Demand for green home features surging, but upfront costs can be a barrier

Long-term savings are top of mind for the growing number of homebuyers who are considering green features, but higher upfront costs can be a turn-off for some.

Toronto Realtor Jamie Dempster told Real Estate Magazine that heat pumps, energy-efficient windows, smart home technology, and spray foam insulation are some green features that homebuyers are most interested in as they help lower energy consumption and costs while reducing environmental impact.

Dempster, an agent with Re/Max Hallmark, said that homeowners are pivoting toward multiple heat pump units, rather than ducts and a gas furnace, as the pumps are more energy efficient and use hydro rather than gas, which is better for the environment.

 He said that there have been a lot of technological advancements with heat pumps that have slimmed down their size, and it is the green feature that is the best value because it will save money down the road and is inexpensive to install.

Dempster also highlighted smart thermostats, such as Nest, which allow dynamic temperature changes depending on your routine. That can save on energy costs because the user can lower the AC if they are away, then turn it back up right before they get home, so they don’t have to have a constant temperature the entire time. Dempster said smart thermostats can even learn your behaviour and automatically adjust to it. 

“Smart thermostats have been a game changer and they really have revolutionized eco-living for people that really want to save not just money but the environment,” he said.

Dempster’s clients also often inquire about the energy efficiency of the appliances, he said, and noted that they should have an Energy Star label that shows they meet energy efficiency standards.

Demand for green features is on the rise, according to the 2025 Canada Mortgage and Housing Corporation (CMHC) Mortgage Consumer Survey. According to the survey,  28 per cent of mortgage consumers renovated their homes within the past three years to improve energy efficiency, while 31 per cent had future plans for green upgrades.

In addition, 61 per cent of those surveyed said energy efficiency impacted their homebuying decision, up from 57 per cent in 2024.

Upfront costs can be a barrier

Not all green features have piqued as much interest in clients, though, due to their price, according to Toronto real estate agent Sivage Sivagumaran. He told REM that price is often a deal breaker among his clients when it comes to green features, and they will more often than not go for a cheaper upfront price rather than spend more on a costly green feature such as solar panels.

“If it’s a first-time buyer or investor, they don’t give a damn about the green things,” he said. “It’s already damn expensive in today’s world (in Canada).”

The Re/Max Crossroads agent said his clients focus more on smaller, more affordable features that can save money long-term, such as LED lights or heat pumps, and up to 30 per cent of the homes he shows already have those kinds of features included.

 Meanwhile, he said only two or three out of 10 clients will specifically ask about green features, and they are usually not first-time homebuyers, but are well off and looking to upgrade their home.

Managing costs from the ground up

Builders recognize that price can be a turn-off for green features, so some are doing everything they can to reduce costs.

Laurna Strikwerda, director of project development and research at Canada Green Building Council, told REM that green home features can be provided more affordably if the home is designed from the ground up with energy efficiency in mind.

 BC Housing came to the same conclusion in a 2024 report that found that energy-efficient housing can be built at the same cost or lower than regular housing if it is planned from the beginning.

 Strikwerda highlighted prefabricated construction as one way to make green homes more efficiently, as they are made off-site and not subject to weather conditions. The Canadian government under Prime Minister Mark Carney has taken an interest in prefabricated homes and plans to use the construction method to rapidly build affordable and green housing in the country. 

“We actually can incorporate green features in a cost-effective way… with planning and incorporating that into design and construction from the get-go,” she said. 

Working with nature

CABN is one green home builder that is using prefabricated construction to make their homes more affordable. Jonathan Frank, CABN’s chief development officer, told REM that the company can make one of their homes, which range from 540 square feet up to 2,400 square feet, in a matter of weeks using the method.

Frank also advocated for building green homes holistically so features aren’t just thrown in but integrated into the design, such as heat pumps or proper insulation. The passive home design concept can also help save energy just by positioning windows strategically to take advantage of natural light and heat.

“You can build homes that work with nature, not against it,” he said. “They can be smart without needing to be high tech.”

Eric Stober has over 10 years experience as a journalist and writer at publications big and small, including Global News, Toronto Life, Post City Magazine, Greencamp.com, the Toronto Star and The Grid.