Will Solar Panels Impact My Property Value?
Will solar panels impact your property value? Will they have a significant impact on your property value? Is it possible for solar panels to ever reduce your property value? Today, we’re answering all your questions about the impact solar panels can have on the value of your property.
Each Additional $1 in Energy Bill Savings from Solar Adds $20 to your Home’s Total Value
Fortunately, you’re 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 home’s total value.
Other research has given us similar benefits. One study from 2013 showed that a home’s resale value increased by $5,911 for each 1 kilowatt (kW) of solar installed, on average.
That means installing a small solar system (3.1 kilowatts) 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.
The Advantages of Solar Energy Will Rise Proportionally Over Time
The impressive statistics mentioned above will only get more impressive over time. The numbers above are based on today’s housing prices, solar panel costs, and utility rates. As electricity prices increase (as they almost certainly will), the advantages of solar energy will rise proportionally over time.
Homes With Solar Panels Sell 20% Faster and For 17% More
Here’s another impressive stat about adding solar panels to your home: homes with solar panels will sell 20% faster than homes without solar panels, according to research by the National Renewable Energy Laboratory (NREL).
What’s more impressive is that same study showed that homes with solar panels sold for 17% more than non-solar homes in the same area.
Specifically, homes with solar sold in an average of 23 months, compared to non-solar homes that were sold by 28 months, on average.
That study utilized data across several subdivisions in California made by different California builders.
One of those builders, Shea Homes, put solar panels and solar thermal systems on half of their newly constructed homes. Of those renewable energy-equipped homes, all 257 sold within a year – two years faster than the home builder expected. The homes were priced between $380,000 and $500,000, but they sold for as much as $600,000.
Homes with Solar Appreciate in Value More than Non-Solar Homes
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 (source is on page 49 of this study).
One thing to note about this NREL study is that it took into account data from before the 2007/2008 housing market crash. It’s very likely that these numbers have changed significantly over time. However, they still provide unique insight into how homebuyers value solar panels.
A Report from 2015 Shows Homes with Solar Panels Are Valued 3% to 4% Higher
The Lawrence Berkley National Laboratory, a research lab affiliated with the US government’s Department of Energy, produced a report in 2015 called Selling Into The Sun, where they analyzed sales of solar-equipped homes in 8 states across an 11 year period.
The Lab found that, on average, home-buyers were willing to pay “PV home premiums” of about $4 per watt of installed solar capacity. If you had a standard 5 or 6 kW PV system, that means your home has an added value of $20,000 to $24,000.
In total, solar panels added about 3% to 4% onto the resale value of the average home.
Do Solar Panels Ever Reduce the Value of your Home?
We couldn’t find any data showing that solar panels reduce the value of your home.
However, it’s possible to imagine situations where panels would reduce the value, or at least have a minimal impact on your home’s value.
Let’s 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.
Why Homes with Solar Are Worth More
Based on all of the information above, homes with solar panels are worth more than homes without solar panels. The reason is simple: solar panels are an investment into your property. They cost money to install, and they add real value to your home. They also provide immediate benefits to homeowners by reducing utility bills.
Just like a kitchen renovation can add value to your home, a solar panel installation will add value to your home as well – although a kitchen renovation won’t have the added benefit of lowering your utility bill.
Ultimately, solar panels are one of the smartest value-added investments you can make to your home. You might not get a dollar-for-dollar return on your investment immediately (say, if you sell your home within a year of installing solar panels). However, home-buyers have demonstrated a trend of paying significantly more for homes with solar panels, and homes with solar panels tend to sell more quickly than homes without solar panels.
Some numbers show that the ROI on solar panels can be about 200% when you take into account your utility bill savings and the increased value of your home. Based on that, installing solar panels is an easy way to improve the value of your home.