responded that I worked in banking, the couple immediately looked at Susan and asked what she did for a living. When she said that she worked in the non-profit sector, they quickly struck up a conversation leaving me feeling like a third wheel. Ugh… it was time for a change.

I guess I share many of the attitudes of the millennial generation, meaning I am far from alone. I am ambitious and demand a lot from an employer in order to earn my respect and retention. I am fine working long hours from the office and from home if I am inspired, and I believe in perhaps a naïve notion that I can live an aligned life.

When I reflect on my own experience and look out at the world around me I see the intersection of two major factors that are driving our company, Green Canopy, and the future of business:

1) The prevailing cultural attitude of the “millennial” shared by so many born before and after 1981, and;

2) Society’s hard charging transition into a new world paradigm of severe resource constraints and climate upheaval.

The success of Green Canopy and other companies is limited only in our ability to positively respond to these two things.

The first of these requires that we inspire our employees and earn the right of their respect and continued employment. And whether the business of an organization is about addressing environmental challenges head on like Green Canopy or not, the most successful businesses of the future will intentionally conduct their operations in the most resource efficient manner possible. Simple, yet oh so difficult.

“At Green Canopy we recognize that we are firmly planted with everyone else somewhere along the spectrum of hypocrisy.”

After the culminating hike in 2003, I spent much of my time trying to create alignment in my life by finding ways to apply my skills and experiences toward environmental issues. That eventually led me to quit working at my father’s bank in order to start my own enterprise. And in 2008 I shared an idea I had recently been mulling on with a longtime friend. After a short period of time Sam and I began developing the plan and finding the right partners that would lead to starting Green Canopy over one year later.

At Green Canopy we recognize that we are firmly planted with everyone else somewhere along the spectrum of hypocrisy. Our mission is to inspire resource efficiency and – while we are extremely intentional and deliberately try to always make the most resource efficient and less environmentally harmful homebuilding decisions – we have yet to perfect our efforts in building the utmost in green and resource efficient homes. Sometimes we are faced with no other alternative than to make the less resource efficient or more wasteful decision. It sincerely frustrates the team when this happens. We certainly have green building design and development standards that we never sacrifice, but the cruel realities of market-based economics sometimes force our hand. And yet many times these very same constraints open up new possibilities. However, at the end of the day we are far from perfect. So when I talk about our company it comes from a position of deep humility and a desire to inspire others to take action.

Inspiring at the intersection of the prevailing cultural attitude and the new world paradigm of severe resource constraints is clearly tricky. How we go about it at Green Canopy is through delivering – for our employees – what Daniel Pink has written heavily about: autonomy, mastery, and purpose. Intentionally building a company designed to deliver these three essential things to its employees took a lot of thought and dedication to cultural development. As a result of our culture we cannot help but to give employees autonomy to make their own empowered decisions, the ability to master what they are already interested in, and a binding sense of purpose. Inspiring at the intersection happens right there, with the binding sense of purpose. Developing a cultural framework that allows every employee to meaningfully engage in addressing that purpose is part of the work.

When Susan and I reflect on the journey of the last decade and the sacrifices that we have made as a family to get here, we know that it was well worth the struggle. We are aligned through our work and in our day-to-day lives and we are proud that through this career we are making a meaningful and lasting difference. Also, despite the hike and my feelings of career shame, my banking skills definitely come in handy at Green Canopy. The future of business requires innovation on every front, including capital.

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.

Since issuing our last newsletter titled, NetZero Doesn't Sell, we have received all manner of responses. I have yet to experience such impassioned communication resulting from one of our newsletters.

Some of the responses have been positive, most have not.

The not good...

"I don't believe a 'few weeks' as you indicate below should be the litmus test for sales and most importantly should not be verbalized to the community..."

"I think to say that 'net zero doesn't sell' when we have very few examples of true net zero energy residences in the greater area is irresponsible..."

"I don't think you should make universal statements based on a sample size of two..."

"I think you can say..." this or that thing

"I don't think you should..." make this or that statement

And so on.

The good...

"Keep speaking your truth"

"Thanks for sharing even when the news isn't the best for you guys or maybe what we want to hear, good for you."

Comparisons and references have been made to the Bullitt Center, zHome in Issaquah, and Bainbridge Island NetZero project. Assertions made about premiums for green homes and buildings. I sincerely respect and appreciate the responses our newsletter has generated. For this reason I am responding with an explanation of our intentions.

Green Canopy's mission is...

to inspire resource efficiency in residential markets. By "residential markets" we mean homebuyers, sellers AND all players in the real estate market: Real Estate Agents, Lenders and Investors, and builders.  We strive extremely hard to accomplish our mission by paying close attention to what is required by the market to be inspired. When we titled our newsletter, Netzero Doesn't Sell, we were only referring to the project that was referenced in the newsletter, and that project only. We did not offer comparisons to any other project. We made a declarative statement referring to our project as a note of caution and optimism for other builders... green efficiency does sell, but promoting this project as NetZero hurt its salability. As stated in the newsletter, "netzero in Seattle doesn't sell quickly." As a builder in a red hot real estate market we cannot afford to have projects linger. The longer a home sits verses comparably priced product negatively impacts the overall market perception of the home, driving the price down beyond our control.

