We all know that solar panels are good for the environment. But do they increase the value of your home? Research indicates that even a moderately sized solar array can boost home value. Whether that added value will cover the cost of installation, however, is another question. Read on to learn if you can improve your home’s value by adding solar panels.
How Much Value Can it Add?
According to a report from the federal government, solar energy systems typically improve the value of most homes. In most instances, solar panels are viewed as upgrades, and buyers are willing to pay a premium of approximately $15,000 more for a property with an average-sized solar array. Homes with solar panels also tend to sell faster than homes with no solar features.
With all of this said, the actual value of solar can vary based on the location of your home. In California, for instance, research has shown that buyers are willing to pay nearly $6,000 per watt of installed solar capacity. This isn’t the case everywhere, however.
After analyzing sales of solar-equipped properties in eight different states over a decade, one relatively recent report found that homebuyers are consistently willing to pay about $4 per watt of installed solar capacity. For a 6-kilowatt solar PV system, this means that solar could add $24,000 to a home’s resale value.
Whatever the case, it’s clear that solar can boost a home’s value. But is it enough to justify the expense?
Will it Cover the Installation Costs?
A solar home’s selling price is usually about 3% to 4% higher or more compared to properties without solar. The price of a typical rooftop solar installation and battery is also generally recouped in the property’s sale price. What’s more, households purchasing solar are usually rewarded with lower energy bills and, in many cases, healthy tax incentives that can help cover all or a large portion of the system’s costs over the life of its warranty.
This can create a valuable selling point for buyers and help differentiate properties from similar inventory on the local market.
Modern Buyers Want Energy-Efficiency
These days, people strongly consider monthly electric bills when buying a home. When assessing a property’s long-term financial value, they’re increasingly open to paying more for a solar-ready property.
In addition to increasing home values over comparable non-solar properties in the area, solar systems provide other financial benefits including:
- Federal solar investment tax credits (ITCs)
- State rebates and other incentives such as net metering
- Replacing standard grid electricity with a potentially cheaper and sustainable option
When it comes time to sell a solar property, homeowners enjoy several benefits, including:
- Solar homes often sell faster.
- Buyers view solar panels as upgrades.
- Sellers usually get a full return on solar investment.
- Sellers can set higher asking prices than similar properties without solar.
Homeowners with a solar energy system should note that buyers usually want documentation showing that the solar installation was done properly by a reputable dealer. They also typically want documented proof that the solar system is reducing electric bills.
When deciding whether to install solar features, homeowners should know that the overall value of the upgrades go up over time as solar energy becomes more accepted in a city and region. Since Colorado Springs is just beginning to embrace solar, homeowners should expect values to increase over time. This makes investing in solar a wise decision for homeowners who plan to live in their homes for a few more years before selling. At the same time, solar can still be a good way to pique buyer interest and differentiate your property in the current marketplace. At minimum, you should be able to get an equal return on your investment, and you might end up making a profit overall.
With six decades of combined industry experience, The Wheaton Team provides invaluable guidance and expert advice for clients. Specializing in residential real estate throughout Colorado Springs and the Tri-Lakes area, our team can guide you through the complicated buying, selling and financing process, so you can achieve your real estate goals. Contact us today to learn more.
To learn more about solar panels, read our blog on the pros and cons of solar.