There is no doubt that solar panels are good for our environment; however, Do Solar Panels Increase Home Value? According to a new study, the answer to this question is yes. Nevertheless, whether it is sufficient to cover the cost of the solar panels will highly depend on the area you live in. Nowadays, Americans are investing in solar panels installing systems capable of powering 12.3 million homes in 2018, according to a trade group known as Solar Energy Industries Association.
Whether or not these solar panels pay off tends to depend on several factors to impact the value of your home. According to a recent analysis by Zillow, the value of a home equipped with solar panels tends to rise by 4.1% across the United States. In this article, we shall be answering the question; do solar panels increase home value?
Do solar panels increase home value?
As a proud homeowner, you probably have a list of improvements you would like to make in your home. When your electricity bill tends to high, or you would like to do something positive for our environment, you might consider investing in solar panels.
Solar panels have several benefits, and it is always a great idea to produce your own power without relying on the power grid. Just like any other home improvement project, it is vital to think of long-term investment before making any significant financial investment in a home. Therefore, do solar panels increase home value?
According to the Office of Energy and Renewable Energy, you will be able to significantly increase your home’s value when you install a solar energy system. Several buyers across the country will be willing to pay approximately $15,000 for a home equipped with an average-sized solar panel.
However, reality can be a bit murkier since some individuals value solar energy, but it is on a case-by-case basis. In most cases, the homeowner does not own the solar system installed in their houses; this means that the seller will own the solar outright. In most scenarios, the homeowner will be involved in a lease where the solar panel is owned by a third party. While in other cases, the seller might have purchased the solar panel with a loan. Such things will create a lien on a house.
Due to these reasons, some buyers will prefer purchasing a house without a solar panel installed. Moreover, not everyone tends to find solar panels as valuable equipment, while others see them as hugely valuable.
What aspects make a home with solar panels more valuable?
Various aspects tend to affect the price of a house equipped with solar panels. Some of these aspects include;
Type of solar panel options
Usually, there are two types of solar panels available in today’s market. The first type is the Silicon panel, which features two types; the Monocrystalline and the Polycrystalline. Both types have similar performance. The monocrystalline panels have been around for a long while; their counterpart, the polycrystalline, is commonly used today. You should note that silicon panels are by far the most efficient solar panels available in the market, and they have an efficiency range of approximately 18% to 22%.
The second type of solar panel is the thin-film solar panel. In most cases, these solar panels are found on products such as solar tiles or shingles. Compared to silicon panels, thin-film solar panels are less expensive to produce; however, they are less efficient, ranging from 11% to 13%. This will profoundly impact the amount of energy your panel will generate. A house equipped with a silicon-based solar panel will be more valuable than the one equipped with a thin-film solar panel.
Solar panel system options
There are two options when it comes to installing a solar system in your house. These options tend to have a significant impact on the cost of your home, as well. You might consider connecting your system to a local utility grid, and you will be able to sell excess energy you generate to your utility company. You might also consider installing the off-grid system, which often stands alone and is equipped with a series of batteries and a backup generator that will store power for use during cloudy days or at night when the sun is not shining.
While homes in the United States saw a gain in value for their homes by 4.1%, this boost tends to differ from one place to another. In metropolitan areas included in the research, homeowners who gained the most from installing solar panels in their homes include; New York, where they received a 5.4% or $23,989 premium on a home that cost $440,200. San Francisco homes value increased by 4.4%, or $41 658 premium for a home that cost $955,200.
While Orlando, Florida, the homes with solar panels installed, their value increment was 4.6% or 10,994 premium for a home that cost 368,300. Even though the value of solar panels tends to vary from one location to another, there is no metropolitan area that saw a drop in home value due to installing solar panels; this is according to the study carried out by Zillow.
Buyers appreciate the solar added value.
Most buyers across the country understand the value of a solar panel in a home; usually, most tend to consider monthly bills while purchasing a home. As they assess long-term financial value, they increasingly prefer investing in a solar-ready home.
According to the National Renewable Energy Laboratory, installing a solar panel in your home is viewed by most buyers as an upgrade, just like a well-renovated kitchen. As a result, most buyers across the country are willing to pay a premium for both economic and environmental benefits offered by a solar home.
By investing in a solar-ready home, you will be able to lower your monthly electricity bill and tax incentives for new installations. In addition to that, homeowners will realistically anticipate recovering their initial investment and gain a handsome return from their investment. By purchasing and installing solar panels on your home, you should expect a sizable percentage of your property’s value. It is a smart and sustainable source of energy and adds value significantly to your home; as a result, most people are encouraged to invest in them.
Factors that influence Solar’s added value
Added value on a solar-ready home will constitute several factors and varies by the market as well. The value of a home with solar panel energy will value based on the following aspects;
· The price of installing a solar panel
· Community that is environmentally conscious
· State incentives
· Price of electricity in the local area
· What region of the county you live
· System replacement value
· The age of your solar panel system
· Frequency of a power outage
· How locals understand solar technology along with its benefits
· Amount of energy generated
Seller/homeowner incentives for solar panels
Solar panels are highly essential when it comes to increasing property value; as a result, most homeowners are investing in solar panels since they have realized it has several financial benefits, including;
· Federal solar investment tax credit
· The state rebate as well as incentives including metering
· Replacing the primary grid with a sustainable and very affordable option
On the other hand, sellers of a home equipped with a solar panel system have observed a tremendous advantage in real estate marketing such as;
· The asking price is higher compared to homes without solar panel system
· Most potential buyers tend to view solar panels as an upgrade
· Homes that are equipped with solar panel systems tend to sell at a faster rate compared to those without.
