We analyze whether houses with energy-saving features are sold for higher prices (i.e., the green price premium) and whether the green price premium is driven by economic or social motives. We find a significant price premium ($21,000+ on average) for houses with green building certificate, geothermal heating, solar systems, rainwater catchment systems, and/or tankless water heaters. We further use hand-collected data to estimate the house-specific net present value of individual green features, and find that the green price premium cannot be explained by the economic value of the green feature(s). Instead, the green price premium depends on the homebuyers’ cultural origins - homebuyers who are more individualistic, indulgent but less uncertainty avoidant pay a lower price premium for green houses. The price difference between green and brown houses also increases over the years and stabilizes after 2016. Our findings point to the social value of green houses and highlight the role of investors’ preferences in understanding the pricing of green assets.
