When it comes to buying solar panels, you may wonder: Is it really worth it? Even though they can help you save money on your electrical bill, they require a substantial investment upfront. But what if you don’t want to stay in the same home forever?
It turns out that solar panels are great for helping you save money on electricity and can help you sell your home for more. Learn more about how solar panels increase home values and the factors that increase the value-add.
How Solar Panels Increase Home Values
According to Energy.gov and studies by Berkeley Labs, solar panels are seen as home upgrades, which means potential home buyers are willing to pay more for a home that has solar panels. More than 80% of home buyers say that they value energy efficiency when buying a home. Having an independent source of energy is an attractive feature to home buyers.
What else do home buyers value? The National Association of Realtors (NAR) found in a survey that sustainability and energy efficiency are highly valued by home buyers. That puts eco-friendly homes in high demand. Consider these statistics reported by the NAR survey:
- 59% of realtors report that homeowners were somewhat or very interested in sustainability.
- 70% of real estate agents and brokers revealed that promoting energy efficiency in home listings is either very or somewhat valuable.
- Utility and operation costs (81%) was the top-ranked building features that homeowners indicated are somewhat or very important.
How Much Do Solar Panels Increase Home Values?
Research suggests that home buyers are willing to pay a premium for homes equipped with solar energy systems. Another National Association of Realtors report indicates the importance of “green” features during the home buying process. And it even begins to give us an idea of exactly how much home buyers are willing to pay for a sustainable home and green features. According to that report:
- 68% of buyers want an environmentally-friendly home.
- 46% would pay an extra $1,000 to $9,999 on a home with green features that saves $1,000 annually on utilities.
- 37% would pay $10,000 or more on a home with green features that saves $1,000 annually on utilities.
A separate study by Zillow provided some numbers on just how much a home’s resale value increases when the home is equipped with solar. These homes tend to sell for 4.1% more than homes without solar, on average — in places like New York City, the value-add is higher at 5.4% on average. In other places, the average value-add is lower, at 2.7% in Riverside, California. However, research points to increased home value regardless.
And another study by Berkeley Labs showed that homes with solar panels can be solar for approximately $5,911 more for each kilowatt of solar power that’s installed. That means a home with a 4 kW system could resell for $23,644 more than it was originally purchased for — and this could be near the total cost of a solar system in some cases. Meaning that return on investment may be closer than you think.
But keep in mind that every solar installation is going to be different. There’s no one-size-fits-all approach when it comes to your system.
What Factors Make a Difference?
When trying to calculate how much solar panels could influence your home’s value, it’s important to look at some of the factors that make a difference. These include:
Location: Just like in the comparison of New York City and Riverside, California, above, the amount that solar can increase your home’s value can vary greatly based on where you’re geographically located. Whether it’s the amount of sun your home gets, the electrical costs in your area, or the perceived rarity of a solar system in your area, all these factors vary based on location and will influence how valuable solar panels can be from a financial standpoint.
Installation prices in your area: When calculating your value add, you’ll have to subtract your installation costs in order to find your true return on investment. In some markets where solar is more common, installation could be less expensive; if solar is less-established, it may be more expensive to bring in a specialist. Additionally, if a buyer would save money by buying a home that already has solar installed, the value-add is increased.
System size and output: It’s simple math — a larger system means you can generate more energy and receive greater benefits from solar. And the bigger your system is, the more it’ll be worth when it comes time to sell your house.
System age and replacement value: If your system was installed last year, it’s certainly going to be worth more than a system installed 10 years ago, so be sure to account for depreciation when calculating the value-add of your solar panels. While solar panels are designed to last 20 or 30 years (or more), the buyer may need to repair or replace certain parts. With that in mind, be sure to consider that it may be difficult or expensive to replace certain parts in the future, which could impact the value add of the system when selling your home.
Increase Your Home’s Value With KC Solar
Ready to install solar panels on your home? Contact KC Solar. We offer 0% Down Solar Loans. We’ll work with you to understand the best solar specifications for your home, and we guarantee your satisfaction.
Get your free quote today.
And be sure to download our Free Solar Panel Buying Guide for more information.