· They will receive a 100% return on the solar investment upon selling the house.
As a homeowner who would like to sell a solar-ready home, you should note that most prospective buyers are interested in the documentation that will prove the installation process was done accordingly by a reputable solar dealer. In addition to that, they will need to prove that the solar panel system equipped in that house will help in reducing the electricity bill significantly.
Why you should consider having a solar panel as a homebuyer
The reasons why home sellers invest in solar panels are parlayed into the buyer’s reasons since the property market value might increase with an increase in electricity prices. For a home with a solar panel system installed, the buyer can potentially receive approximately a 200% return on the sale price premium. It will be challenging to find an investment that will match these financial benefits;
· Annual/monthly financial gains since solar panels have an incredible lifetime of approximately 25 to 30 years.
· Significant reduction of carbon footprint
· You will receive a higher resale value of your home.
Will a bigger solar panel installation increase the value of your home?
The best part of installing a solar panel as a seller is that you control that home solar energy; therefore, the amount of money you add to the property will depend on you. However, research shows that the wattage produced by a solar panel system does not raise your house value proportionally. This means that installing a large solar panel system in the room of your home will not equate to a higher or better resale value. Therefore, you should consider installing a solar panel system that will sufficiently meet the owner’s energy needs; by doing so, you will be able to recoup the installation price.
Do solar-ready houses sell faster compared to those without?
Solar-ready houses tend to sell faster; however, this will vary significantly from one region of the country to another. Research carried out in six different states by Lawrence Berkeley National; Laboratory shows that homes equipped with solar panel systems take eight more days to sell; however, new research tends to show the opposite. A house equipped with a solar panel system will sell 20% faster than those without.
Nowadays, we are witnessing a rapid expansion in the use of solar panels across the United States. This results from an increased appraiser and homebuyer understanding of how reliable a solar panel can be. Furthermore, they have understood the long-term benefits of using solar panel systems; thus, it has accelerated sales and raised seller’s revenue to use solar panel systems in homes.
New home solar panel systems and the old home solar panel system
The age of the solar panel system tends to have a significant impact on the value of your property. Usually, a solar panel that is newly purchased tends to have efficient technology, incredible warranty time as well as less time for maintaining it. Therefore, a home with a freshly installed home solar panel system will significantly add value to your home. On the other hand, a homeowner with an older solar system will need to consider depreciation; thus, they should anticipate a lower premium when selling their property.
If you are planning on selling your home in the future, updating it with a solar panel system sounds like a significant investment, along with other essential renovations. According to a recent report, the cost of a residential solar panel system is approximately less than half the price in 2010. By following this trend, you can see that as solar technology becomes efficient to install, the values n property will have a smaller premium. Nevertheless, low installation costs and an increase in electricity prices will accelerate investment because there will be reduced electricity bills from purchasing a new residential solar panel system.
As a homeowner, should you purchase or lease a solar panel system?
A financial goal is often the main reason why most individuals prefer going solar, and as a result, this will impact whether you should purchase or lease the installation of a solar panel. When purchasing a new home solar panel system, future proceeds resulting from an increase in sale price will directly go to you.
You can also include the solar installation in your property assessment if you own the system, and it remains an asset that you can transfer without any obligation. The warranty and the performance of a solar panel will guarantee a general transfer with sale.
If you are looking to secure a high sale price, it will be best to buy a solar panel system for a home. If you consider leasing or (PPA) Power Purchasing Agreement appropriate, you will receive less recouped from your home when you sell it.
Lenders and appraisers tend to consider that when a homeowner installs a solar panel system using a PPA or lease, it is regarded as an asset of a third-party owner. It means that this will require involving the third party in property transfer.
The regional market as well as electricity cost
Large price increments on solar-ready homes are commonly found in areas with incredibly high electricity rates and strong incentives on solar. Furthermore, a house with high energy costs makes installing solar panels more affordable and the best option for all homebuyers. In addition to that, the state government tends to see an increment in the long-term community and infrastructure benefits of installing solar panels.
For example, the high electricity rate in Long Island has become a boost for the solar panels in the local market. This area tends to be at approximately 40% of the solar panel system in New York. The increase in electricity bills across the United States tends to lead to a higher appraisal for solar-ready homes. Moreover, having low-cost solar electricity is considered a smart investment.
According to a statement made by Depart of Energy in 2015, adding a solar panel system to your home as an average homeowner can net up to $15,000 upon selling it compared to those without. Furthermore, a new study proves that the increment is more significant in the Northeast’s solar market that is currently emerging.
Value of solar panel system by state
California is implementing some influential policies and incentives that will help advance the solar panel systems in residential areas within the county. On the other hand, most states have been solar-friendly for a long time or have come up with incredible programs that help foster the rapid development of the residential solar panel system.
Currently, the leading states in the United States when it comes to using solar panel systems are;
· New Jersey
· New Mexico
· New York
Houses with solar panel systems in these states tend to have incredible value and sell much faster than those without.
By going through this article, you can probably see the impact solar panels tend to have on your home’s cost. As we conclude, we would like to say that by installing solar panels on your home, you will be able to increase their value significantly.