Color Your New House Green

Want to keep the planet and your portfolio green? The Fool shows you how in our special series on Earth-friendly investing.

Once upon a time, living in a "green" home meant moving to the Arizona desert and constructing a geodesic dome. While such futuristic buildings are still one solution to green living, there are a lot more options available today that fit in just as well on Main Street as they do with the tumbleweeds. Even retrofitting an existing 150-year-old farmhouse can reduce your carbon footprint.

In the past, one problem for homebuilders like Toll Brothers (NYSE: TOL) or KB Homes (NYSE: KBH) was finding the materials necessary to build a green house -- or a greener one, anyway. These days, though, there are a lot of options for incorporating energy efficiency into standard construction methods.

Green homebuilding goes beyond just adding solar panels to your home; it permeates every aspect of putting a house together. The National Association of Home Builders says that green homebuilding encompasses energy efficiency, water and resource conservation, the use of sustainable or recycled products, and measures to protect indoor air quality. According to Fine Homebuilding, houses consume 20% of the energy used in the U.S. and give off 21% of the carbon dioxide emissions that some believe are contributing to global warming. There's never been a more opportune time for green homebuilding.

And it shows. The use of renewable materials like bamboo, for example, is increasingly being incorporated, along with recycled materials for carpets, tile, and concrete. Mohawk (NYSE: MHK) has more than 500 flooring products that contain recycled materials. LED solid-state lighting from manufacturers like Cree (Nasdaq: CREE) -- more so than compact fluorescents -- will also become more commonplace in homes.

Yet the problem for homebuyers today is the collapse of the housing market. A new green house can cost 3% to 5% more than a "regular" new home. While some buyers may be willing to pay up for a more energy-efficient house, falling home prices present a challenge for builders wanting to add Energy Star-compliant General Electric (NYSE: GE) appliances as a standard feature in all of their homes.

High costs are also one of the reasons more solar homes haven't been built. Solar homes account for only 1% of power generation in the U.S., according to the Utility Consumers' Action Network. Style is another factor, since the typical panels are not an aesthetic addition to most homes. That might change as solar companies alter their approach; Akeena Solar (Nasdaq: AKNS), for example, is deploying its sleek, low-cost Andalay panels through distribution agreements with Suntech Power (NYSE: STP).

According to the market researchers at McGraw-Hill Construction Analytics, the value of green building construction starts will grow from $12 billion in 2008 to $60 billion in 2010. And while that refers to primarily commercial buildings, increased commercial green spending may lead to greater residential adaptation. Maybe it will be from builders signing on to national standards like the U.S. Green Building Council's Leadership in Energy and Environmental Design (LEED) program, which will give us greater options for houses that make us feel like we're living under a microscope.