Study: Solar Panels Reduce Nearby Property Values
A newly-released study from the University of Rhode Island has found that solar facilities reduce property values for nearby properties.
Im generally skeptical about studies that claim to be able to model the impact of a given development on neighboring property values because I have reservations about many of the assumptions used to formulate them , but Id encourage you all to look at the methods used to come to these conclusions and decide for yourselves whether you think they are reasonable, or not.
Study Results: Solar is Driving Down Property Values
The study examined more than 400,000 housing transactions occurring within one to three miles of 208 different solar installations, meaning the findings are not simply a product of a small or cherry-picked sample.
Our results suggest that solar installations negatively affect nearby property valuesproperty values in the treatment group decline 1.7% relative to the control group.
These findings suggest that solar arrays create local, negative externalities, and the average household annual willingness to pay to avoid these externalities is $279. This helps explain local concerns and opposition and gives pause to current practices of not including proximate residents in siting decisions or compensating them after siting has occurred.
The study also found that homes that are built closer to solar installations suffer a greater decrease in property value than those that are further away:
How Do Solar Panels Work
Solar panel technology works by absorbing light from the sun with photovoltaic cells. These photovoltaic cells help generate direct current energy and then convert it to alternating current energy via the help of an inverter.
AC energy will then flow through a homes electrical panel and then distributed where needed. This is what solar panels do in order to work at powering a home. If someone asks how solar panels work, now you know!
Obviously, solar panels will work best when sunshine is abundant.
Do Solar Panels Increase Property Value
How does solar energy affect the value of your home?
An independent report by EMP Group in the US found that home buyers consistently have been willing to pay more for a property with PV solar panels and infrastructure, and we have found this to be the case across New Zealand as well.
A solar energy system is a modern, forward-thinking addition to a house, and while many homeowners are interested in powering their home with solar electricity, fewer are prepared to do the administration and research to make it happen. A pre-installed solar system is a huge bonus that promises reduced power bills for these buyers and the sense that their new home is future-proofed.
How much does a solar energy system boost the value of your property?
Some experts have estimated that home value increases around $20 for every $1 reduction in your utility bills. In other words, if your solar energy system saves you as little as $400 per year in electricity, you could be adding a whopping $8,000 in value to your home! Sounds like a no-brainer to us!
Other research done in Australia estimates an increase in home value of around $6,500NZD per kilowatt of solar energy. This means a rise of over $30,000 in the retail value of your home for a 5kW system! You can read more about which system capacity is best suited to your home here.
Solar energy earns you money upon selling, but it also saves you money in the meantime.
Get a quote for solar panels in New Zealand
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Why Do Solar Panels Increase Property Value
There are a few reasons behind this increase in property value, but it mainly boils down to how much solar power can save homeowners on energy bills. Solar panel owners can also sell surplus generation back to the grid through the Smart Export Guarantee bringing in even more money.
In fact, we worked out that if you have a three-bedroom house, you’ll save £256.60 per year on your energy bills from solar panels, and make £82.05 from the SEG.
Not to mention that buying a home with panels already attached can help homeowners avoid the upfront installation costs.
Solar-equipped homes also tend to sell for more because solar panels are considered to be upgrades to the home similar to how an extension or conservatory increases a homes value.
Solar panels can also increase the energy rating of a property, which is hugely desirable for buyers especially since the government is pushing for all houses to be rated B by 2030.
The Department of Energy and Climate Change analysed over 320,000 properties between 1995 and 2011, and found that when a homes EPC rating rose from band G to E or from D to B its property price also rose significantly.
You could benefit from this kind of shift.
Will Solar Panels Help Or Hurt The Resale Value Of My Home
Lower electricity bills and a smaller carbon footprint are the two primary reasons why people go solar. From the moment your photovoltaic system goes online, your monthly utility statements shrink as does your negative impact on the environment.
But the benefits of going solar dont stop there. Done correctly, installing PV panels can also dramatically boost your homes property value.
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Cost Of The Solar System
Though prices may be dropping, the cost of your solar system will vary depending on the type of system you choose, the size of your system, and your location. Some states have rebates and incentives that reduce the overall cost of solar electricity systems.
