Does Going Solar Increase My Property Value
Solar energy accounted for 43% of new electricity-generating capacity last year in the United States, according to the Solar Energy Industries Association . As more and more homeowners install solar panels on their roofs, they weigh the pros and cons. Whereas electricity savings are relatively simple to calculate, some of the other benefits are somewhat more complex.
One important consideration is how solar panels will impact the property value. Gaining some understanding of the benefits of a solar energy system on a homes resale value can make going solar more appealing.
How To Save Money Going Solar
One of the biggest advantages of installing residential solar panels is a 30% federal tax credit on the total cost of a system. That means homeowners but not renters can subtract the credit from the federal income taxes they owe, in effect reducing the price of their solar purchase by nearly one-third.
Congress authorized the credit through 2019, but it will decline to 26% in 2020 and 22% in 2021 and then disappear. The credit could save the average homeowner $5,000 or more , according to EnergySage, a solar marketplace with a calculator to help estimate savings.
It may seem obvious, but access to sunlight is important. If your roof is deeply shaded by trees, mountains or buildings, solar panels wont work well. Unsurprisingly, California leads the nation in residential solar capacity, but some of the others in the top 10 may surprise you.
Its important to have a basic idea of how the panels work as well. Also known as photovoltaic panels, they are mounted on the roof of a house and use sunlight to produce electricity. An important part of any solar system is a box called an inverter, which often is installed in the garage and converts electricity produced by the panels into the kind thats required to operate home appliances .
Selling Your Home With Solar Panels Can Be Easy
If youre planning to sell a home with solar panels, youll likely be pleasantly surprised by how easy it is. In addition to the fact that buyers love solar panels, a residential solar system may also boost your homes value and make it more attractive to new buyers.
To learn more about selling a home with solar panels, contact Sandbar Solar today. As the largest residential and commercial solar installer in Santa Cruz County, Sandbar Solar & Electric has been locally owned for 13 years. You can count on our professional commitment to quality work, ethical solutions, community sponsorship and environmental stewardship.
Were proud of our reputation for designing and installing the most efficient solar panels available across the Central Coast. We invite you to look through our online portfolio of Recent Projects. Our work areas include Santa Cruz and Monterey counties as well as San Jose and the Bay Area.
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About the Author
Scott is the founder of Sandbar Solar & Electric. With a Bachelors Degree in Economics from UC San Diego, Scott has an NABCEP certification, and has lectured on and taught many high-tech construction practices and solar PV technical concepts to education institutions, including Stanford University and state-recognized electrician apprenticeship programs. Scott enjoys sharing his knowledge of the evolving renewable energy space and making a difference in his community.
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Do Bigger Installations Increase Home Value
Home solar energy is yours to control while adding property value. Research shows, however, that the wattage generated by a solar installation does not proportionally raise the value of a home. So, installing a massive solar array on your rooftop wont necessarily equate to a higher resale value. A solar installation that sufficiently meets your energy needs is enough for you to recoup the price of your installation.
Impact Of Solar Panels On Your Home
Installing solar panels on your homes roof will improve your home in numerous ways, particularly in two major ways. When you install solar panels on your roof, your:
- House will sell for more
- The house will sell faster
- How easy it is to transfer the solar panel system to the new owner
House Will Sell for More
Lawrence Berkeley National Laboratory is a Department of Energy Office of Science lab. This research facility is managed by the University of Cal. It is highly accredited, with more 13 Noble Prizes associated with the Berkeley Lab.
Berkeley Lab, conducted a study to analyze the impact that solar would have on home sales. They analyzed 22,000 homes sales in 8 states. Four thousand of which included solar PV systems, from 2002 to 2013. Based on their research, in 2015 they released their findings. In a study called, Selling Into the Sun: Price Premium Analysis of a Multi-state Dataset Of Solar Homes. The analysis determines that each found that each watt of solar increased a homes value in California by an average of $4 and an average of $3 per watt elsewhere. For most single-family homes, they typically average a solar PV system size of around 5kW. Therefore, the average home outside of California will increase by $15,000 . And $20,000 in California .
Their House Will Sell Faster
The National Renewable Energy Laboratory , conducted a study based on a national sample across 87 utilities in 16 states. Their analysis found that:
Impacts to These Metrics
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Solar Panels Add Home Value
Installing residential solar panels is a sound investment. Whether youre upgrading your home for a future sale or making it your forever home, your property value will significantly increase. This added value makes payback periods less of a concern.7 You can recoup your investment at a later sale and come out ahead.
