PHOENIX -- Homebuilders slapped on solar panels and added other eco-friendly enhancements as energy prices soared earlier this year, hoping greener homes would lure reluctant buyers.
But since July, the cost of oil has plunged from $147 a barrel to about $36, while home prices continued to fall. Together, these headwinds have stalled low-energy housing developments around the country, including projects by Meritage Homes (MTH) and Shea Homes.
"The program doesn't necessarily pencil out at the moment," said Scott Kramer, a forward planner for Scottsdale, Ariz.-based Meritage Homes Corp., which builds homes in Texas, Arizona, California, Nevada, Colorado and Florida.
"People don't seem to be willing to pay for it."In 2007, Meritage packed $20,000-worth of solar panels, high performance insulation, low-leakage air ducts and other systems in its first green community in Vacaville, Calif. The "Encore" homes promised to slash electric bills by up to half, and buyers snapped them up even though Meritage offered them at a higher price than nearby competitors. Sales figures in July showed that the Encore development sold 1.55 homes per week, compared with 0.88 homes per week for similar homes in the same city, Kramer said. But that advantage disappeared in the second half of the year. Meritage and its closest competitor both sold about one home every two weeks according to sales data for the month of November, and it slashed prices that month to make Encore homes about the same as its competitors. Though Meritage continues to build Encore homes in its Vacaville community, it's re-evaluating whether to move forward with plans to start new green communities. "It's been a bad couple of months," Kramer said.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV