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.
Email email@example.com to learn more about how net zero energy, single-family residential real estate investment and development funds can be designed to be flexible in response to market cycles.
Green Canopy Cofounder, Sam Lai, was featured by Presidio Graduate School (PGS) in the article, "Net Zero Hero". Sam is an alumnus of the Sustainable MBA program at PGS — the graduate school that "educates and inspires a new generation of skilled, visionary and enterprising leaders to transform business and public policy and create a more just, prosperous and sustainable world." Presidio Graduate School has earned accreditation in the sustainability-sphere and acquired Pinchot University (formerly Bainbridge Graduate Institute).
Sam tells Shawna Cain, "I selected PGS after a process of visiting classes and interviewing students and asking what their experiences were like. I realized that what I wanted was:
Finally, the biggest impact that I think graduate school has had for me, beyond some of the hard skills, is that when you go to Presidio Graduate School you're able to look deep within yourself, and understand how to optimize our own personal growth, and I don't think any graduate school is able to do that the way PGS does."
Green Canopy's Alexa Ashley further interviewed Sam on his time at Presidio Graduate School and the value he took away from the Sustainable MBA Program:
AA: How did PGS teach you to think in systems?
SL: One of the things we did in first quarter was systems mapping, which is its own discipline, where you look at different components of how the world is structured, how businesses are structured, environmental systems are structured. You deconstruct them, allowing you to understand the components and then you can see how they’re integrated. So often in business you might be a specialist and you might have mastery in one thing — but you may be working 100% in the wrong direction because you haven’t taken that high-level, systems-level view.
AA: What is the most value that you took away from the Presidio Graduate School MBA Program?
SL: The opportunity to practice and take big risks, and explore ideas, that typically — in the business setting — there just isn’t enough bandwidth or space or willingness from everyone, to just take a wild idea, to play with it, to deconstruct it, and to go all the way with it in a risk-free environment.
I saw lots of people grow from not having much experience in public speaking to feeling comfortable with it at the end of the program. For me, I was able to take storytelling and public presentation and be able to have a very formal structure to bounce off of and play with to where now I feel very confident. I now have a process to be able to get from point A to point B in a very short amount of time because that’s what the process forces you to do. It says, “Okay you have an idea? Okay, test it. Prototype it. Get up and talk about it." That’s a lot of what we do in business. We iterate through ideas very rapidly — and that’s what’s required for progress.
It’s really encouraging and energizing to see other people that are just as passionate about sustainability and improving our world and that they are professionals engaged in business, and the curation of those two characteristics are unique to the PGS tribe.
Watch Shawna Cain's interview with Sam Lai below and read her article, "Net Zero Hero".
Mission Metrics: Case Studies on Impact Part 2
Written By: Aaron Fairchild, CEO of Green Canopy
Green Canopy’s neighborhood engagement started with our first home in West Seattle in 2010. We painted the home a shade of green that our neighbors rejected immediately and publicly via social media. We were taken aback. This certainly wasn’t the “impact” that we had hoped for. Our nascent team had just begun working together with a mission to inspire and this quickly became a moment to listen and learn. We invited all of our neighbors to meet onsite and tour the construction project and vote on the color to repaint the home. This was our first opportunity to talk to the community about our mission, gather feedback and learn more about our neighbors, their values and, of course, a better choice for paint color.
Since that time Green Canopy has increased its commitment to neighborhood engagement in a number of ways. The company has hosted barbecues, sponsored block parties, held educational events on green building, hosted happy hours highlighting local non-profits, and more. The company has also programmatically adopted the Community Color Program to select the color palette that we use to paint every home. Additionally, in 2012 the company formalized our introduction to the neighborhood with a “Meet the Builder” community meeting. This is neither required by the cities in which we build, nor embraced by the associations to which we belong. The Green Canopy Meet The Builder community meetings represent an early chapter in the story of every project, helping to set the tone once construction begins and ultimately ensuring greater community inclusion and consideration than otherwise.
