By Scott Laskey
Are you interested in increasing your home’s resale value? Whether you prefer investing in new countertops, cabinets or major appliances, there are many functional ways to heighten your residence’s equity. Some options, such as installing siding, insulation or home solar panels, offer benefits that provide you with high-functioning, energy-efficient returns.
Just how much do solar panels increase the value of your home? It depends on your specific system. Here’s how to understand your potential gains.
As with any other investment, you shouldn’t just take it on faith that your home solar panels will increase your property’s worth. Fortunately, you don’t have to look that far for convincing evidence.
In 2015, the Ernest Orlando Lawrence Berkeley National Laboratory conducted an analysis of thousands of residential properties in multiple states. This research revealed that homebuyers were willing to pay around $15,000 extra for homes with solar systems of average sizes, or about 3.6 kW.
Interestingly, this study’s findings remained valid when researchers accounted for a range of other factors. For instance, the increased value persisted across various property types and in eight different states.
In case you think that these results might be statistical outliers, they also align with National Bureau of Economic Research data that suggests solar panels augment home values by a robust 3 to 4 percent. If you live near San Diego or some other region where people pay higher-than-average premiums for properties with home solar panels, then the additional equity might just account for your installation costs. This increase doesn’t even account for the added money that you’ll receive in energy savings or from selling power to the utility company via net metering.
Of course, there’s a huge difference between general market trends and practical realities. Countless factors might play a role in how much of an equity windfall you’ll enjoy after you’ve installed a roof-mounted PV system. To understand the benefits in your situation, ask yourself the following questions:
Valuation studies typically gauge solar-powered home price increases in relation to the sizes of the systems in question. Researchers measure equity variance in dollars per Watt, which implies that larger installations that generate more power help sellers secure healthier asking prices.
Is system capacity the only vital factor? Functionality and equipment quality are also important. Installing options like panel monitoring hardware, battery systems and code-compliant inverters and accessories is almost certain to improve your home value even more.
Your property’s market value and condition have irrefutable impacts on the equity advantages of installing solar panels. Although solar homes are worth more, other problems might cancel out the difference.
Suppose that your roof is old. Maybe the decking, or the wood sheathing beneath the shingles and other layers, has material defects. A savvy home shopper will take these factors into consideration before agreeing to your sale terms because they’ll eventually incur the replacement costs.
By themselves, solar panel incentives and tax credits won’t raise your closing price when you sell your property. If used intelligently, however, they could have an indirect benefit on your home’s value.
Government incentives may lower the initial costs of your PV system. What you do with the excess is up to you, but using it to subsidize other material improvements might be the best way to boost your equity. For instance, installing energy-efficient windows with improved R-values or upgrading your old HVAC appliances might make your solar system even more impactful. These features can significantly increase transaction prices, especially if you live in a market that places a high value on sustainable housing, such as the Central Coast.
The market value of any home upgrade reflects the quality of the work. Imagine that you were searching for a place to settle down. You’d probably be wary about shelling out extra for a home’s new siding if it was crooked or warped. Solar panel investments exhibit similar trends, but they aren’t necessarily as obvious. It’s important to pick a reputable installer who has a proven track record and the longevity to be around to service your panels even after you’ve moved on.
Factors such as the kinds of deals that your solar provider offers impact your home’s new value. Since you can’t gain equity from something that you don’t own, it’s worth finding a company that offers non-lease financing options.
Wondering why solar home prices vary so much? It may have to do with your choice of appraiser. Although most observers concur that valuation increases for solar homes, some appraisers may have additional training that helps them assess your PV system’s worth with enhanced accuracy.
Thanks to evolving markets, the question of how much solar panels increase home value is far from settled, but the consensus seems clear. Buying a roof-mounted solar system is a great way to make your property worth more.
Sandbar Solar works hard to help homeowners in the Central Coast understand how solar panels increase home values and take advantage of market trends. After providing and installing solar home systems for over 13 years, we’re proud to keep Californians more informed so that they can make smarter, energy-efficient property investments. To see how our design and installation skills might make your Bay Area, Monterey, San Jose or Santa Cruz residence a stronger seller, check out our portfolio or chat with an expert.
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