My observations:

The hyper or deep green efficient homebuyer in today's market is still an outlier. Very few certified LEED for Homes have been offered for sale in this market and fewer still netzero homes. This suggests that there is little demand for super deep green homes on behalf of homebuyers, otherwise this simply would not be the case. This does not suggest that the deep green buyer doesn't exist. They absolutely do exist, and they are minority players in the larger market.

My conclusions:

Green Canopy will continue to target the larger market, not the outliers, by offering green efficient homes that inspire along our brand pillars: value, innovation, beauty, efficiency.  In targeting the larger market we hope to help transform the market. Demonstration projects such as zHome and the Bullitt Center are incredibly helpful in demonstrating to the market what is possible. I am thankful for these projects. They create awareness and incrementally increase demand. However, the typical builder cannot afford to build demonstration projects due to the combination of the additional cost and risk... getting out in front of the market, selling product to outliers, is not a recipe for success for a market-based, for-profit company regardless of the sector.

The challenge for Green Canopy is to build and remodel homes that: (1.) buyers want to buy (2.) allow us to have a sustainable profit margin and (3.) inspire resource efficiency... all at the same time. Remove any one, or all of these criteria and building the project gets easier and is typically the role of either government, well-intentioned non-profits, or non-mission driven companies. If Green Canopy can consistently deliver on all three of these criteria we will enjoy a sustained competitive advantage for years to come and perhaps one day claim success in our hope to transform the market to consider green efficiency when homes are bought and sold.

Sincerely,

Aaron Fairchild, CEO

Contributed by Aaron Fairchild:

While we have been certain of our business model for two years, apparently we haven’t been certain about who we are. J

From our retail brand name, to our websites, to our legal entity, to the shareholder base, to our corporate location, so much of our company has changed!  The result is that we are rolling into 2011 refreshed, recharged and ready.  We are now located in Fremont, as a C-Corporation holding a homebuilding company named Green Canopy Homes with roughly 20 shareholders.  The changes have established a highly resilient, well funded and determined group, with a healthy following of fans and supporters.

2011 brings with high hopes and expectations combined with plenty of unknowns.  We anticipate our local real estate market to remain relatively flat and for interest rates to be higher.  We believe that the NWMLS will have new check boxes to list energy performance scores among other make-sense sustainability features.  We hope that the City of Seattle will announce the coming of an ordinance requiring all homes to have energy performance scores assessed at the time of sale.  We are certain that 2011 will see increased awareness of the benefits of energy efficient homes, which will translate into shorter sales cycles for Green Canopy Homes.  Lastly, keep an eye out for Green Canopy to expand its business offerings and impact in the residential market.

All the best to you in 2011!

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:

Dow Jones Newswires published an interesting article two weeks ago on one national homebuilder’s announcement that it will be measuring the efficiency of all its homes.  Using what it calls an Energy Performance Guide (EPG), national homebuilder KB Homes is positioning the rating along the lines of a “miles per gallon” score we are used to seeing on cars, and hopes to use this to differentiate their homes against the competition.

Although I think the EPG is imperfect because it does not account for absolute house size (that is, a big home can get as good a score as a little one, even though the larger will consume much more energy), the idea of a homebuilder asserting a measurement of efficiency is a powerful tool for both the builder and the eventual homebuyer.  For some builders, it may be a way to differentiate their product amongst plentiful competition, or be a way to highlight the company’s fundamental values.  And for buyers, it’s just another valid piece of information that they deserve as they make a major purchase decision.  In the state of Washington, we are required to disclose if a home has a leaky roof, why not leaky walls and windows?  An EPG score may help to tease out some important information about the quality of the home.

What really strikes me about this article is the reaction of another builder who is ignoring the green position.  “I will build whatever the market demands,” says Eric Lipar, chief executive of LGI Homes, a Texas-based builder. “It’s not what the public wants.”  The sad truth is that many builders have in fact built green homes only to see buyers choose something a bit cheaper, a bit bigger, a bit lower in quality.

But.  Let’s look back in order to look forward.  Remember when the public didn’t want airbags in their cars? (I know, this dates me. If you’re too young to remember, there was a big brouhaha over the “significant” cost of adding airbags to cars).  “People aren’t demanding it”, lagging automakers said.  “They won’t pay the cost.”   Then Chrysler decided to install airbags standard across the product line, and suddenly they had both a differentiating factor that made the competition look a little slow, and also played innovative market mover. Can you even find a new car without airbags anymore?  The market didn’t initially demand them; and automakers actively fought against them.  But then, data showing crash survivability emerged and the market moved, and the laggards scrambled to catch up.

KB Homes is clearly making a bet that people will come to value green, even if over time.  They are smart to use an energy rating to assert their position with measurable data.  (We at Green Canopy are happy to see a national homebuilder take this position, one that we announced in 2009 when we chose the Energy Performance Score.)  Part of why builders have not been rewarded for green is that buyers don’t know what the heck green is.  Taking a measurable position (such as energy efficiency) takes out the mystery and makes your case that much more simple to assert.

So I believe that Mr. Lipar at LGI Homes will be one of the many laggards forced to catch up as the rest of the market uses the transparency of an energy score to tease out the information that helps them make their decisions. In this Google era, people are not asking for less information.  They are not asking for less green.  And as valuable data such as energy scoring becomes more commonplace in the residential market, we think consumers will come to demand this sort of information–and the efficiency measures that drive the scores upwards.  The market is speaking, Mr. Lipar.  Move along.