Will Solar Panels Increase the Value of My Home?
The real estate market is going crazy right now and homes are selling for top dollar. But what if we told you that homes with solar panels are fetching even more? It turns out putting solar panels on your home increases the resale value.
How Much Can Solar Panels Increase the Value of My Home?
A 2019 study published by real estate website Zillow determined that solar panels raise a home’s value by 4.1% across the United States. On a $300,000 home that is $12,300!
The National Bureau of Economic Research came up with a similar number, estimating that home buyers pay an extra 4% premium for homes with solar systems.
In certain markets, that number was even higher. CNBC reports these are the top 10 states with the highest premiums for solar:
- New Jersey: 9.9% or $32,281 for the median-valued home.
- Pennsylvania: 4.9% or $8,589 for the median-valued home.
- North Carolina: 4.8% or $8,996 for the median-valued home.
- Louisiana: 4.9% or $7,037 for the median-valued home.
- Washington: 4.1% or $15,916 for the median-valued home.
- Florida: 4% $9,454 for the median-valued home.
- Hawaii: 4% or $24,526 for the median-valued home.
- Maryland: 3.8% or $10,976 for the median-valued home.
- New York: 3.6% or $10,981 for the median-valued home.
- South Carolina: 3.5% or $5,866 for the median-valued home.
There was not a single market in the study that found a decline in home values.
But wait, there’s more! Experts at the Department of Energy’s Lawrence Berkeley National Laboratory surveyed six states in 2013 and found that home buyers were willing to pay a premium of about $15,000 for homes with solar arrays. The study also noted that homes with solar panels sold faster.
An earlier study by Ruth Johnson and David Kaserman in The Appraisal Journal posits that home values increased about $20 for every dollar saved on annual energy costs.
When Solar Panels Might Not Increase Home Value
There are a few factors to consider if you are a home buyer or seller, however:
- Older panels are less efficient, contribute less to the home’s electrical use and are worth less than newer systems.
- Leased solar panels require the potential new owner to take over the lease. This isn’t a huge issue, however, as Berkeley Labs found that 77% of solar leases in California are transferred and only 20% of buyers are scared off by solar leases.
- If you are unable to transfer the solar panel lease to the new owner, you will have to pay off that lease before finalizing the home sale.
- If you have financed your solar system, you will need to pay off that system before you sell your home.
- Not all states have net metering, where the excess energy you produce is exported back to the grid and a credit is given for that power. Arizona practices “net billing” which is a slightly different way to determine the value of the electricity sent back to the grid.
- Tax credits only apply to new solar systems, not existing solar systems.
Keep Your Solar Panel Records
While we have determined that solar panels can increase the value of your home, it is best to keep records to insure you get maximum value. Being able to prove the age of your system will help. Showing the system was installed by a reputable provider like Fusion Power will go a long way. Having maintenance records and proof of warranty will help, too. It will also be an immense help to buyers to show how much money they can save on electricity every month, so make sure to keep your electric bills.