Can Solar Panels Increase Your Home Value?
Solar panels, once the domain of dedicated environmentalists, have been making remarkable inroads into the consciousness of the public at large. You’ve probably noticed the trend; photovoltaic arrays are becoming an increasingly common sight in cities and towns across the nation.
And while the environmental benefits of going solar certainly make up part of their increasingly broad appeal, the real reason so many of your friends and neighbors are going solar is simple economics.
As it turns out, solar panels can increase your home value, according to a recent study sponsored by the United States Department of Energy.
The Solar Premium
Between 2002 and 2013, the Lawrence Berkeley National Laboratory performed a survey of home sales data in eight states. More than 23,000 sales were analyzed, and approximately 4,000 of the homes sold were equipped with seller-owned solar panels.
The research team found a striking correlation between photovoltaic arrays and higher home sales prices. In otherwise comparable listings, buyers were willing to shell out an additional $15,000 for solar-equipped homes, on average.
The average size of the solar arrays included in the survey was 3.6 kilowatts. Let’s do the math:
3,600 watts / $15,000 = $4.16 of added value per watt of solar capacity.
Solar Is a Great Investment
Given the premiums that today’s buyers are willing to pay for a solar-equipped home, the value proposition of going solar becomes even more attractive. Consider the following:
Recent estimates put the cost of a 3.5 kW solar array at around $15,000, and that’s before the incentives kick in. While the federal Solar Investment Tax Credit remains in effect, 30% of that cost can be taken as a tax credit, and many states offer additional perks. Some even exempt solar arrays from property tax assessments.
Then there’s the matter of electricity bills. Depending on where you live, you (or your home’s new owner) would stand to save $1000 per year, thanks to solar energy.
And while the environmental benefits are difficult to quantify, they’re very real. How can you put a price on bestowing a healthy earth on future generations?
Lenders Are Catching Up With Solar
The solar revolution is happening quickly, and until very recently, lenders have been reluctant to include photovoltaic arrays in their lending appraisals. This posed a problem for buyers and sellers alike: some buyers experienced difficulty in recuperating their investments, and buyers had trouble getting the bank to fund loans for more than their estimates indicated these solar-equipped homes were worth.
Industry insiders say this recent study could help lenders to “see the light.” Indeed, Fannie Mae has issued a guideline instructing appraisers to take solar arrays into account when valuating residential properties, and it’s no stretch to imagine that mortgage lenders will soon follow suit. After all, lending is their bread and butter, and if the market will bear a solar premium, then it would be prudent for them to adapt.
The Color of Money
Before too long, we should start seeing solar arrays alongside remodeled kitchens on lists touting “Home Improvements with the Best ROI.”
After all, the extra money buyers will pay for solar is just as green as the cash they’ll shell out for a renovated bathroom… maybe even greener.
[Photo via: Pixabay]