Dave Everson runs a pragmatic business. A third-generation contractor, Everson founded Phoenix-based Mandalay Homes in 1999, and enjoyed almost a decade-long run before the housing bubble burst and the country became mired in recession. Austere risk management and old-fashioned belt-tightening kept Mandalay afloat as other builders shuttered. The company eked along until 2012, when Everson fielded a call from the city of Phoenix looking for a construction partner. The mission: use federal stimulus dollars to resurrect one of the city’s zombie subdivisions abandoned in the crash, and create a model community of environmentally friendly, affordable homes.
“I’m pretty sure we got invited in as a last-man-standing after several other players had gone out of business,” Everson says of the call that introduced Mandalay to the Gordon Estates project, beginning the big builder’s five-year journey to make near-net-zero home construction possible at production scale.
“Obviously we were on their radar, but I doubt we were the first call by the city of Phoenix on Gordon Estates. We were simply one of the few builders still operating and around to answer the phone.”
After learning more about the project, Everson had his doubts. In addition to the uncertain costs of the development’s green building requirements, a glut of distressed homes was still cheaply available across Phoenix, making the prospect of selling 20 new houses a daunting one. A trip to a Ford Foundation/Harvard University boot camp on deploying Neighborhood Stabilization Program funds convinced the wary Everson to commit Mandalay to the project. Part of the boot camp focused on how to create localized economic impact areas, and the fundamental idea of realizing value by completing something already begun resonated with Everson’s traditional builder roots.
Mandalay signed on and got to work, with Everson persuading the city to shoot for the DOE’s Zero Energy Ready program in addition to Energy Star 3.0, WaterSense, and Indoor airPlus. The resulting community saw a 10-to-1 return on stimulus funds, was profiled in a National Public Radio story about Phoenix’s rebounding market, and effectively signaled the end of the recession’s hold on the city. The project became a living laboratory for sustainable design and construction tactics, with Mandalay using it to host on-site education workshops and tours for Realtors, state and local officials, other builders, university students, potential homeowners, and curious members of the public.
Gordon Estates opened up Everson’s eyes to the prospect of creating more energy-efficient communities at production scale and at an attainable price for working-class buyers. Depending on options and upgrades, Mandalay homes sell for about $356,000, just over the area’s average median sales price of $353,119, according to Metrostudy. While it has taken several years to achieve the vision (Mandalay is on track to build 200 homes this year, all of which will be certified Zero Energy Ready and clock in at 50 HERS or less), the blueprint has not changed since Gordon Estates: Use only basic, applied technologies readily available in the marketplace, pursue builder-friendly certifications, and work with energy raters to consistently tighten the building envelope. (Click here for a rundown of some of Everson’s favorite high-performance products.)
“The thing we learned the most at Gordon Estates was the use of the HERS Index and the computer modeling of how a home performs to understand how different components will work together,” Everson says.
Much like an mpg rating for a car, the HERS Index runs from 0 to 100 with 100 representing a normally constructed house and zero representing a home that produces as much energy as it uses. Mandalay uses the index to gauge building performance as it adopts construction practices and products that lead the company closer toward its goal of an attainable, production-built net zero energy home. It also promotes these ratings on its website, letting buyers know the HERS score and estimated monthly energy costs for each floor plan.
Mandalay employs outside energy raters on all of its projects, an expense that Everson says is well worth it. While Mandalay also annually builds a model Discovery Home to use as a test-bed for new technologies, Everson remains resolute that Mandalay systems otherwise stay simple and use readily available and contractor-accepted products and practices.
“Labor is a challenge for everyone, and we avoid adopting anything that is disruptive and instead use proven, applied technologies that allow skilled and unskilled laborers to make minor adjustments, not major ones,” Everson says. “There are hard costs and peripheral costs from industry pushback, so we’d rather not get involved in trying to win battles that change tools or mindsets.”
The raters run a series of tests on each Mandalay home, including blower door tests and duct testing, and crunch data to help the project team determine the correct push and pull of material selection and construction methods to winnow down HERS scores, determining, for example, when and where to increase insulation by a half inch or employ advanced framing techniques to optimize thermal breaks in the building envelope. They use software to calculate energy loads and consumption for heating, cooling, hot water, lighting, and appliances to help size mechanical systems and ventilation flows prior to construction. In total, the tests, ratings, and certification paperwork cost about $850 per home, Everson says.
Everson doesn’t consider his metrics-based approach to be entirely inventive, or even environmentally friendly, per se. “I think as builders we have always been looking for and chasing efficiencies as they relate to different components, from 2×6 construction back in the day to better AC systems to improved windows,” he says. “So we’ve always been facing the idea of approaching zero energy, but not chasing it comprehensively, and as production builders we were simply referring to it as high-performance assembly.”
The firm’s approach is working: Its sales volume has grown exponentially since the recession, nearly quadrupling to 200 this year from 55 in 2014. Most Mandalay buyers tend to be empty nesters and retirees ready to downsize or relocate to better weather. However, the company’s customers also include new families, couples, and multigenerational households, Everson says.
But even as theevolution of construction practices has put green within the reach of everyday building pros, Mandalay has nonetheless emerged as emblematic of a type of builder looking to figuratively and literally push the envelope on possibilities.
