Do Solar Panels Increase Your Home Value?
Studies and research show that solar panels help your selling market. Now there is a caveat to that, which we’ll get into later. Still, solar investment has significant returns on your home’s market value. Zillow found that homes with solar energy systems see a 4.1% higher sales value, and the U.S. Department of Energy's Lawrence Berkeley Laboratory found homes with PV systems saw a $15,000 higher value in their sales. The value of solar has never been higher nor provided greater returns.
Value of Solar Increases Home Value
We mentioned the numbers, but why? Solar’s value continues to grow, especially in California. The arguments come back to energy independence, faster payback, and residual income for decades. Berkeley and Zillow’s studies show more people are willing to get a home with solar already equipped. A 3.74% to 4.1% increase in your home’s selling price is huge. For a home worth $250,000, that would mean an additional $10,000 added to your selling price. However, sellers have been able to add up to $18,000 to the same type of home.
California buyers love:
- Saving money with no energy bills or rate fluctuations
- Having dependable energy backup during any power outages
- Residual income that has little or no time and work involved
Who doesn’t love those things? That’s why the value of solar is increasing, not to mention:
- Technology is improving, so prices dropped 80% in the last ten years. That makes solar investments approximately $2.50 to $3.38 per watt now.
- Incentives and financing that offer at least 26% tax credit rebate and $0 upfront cost.
- Grid-tied connection for continuous energy to match any demand.
All in all, you can’t go wrong with a solar investment.
Solar Investment Caveats
Full disclosure, there are two caveats you need to be aware of with this built-in value boost solar systems give your home.
First, you must own your system. We don’t mean you have completed the payback period. We mean you are not in a solar PPA or leasing agreement. These two options are challenges when you are trying to sell your home. Although you may get into a solar system cheaper, solar PPA and leases:
- Trap you in long-term contracts where you still pay for your energy.
- Have rate escalations based on the solar company’s determination.
- All tax or rebate incentives go to the solar company and not you.
These disadvantages get compounded by the fact that your buyer will have to agree to take over your PPA or lease agreement, or you will have to pay to cancel the contract. If you cancel, then the solar company will come to remove the equipment, which may cause an eyesore and devalue your home to the buyer. Not only do you have to deal with these issues, but now that extra value provided by your solar investment just became moot.
You can avoid all of this by merely owning your solar system through financing or buying outright.
Second, diminishing returns and longer sell times. On average, solar-equipped homes have seen up to eight days extra on the market than nonsolar-equipped homes. That’s not that big of a deal with the extra money you will get, but if you have to have a quick sale, it is something to remember.
Diminishing returns come with your system’s size and age. Newer systems fetch higher home values, which makes sense. You may not be able to ask for the same value as a comp home due to your system’s age. Larger-sized systems have faster paybacks, greater returns, and may get you higher prices, but the more powerful PV systems may not increase proportionally to the installation cost you paid.
That wasn’t bad or scary. You can avoid both of these by owning your system and getting the right professionals to size it.
The bottom line is the increasing value of solar transfers to your home’s value. Whether you plan to sell your home or not, the added value a solar investment brings is just one of the many reasons to get a solar system installed today.