Installing solar panels can significantly increase your property’s value, according to a new study from the Lawrence Berkeley National Lab (LBL).
ENERGYSAGE — The report, titled “Selling into the sun: Price premium analysis of a multi-state dataset of solar homes“, builds on previous research which concluded that homes with solar panels in California sold for more than those without.
In addition to California, the new study investigates home pricing trends Connecticut, Florida, Massachusetts, Maryland, North Carolina, New York and Pennsylvania by analyzing the sales of over 20,000 homes in these states. LBL’s analysis of the housing markets in these other states shows that the premium paid for homes with solar is not a phenomenon isolated to the Golden State.
The takeaway is this: If you are thinking about purchasing a solar system for your home, the study’s conclusions should give you a boost of confidence that you are making a smart investment. LBL finds that homes with solar panels will benefit from a ‘solar premium’ when they are sold because buyers are willing to pay more for a home with solar panels.
How Much Does Solar Power Increase Property Values?
The solar premium is how much more your home will be worth with a solar panel system as opposed to without one.
Here’s an example: if your home has a 3.6 kilowatt (kW) solar system (the national average) on its roof, this means you have 3,600 watts of solar power (1kW = 1,000W). LBL says that each watt of solar you have will add approximately $4 to your home’s value if you live in California and about $3 if you live elsewhere. This means that, thanks to your 3.6kW solar system, your home should sell for about ($4 x 3,600W =) $16,000 more if you live in California or about ($3 x 3,600W =) $12,700 more if you live outside of California. Specifically in this state analysis, prospective buyers wondering if solar panels increase home value were pleasantly surprised.
What is surprising about these figures is that they are very close to what you would pay for a brand new solar system today. Our own analysis of prices for 6kW solar systems in California reveals that some of the more expensive systems cost just over $4/W. And bear in mind that these prices are what you would pay before you take into account the generous 30% Federal tax incentive that is available until the end of 2016.
The report notes that the difference between the solar premium for solar panels in California as opposed to the non-Californian states is “not statistically significant”: The lower premiums may be due to “lower net costs and income estimates” in the other states. In essence, the premiums in non-Californian states may have to do with lower solar installation prices and electricity rates rather than because solar has a lower valuation there.
All of this suggests that if you sell your house soon after you have solar system installed, you will recoup most or all of your investment, even as you save money on your power bills. It also confirms what we’ve said before: Payback periods on solar power systems are not something to be overly concerned about. Your solar system will either increase your home value significantly should you decide to sell your house, or it will pay itself off in power bill savings before you move out. In both cases, solar is a sound investment.
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