Want to Increase Your Home’s Value?
Add solar power!
The verdict is in: a solar system will increase your home’s value.
This isn't really news. For years now, studies have been finding that solar increases home values. A recent report by the Lawrence Berkeley National Laboratory, “Exploring California PV Home Premiums,” confirms these findings.
How much does solar increase home values? That’s where it starts to get tricky. Home values rely a lot on buyer perception, and that’s no less true for homes with solar. Every situation is unique, but the study found a few trends:
- A solar system more than pays for itself in terms of resale value. Solar apparently increases a home’s value by more than the system’s cost. So if your system cost $15,000, your home value is likely to increase by more than that.
- Buyers like bigger systems. In general, each increase in size of 1 kilowatt equals a home value increase of about $5900. Most home solar systems are sized between 2 and 5 kilowatts.
- Buyers prefer newer systems. Here’s where perception is particularly interesting. Solar systems keep producing power even as they age. They lose only a very small amount of efficiency, about 1% or less a year. But most people don’t know that. So buyers tend to think older systems aren't worth as much, which results in a price decrease of about $2400 for each year a system ages. Still, this decrease is much smaller than the increase that comes with each kilowatt of your system.
What does this mean? A few takeaways from these results:
- It might be worth buying a solar system even if you plan to sell your house in a few years. Not only does a system add more value to your home than it costs, but some realtors say that your home may sell up to 20% more quickly with solar.
- We need to educate people about solar. Older systems would be more likely to increase a home’s value as much as new ones if people realized how long systems last, and how much power they keep producing. Plus, electricity prices keep rising, so the value of generating your own power increases over time.
- We still need to learn a lot more. For example, a lot of people are leasing their solar systems now instead of buying them. The report didn’t look at homes with leased systems. And it only studied homes in California. Future reports will look at other states, too.
So much has been changing in solar. The cost of solar has plummeted in recent years (99% since the late 1970s!), and new financing options like leasing have brought solar to many more people. New tools are helping appraisers value homes with solar. And reports like this one will help everyone get a better idea of how much value a solar system can add to your home.