Developer Should Establish the Level of Demand for Eco-Friendly Housing

A reader asks for my advice regarding a concept in sustainable building that can provide whole neighborhoods of energy-neutral houses.  He believes he has a very marketable product that can serve West Virginia, Virginia, North Carolina, South Carolina and Tennessee right now.

My advice: Choose each specific target location very carefully.  As you know, “location” is all three of the top three ingredients that creates the market price of real estate.  Here it’s even more important.  If you’re going to sell 15 eco-houses in Gatlinburg, TN, the first thing you need is 15 families who want to live in Gatlinburg, TN.  Do they exist?  You’re creating a huge amount of supply, and if that’s not met with an equal demand, you’re going to face a problem, regardless of the houses’ eco-characteristics.