In general, the National Renewable Energy Laboratory says a 2-kilowatt system, which should offset the electricity use of an average-sized home, will cost about $8 to $10 per square foot before state and federal rebates and incentives.
Solar panels dont require much maintenance, aside from an occasional cleaning. The price of cleaning should run between $150 and $330, and cleaning should be done on an as-needed basis.
Providing regular cleaning and maintenance to your solar panels may be required if you lease your panels or to keep your warranty current. Read the fine print in your agreement, so youll know if cleaning and maintenance is required .
The EPA offers tax credits to homeowners who install solar energy systems. Until the end of 2019, that tax credit was 30% of the total cost of your solar system. Beginning in 2020, however, the percentage begins to step down. By the end of 2021, the credit disappears completely.
If you install your solar panels in time to receive the tax credit, you can choose to either deduct the tax credit directly from your tax payment if you owe federal taxes, or deducted it from your taxable income when you file your taxes.
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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Are There Any Other Reports On Solar Panels And Home Values
Smart homeowners never rely on a single report in case there are hidden biases affecting the research results. If thats the case, the conclusions could easily be affected by the type of data introduced by the researchers.
Luckily, the LBL report isn’t the only authority report on how solar panels affect home values. A Zillow research study conducted in 2019 showed that homes without solar power are sold for 4.1% less than comparable homes with solar power.
When you take a median-valued home, a solar powered home can be priced at an additional $9,274. However, it’s important to keep in mind that the particular increase in percentage points varies between states and cities.
We also can use a study undertaken by the Appraisal Journal. According to their numbers, your home’s value increases $20 for every $1 reduction in annual electricity bills. For instance, a solar energy system that saves you $300 a year results in a solid $6,000 to the value of your home.
Is It Better To Lease Or Buy Solar
There are different ways to access solar energy. If you are looking for the most long-term savings and return on your investment, then owning your solar system is the better option. If you are looking to have a solar installation project completed on your home but do not, or cannot, make the large initial investment, then leasing may be a feasible option7.
Solar panels are a great way to use clean energy and reduce your energy bill. If you want to use clean energy but solar panels arent the right solution for your home, then check out Inspire Clean Energy and sign up for a 100% clean energy supply plan.
Not sure if renewable energy is right for you? Read some of Inspire Clean Energys reviews to see how we’ve helped customers make the switch.
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Why Is Solar Energy So Valuable
A 2015 survey showed that 61% of respondents agreed that solar electrical or water heating systems were desirable in a home theyd consider purchasing.
As solar gains popularity, so will realtors who understand how to position solar as the one feature that sells the home. In a buyers market, it may be the one thing that sells your home over the one up the street.
Additionally, installing solar panels is a relatively easy one-time project. It has little impact on your living space compared to other major sustainable living home improvements. Most of your effort is doing the research to find the right company and getting paperwork through for installation and warranty purposes.
How Much Does Solar Increase My Homes Value
Installing solar panels in a household not only helps to reduce current monthly utility expenses it can also improve the propertys value by up to 4.1% above comparable homes without solar power, according to recent solar research done by Zillow or $9,274 for the typical-priced home in the United States.
Studies Linking Solar Panels To Home Value Increases
The Appraisal Journal cited researchers Ruth Johnson and David Kaserman who report, Home value increases of about $20 for every dollar saved on annual energy costs.
So, in the case of the $200 monthly savings example above, you could expect the value of that solar home to be worth $48,000more than it was previously .
For a second example,a study by the Lawrence Berkeley National Laboratory yields a formula of a $5,000 resale value increase for every kilowatt of solar installed. To get that same $48,000 home value increase from the Appraisers Journal with this calculation, youd need a 9.6kW system .
With average installation costs around $3,500 per kW upfront, you could have this size system installed for $33,600. That difference in value gained relative to your investment potentially nets you an arbitrage opportunity of $1,500 per kW of installed solar.
That doesnt even include the federal investment tax credit, which allows you to recover 26% of the cost of your home solar installation. Additionally, in some states, your property value increase is even exempt from additional property taxes.
If youre looking to sell your home faster and at a premium, it might be worth having solar installed first! You can expect a quick return on investment for this type of clean energy home improvement.