Put the sun to work for you. Adding Sunrun solar panels and a Brightbox home battery to your home may not only raise your property value, it will give you control over your electricity usage, protect you from power outages and help the environment.
Solar is as reliable as the sun. See why over 250,000 Americans have added value to their homes with Sunrunget a free quote today to get connected with our expert Solar Advisors.
Homes With Solar Appreciate In Value More Than Non
That same NREL study found that homes with solar were not only valued more than non-solar homes, but they also appreciated more in value. Houses with solar increased by an average of 55% compared to just 33% for non-solar homes .
One thing to note about this NREL study is that it took into account data from before the 2007/2008 housing market crash. Its very likely that these numbers have changed significantly over time. However, they still provide unique insight into how homebuyers value solar panels.
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Why Do Solar Panels Increase Home Value
For most Australians, their home is their primary asset good quality maintenance and additions ensures it holds or increases its value over time. As such, homeowners across the country are constantly searching for potential features or selling points they can add to their homes.
With a competitive property market and buyers aware of gimmicks and quick fixes, meaningful additions and climate conscious initiatives are great ways to increase interest in your home.
As the years roll on, many Australians are becoming more and more concerned about reducing their environmental footprint. By installing solar panels, Australians can reduce their emissions, save money on their electricity bills, and increase the overall appeal of their property. Installing solar panels will only become more enticing as solar panels increase in efficiency and their price point is reduced. Overall, they are a worthwhile investment to reduce power bills, reliance on the power grid and generate interest from buyers.
So, do solar panels hurt the resale value of your home? No!
Well, just how much does solar add to home value?
Do Homes With Solar Sell Faster
If youre still considering whether or not to install solar panels, you may be wondering whether theyll help you to sell your home faster if and when you decide to sell.
While there is strong evidence that homes with solar sell for a premium, there isnt much research on whether solar helps homes to sell faster. The little research that has been done focuses on California, the U.S. state that has led the solar revolution for more than 17 years.
So what does the research that has been done tell us? In a nutshell, it states that homes with solar panels can sell between 20% and more than 100% faster than those without.
Having completed my first net-zero solar home renovation in 2021, I know how important it is for homeowners who invest in solar to know everything possible about its financial implications. The answer to this particular question isnt written in stone, but I am convinced that properly installed, quality solar panels and systems do make homes sell faster.
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Do Solar Panels Ever Reduce The Value Of Your Home
We couldnt find any data showing that solar panels reduce the value of your home.
However, its possible to imagine situations where panels would reduce the value, or at least have a minimal impact on your homes value.
Lets say your panels were installed incorrectly. They could be a fire hazard, or they could be unsightly. Solar panels on the roof could reduce the curb appeal of your home.
In other situations, homeowners may remove trees or other natural features to accommodate solar panel arrangements. Some home-buyers may not like this.
In virtually every case, however, solar panels increase the value of your home. Even in the situations above, PV systems will likely still increase the value of your home just by a slightly lower amount than properly-installed PV systems.
Selling A Home With Solar In Sacramento Expect A 3% To 7% Price Bumpmaybe
There isnt a ton of data to go on when it comes to the selling price of houses with solar in Sacramento, but one 2011 study sampled homes sold in Sacramento County between 2001 and 2011.
The researchers found:
- Houses with solar power systems that are located on streets with multiple other houses that have solar sold for 3% more than houses without solar.
- Houses with solar power systems that are not located near houses with solar sold for 7% more than houses without solar.
In other words, a home with solar in an area where that is unusual tends to be more attractive and command higher offers. But again, there are other factors at play that affect the final sale price, depreciation in particular.
A seller might look at their system and think, I paid $20,000 for it, so lets tack $20,000 onto the sale price so I can recoup my investment! But that likely wont fly with the buyers, especially if the system is a few years old. As we talked about, older systems just arent as efficient as new systems. And what about those rebate incentives a seller might have gotten when buying the system? A seller may have paid an upfront price of $20,000, but recouped 30% of that thanks to the Solar Investment Tax Credit. So the dollar value of the investment in the system wasnt anywhere near $20,000.
And dont forget about the current real estate market where your home is located! The price bump for solar depends heavily on the housing market.
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Each Additional $1 In Energy Bill Savings From Solar Adds $20 To Your Homes Total Value
Fortunately, youre not the first person to ask the question at the top of this article. The National Renewable Energy Laboratory asked this question and determined an answer.
According to their research, each additional dollar in energy bill savings from your solar installation will add $20 to your homes total value.
Other research has given us similar benefits. One study from 2013 showed that a homes resale value increased by $5,911 for each 1 kilowatt of solar installed, on average.
