According to a recent study by the Lawrence Berkeley National Laboratory, solar panels can increase the value of your home by an average of $14,329. This means that homes equipped with solar power systems sell for 3.74% more than comparable non-solar properties.
One of the main benefits of a solar power system is that it is an investment that pays for itself over time. Although there may be upfront costs, these can be paid back through the reduction or elimination of energy bills. Solar customers can expect to see a return of at least 3-5 times their initial investment over the life of the solar power systems.
However, some homeowners may be hesitant to invest in solar power systems if they do not plan to live in their homes for the full duration of the warranty. But, if you own your home, research shows that adding a grid-tied solar power system can increase your property value and provide a selling point for real estate agents.
Even if you don’t live in your home long enough to break even on energy costs, the premium that home buyers are willing to pay to move into a solar-powered home will be more than enough to cover the initial investment.
Homes with Solar Power Systems Sell For $14,329 More On Average
The study evaluated the sale price of 22,822 homes across 6 states to determine what effect solar power systems have on home resale value. It found that, on average, solar-powered homes increase home value by $14,329, or 3.74% more than non-solar homes.
While the average cost of a solar power system is between $10,000-$18,000 in materials, homeowners can expect to recoup the cost of the hardware when they sell their homes. This is in addition to the expected savings from reduced energy bills and tax incentives, which can already pay for the system 2-3 times over the life of the warranty.
It is important to note that some states do not count solar power systems toward the value of your home when calculating property taxes, which can be an added bonus for homeowners.
Digging Deeper Into the Data
Overall, while real estate is a complex market, solar panels can provide a significant boost to your home’s value. Additionally, buyers are willing to pay more for the distinction of owning a “solar home,” regardless of the efficiency of the solar power system or its ability to fully cover their expected energy usage.
Diminishing Returns on Larger Solar Power Systems
According to a recent study, having a solar power system installed in a home results in a higher selling price, regardless of the system’s wattage output. However, the study also found that installing a more powerful solar power system did not proportionally increase the sale price of the home. This indicates buyers are willing to pay a premium for the privilege of owning a home with solar power, regardless of efficiency or coverage.
As a seller, it may make sense to install a modest grid-tie solar power system that relies on stored solar energy for most of the year but pulls from the electric grid during periods of heavier usage. This allows you to market the home as solar-powered while keeping installation costs low and potentially making a profit when the home is sold.
However, keep in mind that taking on this extra project requires time, labor costs, and some risk. Therefore, it’s important to carefully consider whether it’s worth the investment, especially since larger and more expensive solar power systems do not necessarily result in a proportionally higher selling price.
Solar-powered Homes May Take Longer to Sell
According to a recent study, homes equipped with solar power systems may take slightly longer to sell compared to their non-solar counterparts. On average, solar-powered homes remain on the market for an additional 8 days before being sold.
Incentives vary by state
However, there are variations in this data from state to state. This could be due to differences in incentives offered by each state. For instance, some states provide stronger incentives for purchasing a solar-powered home, while others offer none. In areas where owning a solar-powered home is incentivized, such as those offering property tax breaks, homes installed with solar power systems may be more attractive to potential buyers and sell more quickly.
Local perception of solar
Solar power is becoming increasingly popular in states like California and Florida where abundant sunshine and tax incentives make it an attractive energy option. However, in other states, solar adoption rates are slower due to lower electricity costs and the limited benefits of going solar. This lack of awareness can make it harder to convince buyers that solar-powered homes are reliable and worth the investment.
One major stumbling block is the lack of education about solar energy in these areas. Many buyers may not understand the difference between on-grid and off-grid systems, leading them to assume that all solar power systems rely solely on solar panels and batteries. This misconception can make them hesitant to invest in solar-powered homes out of fear that they’ll be left without power if the solar system fails.
In reality, most solar power systems are grid-tied, meaning they still connect to the public utility grid and can draw power from it when needed. This allows the solar panels to generate a portion of the home’s electricity without having to generate 100% of it. If the power goes out, it’s the responsibility of the public utility workers to fix the issue and restore service as quickly as possible.
To overcome these misconceptions, education is key. By providing buyers with accurate information about how solar system works and the benefits they can provide, it’s possible to convince them that a solar power system is a reliable and cost-effective way to power their home.
Newer Solar Power Systems Are Worth More
It is common knowledge that newer solar power systems are more valuable than older ones. This is supported by data that shows that newer solar panels are made from more efficient materials and come with longer warranties. They are also less likely to require replacement parts, such as an inverter.
As the solar power system ages, its value decreases, which can lower the overall value of your home. On the other hand, newer installations can significantly boost your property’s value.
Leased vs. Owned a Solar Power System
However, it is important to note that this premium only applies to host-owned solar power systems. If you have leased or entered into a Power Purchasing Agreement with the developer who installed the solar system, you may not see any additional profits from the sale. In these cases, the buyer will typically request that the previous owner pays off their lease or PPA agreement.
Therefore, it is recommended that you purchase your solar power system outright to ensure that you benefit from the higher sale price. The solar system is a smart investment, as it is likely to pay for itself 2-3 times or more in tax breaks and energy savings over its warranty period.
Even if you decide to move before the warranty is up, you will still benefit from the higher sale price of your home. This premium is often enough to cover the cost of the hardware, so homeowners can break even on their solar investment from the start.