Jocelyn Smith, manager of green building systems for the Washington D.C.–based NAHB, acknowledges that her team is quite familiar with Mandalay (Gordon Estates was certified to the Gold level in the National Green Building Standard). She says the company’s work to establish the scalability of green building is critical as a vast number of NAHB members report green becoming mainstream in their projects.
According to a Green Smart Market Report released this year by Smith and her team at NAHB, 44% of the association’s membership are involved in green building projects, and among those builders, green construction counts for roughly one-third (31% or more) of their business. In the next five years, the association forecasts that number will rise to 59% for both single-family and multifamily.
“The two primary triggers that are fueling greater green building activity on the single-family side are customer demand followed by the greater availability and affordability of green products,” Smith says. “But on the flip side, where there are obstacles, customer demand is also a significant trigger, and the lack of it can be significant in areas where consumer interest in green is more negligible, including in the Midwest and the South.”
Count Mandalay’s primary markets of Prescott, Ariz., and Phoenix among the ones where home buyers aren’t necessarily clamoring for green. Philip Beere is a sustainability consultant and three-time NAHB Green Advocate of the Year who met Everson while consulting on Gordon Estates, and he has been providing strategic marketing support to Mandalay ever since. Beere thinks he knows why local buyers are responding so well to Mandalay’s offerings.
“It’s not because of green and energy efficiency per se,” Beere says. “When we survey them directly they say energy efficiency was not a motivator, but that their home simply feels different. They cannot pinpoint it, but it seems that a superior build resonates with them, so task No. 1 has been to communicate to the buyer what they are getting. In fact, education is a big obstacle not just for the home buyer but for other builders as well to know what it means to build an energy-efficient home.”
The prospect of educating other builders using the Mandalay model hasn’t been lost on the DOE. In addition to certifying the Gordon Estates project as a Zero Energy Ready Home community, the agency has recognized Mandalay with a Housing Innovation Award every year since 2013, for its work in building zero energy ready homes.
DOE Zero Energy Ready Homes Are:
-Qualified by a third-party
-At least 40% more energy efficient than a typical new home (average HERS rating in the low to mid 50s)
-Designed to meet comfort, health, quality, and durability standards that are more rigorous than Energy Star-certified homes
-So efficient that a renewable energy system can offset most or all of residents’ annual energy consumption
Sam Rashkin heads the Zero Energy Ready Home project at the DOE and says Mandalay—among a small handful of other builders—has been successful at proving the scalability of green building by incorporating energy efficiency and superior building performance with a dedication to stay ahead of code changes.
“We had 240,000 homes achieve an average HERS rating last year between 61 and 62, and that tells me the nation is already building efficiently at scale, but Mandalay is building in efficiency plus performance at scale,” Rashkin says, noting that besides a low HERS index, Mandalay has been a market leader in managing water intrusion, managing comfort with airflow and indoor air quality, prepping for solar, and otherwise ensuring readiness by building beyond the next code cycle.
In addition, Mandalay’s contemporary desert aesthetic and design touches like exposed ceiling beams, stackable sliding patio doors, and spacious kitchens resonate with buyers. “Their product looks outstanding for amenities and other features,” Rashkin says. “So Mandalay is a perfect example for us to showcase that you don’t have to be eclectic or at a substantial price point increase to be zero energy ready.”
Everson credits hisreputation as a net-zero trailblazer with helping him to move the needle on key products and green building innovations.
“By providing an open architecture and shared case studies, trade partners and material supply people gravitate to us as first adopters and give us first looks, which helps us stay ahead,” Everson says. “We give the benefit of sharing our knowledge to follow our lead, and get the benefit of seeing new tech.”
Most recently, Mandalay has adopted the use of AeroBarrier, an aerosol-based envelope sealing system that enables a home to have an average air exchange rate of 0.8 (compared with 1.5 for a typical Mandalay house and 3.0 for the average green-certified home). “Once you get to that passive home level of air exchange, the world changes, and you can cost-effectively introduce solar and storage at the production home level,” Everson says. Mandalay plans to use AeroBarrier to fog and seal all of its homes moving forward (a two-person, one-truck team can seal two houses per day).
The builder also has introduced a solar plus storage option to provide 100% renewable energy to power its future homes. “Even at a 46 HERS with a 1.4 exchange rate, we were hovering in the 11 to 12 kW range for a solar array, which just wasn’t feasible for production homes,” Everson says. “At a 0.8 exchange rate, we get down to 3.5 kilowatts of solar that can be optimized with 10 345-watt panels that fit on the roof no problem and a Sonnen 8 kilowatt battery for energy storage.”
Everson realizes that many Mandalay customers don’t necessarily buy his homes in order to “go green.”
“Any builder who still believes that home buyers aren’t really motivated to purchase a green home because of environmental friendliness is largely still right,” he says. “The ROI is not in pure price point and the marketability of a home bring green. But when you begin a pursuit of energy efficiency, water conservation, and air quality, you create a background that provides comfort to the customer, and you cannot get there unless you build a quality home. You just can’t be there. And that quality is what we use to bridge the gap, and get a premium to market on what we build.”