In October of 2014 we layered into the Green Canopy Meet the Builder community meeting, an online neighborhood survey. Since that time, we have held over 20 community meetings and received results from 15 communities with responses from over 100 neighbors in Portland and Seattle. Once the surveys have been completed we process neighbor’s responses and send all responses back to the community members that filled out a survey. The responses are shared anonymously; yet when we review these results we receive highly informative feedback, which we use to learn, adapt and inform the Green Canopy team about the unique story of every community in which we build.
For the first time, we are producing the results of the community surveys from which we have learned so much – they are full of critique, feedback and grace - take a look for yourself and let us know what lessons you learn in the comments below!
Download Green Canopy's Community Survey Responses to learn more about the communities in which we work.
The numbers from the NWMLS are in! Below you will see the list of the Top 20 Branded Builders in Seattle as pulled from our local Multiple Listing Service data. More importantly, you will also see the percentage of the homes that each builder listed as certified Built Green.
Why is this data useful? It is a market insight that clearly shows builder trends and market impact. The data reveals the local trend toward more sustainable construction practices that impact our region and our nation. As Seattle remains at the top of national growth centers - builders here are in the spotlight and the quality of our housing stock sets a precedent.
So, how do Green Certifications impact our market? The Built Green certification standard means that Built Green certified homes were built to a standard that is beyond code. Simply put, Built Green certified homes are better than code-built homes because they are built to a standard that meets and exceeds our building codes. Not only are certified Built Green homes better quality than standard code built homes, but they cost less to own, have a reduced impact on the environment and put less strain on our water and energy resources. They are less toxic and have better indoor air quality which is imperative considering our growing asthma rates for adults and children across the US. Life in these homes are simply more comfortable and healthy.
Why aren't all builders building to this standard? Often the argument you hear builders make for not building to a standard that exceeds code is that it costs too much money, or that people will not pay extra for better quality. And yet most of the builders in the Top 20 are building at least some certified Built Green homes. So it stands to reason they have figured out how to make it work. Green Canopy would like to continue to encourage the Seattle homebuilding community to advance our collective building practices and embrace green building standards and techniques wherever and whenever possible. There will always be better quality homes than others, and homes that are more “green” than others. For those builders that have built and are continuing to build leading edge quality homes – THANK YOU and keep on keeping on blazing the trail for all of us to follow!
Excerpt from the Washington Women's Cookbook, 1909
1. Sleeping Bag, consisting of three bags - one inside the other.
(1) Waterproof shell, of khaki or rubber or parafined canvas or oiled silk
(2) Double wool blanket bag
(3) Comfort padded with wool bats, the comfort folded and sewed together as a bag.
2. Tramping suit:
(1) Bloomers or knickerbockers
(2) Short skit, knee length, discarded on the hard climbs
(3) Wool waist or jumper
(4) Sweater or heavy coat
3. Three pairs of cotton hose
4. Three pairs of boys' wool socks to wear as the second pair of hose to prevent chafing
5. Mountain boots to the knee with heavy soles, heavy enough for hob-nails and these must be placed in the soles before starting, using 3 1/2 eighths Hungarian nails in the instep as well as in the heels and soles
Say Hello to Cora! 2902 NE 53rd
It's always fun to research names for our homes. It is one of the identifying features of a Green Canopy Home - and most of our homes are named after women who have made history and who have helped us get to where we are today. I couldn't help but highlight one of our newest acquisitions. The moniker for this home certainly is a story worth being told! Our latest project is Cora - after Dr. Cora Smith Eaton.
Cora was one of Seattle’s leaders in women’s equality during the turn of the century. Additionally – she was the first female secretary of the Mountaineers Club and also the first woman to summit Mt. Olympus (not to mention she summited all 6 of Washington’s major mountains).
Cora was also a doctor of medicine and was the first woman doctor to practice in North Dakota before moving to Seattle. She was licensed in several states by the end of her career and ran a practice with her husband Dr. Robert A Eaton.
And my favorite anecdote – Cora also helped author the Washington Women’s Cook Book – a PR stunt for the Suffragettes to help get the message of women’s equality to the women who were still stuck in their kitchens – and to help sway men to support women’s right to vote by saying even the Suffragettes can still put a good meal on the table. Brilliant!