While that estimate is simple, theres a lot of unaccounted for variables. For example, it doesnt take into account the size of the solar energy system.
What Did The Study Consist Of
Researchers from the Berkeley Lab worked with a team of seven appraisers from six states to determine the market value, if any, was added to single-family homes equipped with solar photovoltaic systems. The appraisers compared 43 non-PV homes with the same number of similar homes with PV installed and employed the industry-standard paired-sales valuation technique, which essentially compares the recent sales of these comparable homes to estimate how much more new home buyers would be willing to pay for homes with PV systems.
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Owning Vs Leasing Matters
While this might not be at all obvious to the unsuspecting homeowner, theres a big difference between owning and leasing your solar panels especially when its time to sell the home later on. Were guessing the solar company mightve left this detail out, as they like to say leasing is one of the cheapest and easiest ways to acquire a solar package but the truth of the matter is that if you did lease your solar package , this complicates selling your home quite a bit.
A Massachusetts Based Solar Installer For Massachusetts Homes
Planning for a future of efficiency and energy savings should be trusted to the local professionals. As the number one Massachusetts based solar installer, Boston Solar knows what it takes to design and install a system of solar PV panels on your home that will provide lasting renewable energy, and give you the maximum increase in resale value when it comes time to put your home on the market. If you are curious about what installing solar panels would look like on your roof, on your taxes, and on your energy bills, get a free solar quote from Boston Solar today.
We are committed to maintaining safe and sanitary practices amidst the precautions surrounding COVID-19. You can get more info about how we are staying safe while staying open, here.
Wondering if solar panels increase a homes value in Massachusetts? Ask Boston Solar about your solar options today! Call 617-858-1645 or get in touch here.
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How Much Do Solar Panels Cost For A 2000 Square Foot House
The cost of a solar panel system for a 2,000 square foot house in 2022 depends on a few key factors. This includes the size of the system that your home will need, the price of solar panels in the area, and what the installer charges for installation. For example, a 6-kilowatt system may run the average U.S. household somewhere from $15,180 to $18,900, whereas a 20-kilowatt system could reach somewhere between $50,600 to $63,000, depending on the location. These prices are before the 26 percent ITC that is promised for homeowners in 2022. That being said, the national average cost for installing a typical solar panel system on a 2,000 square foot house is $16,168 in 2022, with a minimum cost of $3,500 and a maximum cost of $35,0006.
How Do Solar Panels Increase Home Value
The energy savings provided by solar panels translate into better value for your home. The National Renewable Energy Laboratory found that every dollar saved on energy through solar increases home value by $20.
Thatâs a return on investment of 20 to 1. When you sell your house, these better savings equal bigger profits.
According to Zillow, homes with solar panels sell for approximately 4 percent higher on average than homes without solar energy. That means an added value of about $9,200.
Key reasons why homeowners benefit from solar when trying to sell the house include:
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Impact Of Solar On Real Estate
While solar energy systems have been around for a long time, their impact on the real estate industry is only now being realized. Solar panels increase home values, reduce the amount of time it takes to sell a house, and are vital for real estate agents to understand and leverage. In order to stay ahead of the curve, real estate agents must become knowledgeable about solar energy systems and how they can benefit their clients.
There is an increasing trend towards the installation of solar panels on real estate, mostly due to the fact that they do not affect the sale price of the house and do not require any maintenance. Homebuyers love solar panels because they can increase their homes resale value and improve their quality of life.
Pros And Cons Of Selling A Home With Solar Panels
|They increase your homes value by 4.1%, on average|
|Easier to sell a home with ready-made energy savings of up to £390 per year|
|Save 1.6 tonnes of CO2 per year 74% of adults are concerned about climate change|
|Popularity makes convincing easier there are a million UK solar homes now|
|62% of people want solar panels|
|Solar is the most popular energy source|
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What Affects The Value Of Your House
House prices are area-specific so you should focus on prices in your neighbourhood, rather than national averages. Use our interactive map to find out about property prices in your area.
Beyond location, your propertys age, size, number of bedrooms, structural integrity, wear and tear and room layout will all affect its price. As will whether it has a garden, parking space, garage, and any extra features, such as a shed converted into an office.
Talk to local estate agents for the inside track on all the factors to consider.