A commonly asked question among many solar customers is, “Will solar add value to my home?” For many professionals within the real estate industry, there is not a finite answer. Like a pool, solar is often seen as a luxury upgrade for only a percentage of all homebuyers. However, recent changes in California only can lead to the assumption that solar on homes is not only going to be seen as a luxury, it is going to be mandatory. Legislation recently passed states that all new builds in California must have solar installed by 2020. Recently signed bills tout that California will only allow for clean produced electricity by 2045. Solar is becoming more and more important across the board. This short article will discuss how solar affects the sale of a home in today’s market.
Solar PV Systems: Increase in Market Value
A study from the National Bureau of Economic Research studied the impact of solar systems on home in both the San Diego and Sacramento areas. They were able to confidently conclude that an average residential solar system added 3-4% to the home’s overall value, an average of $22,500.
A study published in 2011 by the U.S. Department of Energy’s Lawrence Berkeley National Laboratory reported, “California homes with PV systems have sold for a premium over comparable homes without PV systems.” The researchers concluded most homes increased by an average of $5.50 per installed watt of solar capacity.
A follow up story confirmed what they had already discovered and published that “homebuyers are consistently willing to pay PV home premiums across various states, housing and PV markets.” The study noted that home prices increased by about $4.00 per watt, which, in our current market, is slightly above what the cost is in to install a new system.
Solar PV Systems: Red Flags
It is easy to see how your solar investment can turn into high sale prices on home, but there are some areas to be mindful of.
- Systems that are leased do not show the same type of solar benefits. In fact, most homes with either leased or PPA’s sell for less than market value as lease transfers and PPA transfers can be difficult to maneuver.
- Appraisers still do not know how to properly appraise residential solar systems. Although there are courses people can take, they are not mandatory classes and often, PV systems are evaluated at much less than their actual value is.
- Understand your market. Although research suggests that areas where home prices are higher and there are higher levels of education, homes with PV systems sell more quickly and for higher prices, there is no way to guarantee that adding solar to boost your home value will pan out, especially if you are looking for a quick sale. However, if you plan on living in the home for a while, solar has many perks and will bring in a wonderful return on your investment.
Not Sure What to Do Next?
If you are still sitting on the fence about solar, now is the perfect time to sit down and learn more about solar systems, pricing and the installation process. Working with a knowledgeable solar professional will help you understand how to make the best decision regarding solar and your home.