Cora's contribution to the Cook Book consisted of the list above (they have a section on packing food for a hiking trip) and a recipe for (drum roll please...) Tea. Yes - her meaningful, amazing contribution was Tea. The recipe is below - but in her heart of hearts, you can see where Cora's priorities were. She was an adventurer... blazing trails for all of us.
But clearly, none of us can live in the PNW without tea.
She is one bad ass mademoiselle. Welcome to Green Canopy.
A Recipe for Tea
In two quarts of fresh water, boiling hard, put a loose cheesecloth bag containing four heaping teaspoons of tea. Cover and let stand by the fire for five minutes, but do not boil. Then remove the bag of tea, as leaving it in will make the tea bitter. Or, if the bag is not convenient, pour the tea off the leaves after it has steeped for five minutes. -Cora Eaton
"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.
Contributed by Krystal Meiners, Director of Marketing
Recently I was asked by a neighbor if I knew any custom green builders. Ahem! I proclaimed - I just so happen to work for one! What can I do for you? They were interested in building their very own green home in the near future and were currently saving to buy property on Bainbridge Island. Great! Let me know when you're ready, I said - and I can get you started.
My neighbor's next question is one that we get often. How do I know if a builder is a green builder? Do they have to be LEED Certified? To which I replied... first of all - buildings are certified, people are accredited. What you really should look for when searching for a green builder is whether or not those sustainable business practices are embedded in the culture, their people and their product. But also - LEED, while it is an incredibly robust program, is not the only green building guideline out there. In fact - Built Green carries many advantages in our region. It's tailored to the needs of the Pacific Northwest - and is incredibly in tune with the builder community here.
Of course my neighbor had never heard of Built Green - which goes to show that the USGBC has a great marketing budget and a good hold on the market. Still - any green builder should be familiar with both - and that was my point.
In light of the conversation with my neighbor - I decided that I would post our latest Built Green Case Study that was submitted to their newsletter. Every Green Canopy Home is Built Green Certified, but this one was a particularly amazing rehab project that presold in Ballard. We were happy to work with Evergreen Certified to get the job done and truly believe that Built Green is a critical brand and program in the Pacific Northwest.
1. An AMAZING question.
Our non-profit cohost has always provided a topic of discussion for our happy hours – and Sustainable Ballard really hit it home with their topic.
a. Does Density = Sustainability?
b. Does Sustainability = Density?
This two-parter really has a huge impact in Seattle right now and is on the tips of everyone’s tongues. Despite the "breathing room only" crowd – the quality of conversation was fascinating. Not everyone chooses to talk about the topic during our happy hours but this really captured the attention of many including Councilman Mike O’Brien who was discussing Ballard’s new apodments – considered both a scourge and blue-sky solution to housing in Seattle.
The rest of the conversations spanned walkability (a fun topic in light of Redfin’s recent acquisition of Walkscore) – as well as Ballard’s most recent developments and the addition of quality locations to eat, shop and sip. The idea of a “carless lifestyle” as the new definition of luxury was a spirited thought when considering the changing mindset toward livability in times of climate change and a return to urban living.
Not all of the conversations were light-hearted. Serious attention to community wants and needs and the impact of more density on transportation was a common topic; as was the builder-bad-guy issue with neighbors. Not everyone loves the way development looks, feels and changes a neighborhood – so thoughts on working with community were abundant. In particular - discussions around Green Canopy's new Neighborhood Design Survey and community meeting approach were inspiring to neighbors that had visited the event.
2. Another key ingredient to the success of this specific happy hour was the LOCATION.
We went against our own rules and decided to host the event in a small event space – but to keep it lively, we started off with drinks at the nearby Skillet – and then moved indoors. While it may have been difficult to corral folks - no one was lost and the “bar-hopping” effect made the event feel less stiff.