That means installing a small solar system would add a value of $18,324 to an average medium-sized home in America. Installing a larger, 5 kW array of solar panels would add nearly $30,000 to the value of your home.
Use Our Home Solar Calculator To Help You Estimate Home Value Increases
To quickly and accurately calculate how much solar you do need, we recommend using our solar calculator. That information, combined with the formulas above can also help you quickly estimate your expected property value increase with solar.
In the section below, we provide an example of how to create a ballpark estimate of the value of your home with solar panels installed using our calculator and the above formulas.
Our calculator takes the following factors into account in order to give you an accurate estimate of your installation costs and solar savings:
- Your available roof space
- Your utility company electricity rates
- Available solar incentives
In our example, we use Zillow as well, to help you get a gauge on your initial real estate value without solar.
When you enter your address into a search engine like Google, youll quickly find a Zillow link to your property. On that page is a listed Zestimate value, or the amount your home would probably sell to a new owner for based on sale data from similar types of homes.
Find out how much a rooftop solar system will cost you
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Solar Panels And Battery Storage Can Help You Build Long
Savvy homeowners, potential buyers and appraisers know that solar panels and battery storage can increase your homes value on the real estate market.
Specific numbers vary between each installation and property. Yet recent studies show an average increase in resale value between $4,020 and $5,911 for each 1 kilowatt of solar panels installed.1,2
At $4,020 per kilowatt, a 5 kilowatt solar panel installation would add an average of $20,100 to the market value of a mid-sized U.S. home. Or in California at $5,911 per kilowatt, a small 3.1 kilowatt system would add an average of $18,324 to the value of a mid-sized home.2 Thats an appreciable amount that homebuyers are willing to pay. And, a solar homes selling price is typically 3.74% higher or more than comparable properties without solar.3
The price of an average rooftop solar installation and battery is generally recouped in the homes sale price. Plus, households purchasing solar are rewarded with lower energy bills and healthy tax incentives that can cover the systems costs multiple times over the life of its warranty.
Things That Your Home Inspector Should Inspect
Youâre doing a pre-inspection before buying that home, right? Good. If the solar panels are on the roof, youâll want your inspector to get on a ladder to take a close look at them. If theyâre ground mounted, you can do this inspection yourself.
Here are things to look for:
- Look for cracked glass. This can be caused by hail damage, or the neighborhood kidâs baseball.
- Look for hot spots. Hot spots are damage caused by an electrical fault within the panel. A hot spot will be appear as a localized discoloration that looks like a burned area of the panel. This is a failure of the panel, and needs to be replaced.
- Check underneath the panels for wire damage. One surprising cause of damage to solar panel systems are squirrels, who like to get underneath and chew on wires. You or your inspector should take a look underneath and make sure that cabling is properly tied off, and that there are no loose cables that are rubbing against any sharp edges of the racking. The wire insulation should be completely intact.
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What You Need To Know About Buying A Home With Solar Panels
If you consider buying a home with solar panels, make sure you get clear, accurate information on the system involved.
As a buyer, you want to know all the relevant facts about the system you are considering including when it was installed, by which company, how much power it produces, what percentage of the homes power does it provide, maintenance history, and more.
When purchasing a home with solar panels, make sure you learn about the warranty.
Two kinds of solar system warranties are normally offered. The first one is the manufacturers warranty with covers the panel and inverter. The panels warranty is typically 20-25 years and 5-10 years for the inverters.
Whoever is installing the system should also offer a warranty on the installation, which means ensuring they have made no holes in your roof that lead to leaks for a specified period usually 2 to 5 years.
Keep in mind that neither of these warranties covers fire, theft, or other damage, so ensure you get the system added to your homeowner policy.
The technology with solar panels is getting better and better. Do your research and understand exactly what you are going to get.
As a seller, you want to have all this information at the ready for when a buyer or a Realtor asks for it. Accurate records and information will make everyone feel better about the transaction.
Solar Panels Increase Property Value
Lets start with a thought experiment. Say you were thinking about purchasing one of two identical homes, right next to each other on the same street. The only difference is that one of them has enough rooftop solar power installed on it to completely eliminate a $200 monthly power bill. The other has an empty rooftop.
Thats $2,400 a year in savings when buying the solar home instead of the one next door. Not only do you save big on electricity every year, youre also reducing your carbon footprint and avoiding the impact of future utility rate increases by producing your own power.
Logically, itd make sense that the solar homes value would be significantly higher than the home without solar panels. But, the question is, how much more?
The exact answer depends on a few factors we outline in the next section, but well cover three studies which help get us to a ballpark range you can feel comfortable with first.
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