Building on both the certification literature and previous work on the impact of climate change on real estate prices, this paper investigates how the prices of more sustainable homes differ from conventional homes. This paper utilizes data from the Green Building Registry and the Yale Climate Opinion Maps, along with Zillow housing price datasets and uses the hedonic pricing model to estimate the economic impact of energy efficiency on housing prices. Using comprehensive sales transaction data merged with energy rating data of U.S. real estate properties, this paper finds that properties with better energy ratings are sold at a premium compared to those with poor energy performance. The results also suggest that the premium is more profound among neighbourhoods that are more concerned about sustainability and environmental issues. The paper contributes meaningfully to the sustainable finance literature and the energy ratings literature. It has the potential to further our understanding of the role of energy ratings on real estate pricing and how climate beliefs may impact this role.
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Yuchen Lin (2024) studied this question.
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