Realtor.com ranks investing in solar on your home in the top 5 upgrades that will increase value and decrease time on the market.
(Update: March, 2019) “Solar panels are hot thanks to demand from both climate-conscious buyers and those simply hoping to cut down on their electricity bills. Homes with these features sell the fastest of all of the amenities on our list, at a median 51 days. About 2% of homeowners undergoing remodels have been installing them each year from 2015 to 2017, according to Houzz data. See Article.
Solar PV on your Rooftop brings a 43% return on investment according to a study by the US Department of Energy, at Lawrence Berkeley National Laboratory. It’s time to start investing in solar.
(Original Post: June, 2015) The recent study concluded that “home buyers consistently have been willing to pay more for a property with PV across a variety of states, housing and PV markets, and home types. Average market premiums…are about $4/W or $15,000 for an average-sized 3.6kW PV system.” (Read “Selling into the Sun: Price Premium Analysis of a Multi-State Dataset of Solar Homes” )
UPDATE: 10/1/2018: Location, location, location has always been the motto for where to buy and sell real estate. Turns out it can impact a solar investment as well.
Typically, the largest increases in property (with solar) come in regions with high electricity rates and strong solar incentive programs. High energy costs can make a home with a PV system more sellable. For example, Long Island’s high energy rates have been a boon for their solar market. Buyers are “certainly willing to pay more” for a home where high electricity prices increase the savings from PV systems.
Higher energy costs can mean higher home value for homes with solar during the appraisal process as well. If appraisers consider the role of a PV system in the calculation of a home’s value, electricity produced by the system can be considered income, whether due to savings or from utility production credits, as noted in appraisal guidelines for green and high-performance properties from the Appraisal Foundation (see pages 36-38).
Another factor to consider is if the utility is friendly to solar. If a utility charges a different rate structure for a home that has solar, this could be a negative contributing factor to resale value. However, if a solar energy system is not connected to the grid but instead feeding a battery – theoretically, this could increase value due to energy freedom.
Lenders, real estate agents and appraisers should account for the value added by solar and some may not know to do this. The Federal Housing Authority (FHA) and Fannie Mae both have guidelines for valuing the system during appraisal. Sandia National Laboratories has a free tool designed to help real estate appraisers and others calculate the value of a new or existing PV system. To quantify the value of a home solar system (property value aside), the blog post by Aurora “quantifying the value of a solar installation” is a good place to start.
Two other factors found to affect resale value is PV system size and age of the system when the home is sold. The LBNL study notes that the depreciation of aging solar systems may decrease the value added to the home during appraisal. However, as the study authors note, exactly how system age impacts the numbers is unclear because there has been little research about it given the immaturity of the American solar market. Therefor purchasing a solar energy system that has very little degradation is preferable.
UPDATE: 4/21/2017: Overland Park, Kansas homeowner sells home for an additional $20,000 due to Solar Investment.
More articles about Solar and Home Investment:
- Retirement Investment https://www.goodenergysolutions.com/blog/looking-for-an-outstanding-retirement-investment/
- Not all Solar is created equal. SunPower offers a 25 year performance and production warranty: https://www.goodenergysolutions.com/blog/what-is-the-cost-of-solar/
- Make sure your installer is NABCEP certified so you get the most out of your solar investment: https://www.goodenergysolutions.com/blog/bad-solar-installation-unethical-sales-practices/
Even in the Northeast, an area of the United States that does not have as much potential solar resource as Kansas, (see National Renewable Energy Lab) solar is proving to be a wise home investment. A recently published article, April 12 of 2017, in pv-magazine shares: “homes in the Northeast with solar panels sold for an average of nearly $99,000 more than those without them.” (See article)