Aside from just the venue – the fact that the event was held in Ballard – a community common to our hosts, co-hosts, sponsors and mired in the topic at hand – made it easier to talk about density relative to where we were all feeling excitement and pain. The Greenfire Campus was a perfectly inspirational space with only enough room to kiss or kill whoever you were speaking to. Skillet made for the perfect pre-funk, and Parfait made for the perfect after-hour snack.
We definitely look forward to hosting many more Empower Happy Hour’s, and aim to keep them simple, sexy, and substantial. We hope you will join us the next one to help ADVANCE THE DISCUSSION.
The outcry against residential in-fill has reached a fevered pitch in Seattle. Neighbors are yelling at homebuilders, each other, the city, and anyone who will listen. The themes are relatively consistent; opposition to modern homes, bigger homes, added density, or the fact that projects are unaffordable to existing residents. Builders, on the other hand, are simply trying to build what the market demands – and that may well conflict. But, is the fevered pitch, and ill will around new in-fill developments in the Seattle area necessary, or is there a way to work together?
As someone on the front lines of the neighborhood hostilities trying to do business in a new way, I think there is. By engaging with (and listening to) neighbors and being transparent about planning and decision-making beforehand, infill housing can become a welcome and community-forwarding endeavor.
Having heard the angry outcry, and with a focus on continuing to build a human values-based business that contributes to communities, here are a few ideas for how this could be done:
- Listen, really listen, first. Changes within a neighborhood can be emotional for many. When you recognize that going in, even hearing concerns starts to build a trust pattern. While plans are still conceptual, hold a community meeting to receive input on the direction of your design.
- Engage along the way. Especially with topics like sidewalk closures, site work, paint colors, etc. (We use Tumblr quite a bit on this front) Updating the community using a community blog demonstrates awareness that the developer is entering into an established norm of how the neighborhood functions.
- Acknowledge feedback and make Changes. When neighbors really see a result of their comments, whether as acknowledgement or in changes to the plan, trust is solidified, paving the way for the best possible relationship with the community throughout the construction process, and helping the new homeowner receive a much warmer welcome.
How is this good business? Engaging the community while building in close quarters with neighbors helps minimize angry calls and letters to the city, intense verbal discussions with subcontractors, and creates a much better work environment for everyone. By approaching our own projects in this manner, we’ve had neighbors bring us warm coffee, cookies, and offer to help. Our homebuyers are a welcome addition to the neighborhood versus being seen with skepticism and mistrust by association. All of this work helps create positive association with our company name and ultimately helps sell our homes.
In this day and age of transparency, builders really can’t “bulldoze” their way into a neighborhood. If neighbors and builders alike can remain open to each other, listen and engage, we should all be able to learn together how to effectively rebuild our aging infrastructure, honor our past and lay the groundwork for a thriving future in Seattle.
Affordable Net Zero Homes
Bainbridge Graduate Institute
B Corps Champions Retreat
Boots On The Ground
Business As A Force For Good
Construction Waste Recycling
Corporate Social Responsibility
Ethics In Business
Graduate School Seattle
Green Building Materials
Green Real Estate Offices
Impact Investment Fund
Innovative Seattle Company
Investing In Real Assets
Investing In Real Estate
Investing In Real Estate Development
Modern Home Builder Magazine
Most Creative People In Business
Net Zero Energy
NetZero Energy Homes
Net Zero Home
Net Zero Homes
Northwest Electric And Solar
Pacific Northwest Real Estate
Portland Housing Market
Portland Real Estate
Presidio Graduate School
Real Estate Market
Salvage Building Materials
Seattle Home Builder
Seattle Housing Developer
Seattle Housing Marke
Seattle Housing Market
Seattle Real Estate
Seattle Real Estate Market
Seattle Zero Waste
Socially Responsible Investing
Socially Responsible Mutual Funds
Sustainable Design And Development
Sustainable MBA Seattle
Theory Of Change
When To Invest In Real Estate
Zero Energy Home
Zero Energy Homes
Zero Waste Home
Zero Waste Washington
The Green Canopy blog is written by our CEO and Culture Curator, Aaron Fairchild, as well as our staff and a few very special guests.