June 10, 2023


Creative living

Do Homes With Solar Power Have More Value Than Homes Without?

2 min read

Why is property powered by solar panels worth more?

• Solar PV systems reduce or eliminate the energy cost from the grid
• Solar PV systems protect or eliminate future rate inflation due to approved increases from Departments of Public Utilities
• Solar PV systems are allowed to be in accelerated devaluation for tax purposes helping ownership values to improve quickly
• Properties with solar panel systems resell for more than properties without solar (As much as 17% more)
• Studies show that properties with solar have sold faster than properties without solar (On average 20% faster)

Based on Nevin, Bender and Gazan from the Appraisal Journal it’s more than financially quantifiable to integrate solar. A solar electric system increases home value by $20,000 for each $1,000 in annual reduced operating costs, supported by the entire Appraisal Institute. The rationale is that the money from the reduction in operating costs can be spent on a larger mortgage with no net change in monthly cost of ownership.

A solar electric system goes beyond other property improvements in percentage of cost recovered. Most solar systems will recover much more than 100% of cost, in actuality it has been determined that the total savings over 25 years is 220% to 350% return on the investment. This savings may even increase greater if energy costs from public utilities continue to skyrocket.

Interestingly, and as a sidelight to this article, a recent exhaustive and detailed study by the National Renewable Energy Labratory (NREL) found that solar homes sold 20% faster and 17% more than the equivalent non-solar homes across several subdivisions built by different California builders. In one particular subdivision all 257 solar homes sold within a year, 2 years faster than expected. Interviews with the home buyers provided some interesting findings: If solar was already on the house and factored into the price, buyers were more likely to pick the home with solar, but if a decision to be made at the point of purchase the buyer shelved the choice as just one more decision. The homes with solar were priced at $380,000 to $500,000 but because of the demand some sold for as much as $600,000!

As the solar system ages, appreciation is expected to continue as electric rates increase. For example, the more rates rise the greater the ratio 20 to 1 creates on value. This aging will continue since most solar panel systems now generate at least 80% of their power to 25 years and hardware (not financial) depreciation will be expected to accelerate. All system warranties are required to be at least 25 years before solar modules are set to expire. Homebuyers will be at least willing to pay 100% of originating costs for a retrofit solar system with 20 to 1 ratios only increasing with inflated electrical prices. The overall feeling of the current or future owner will be the assurance that they can get their money back out of the system if they need to sell.

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