solar could increase your home value by $79,000
A new study of more than 5,000 home sales showed homes with solar panels installed sold for 5-10% more than comparable homes without solar. If you’re doing the math, “(that’s) an eye-popping $39,500 to $79,000 boost.”
Everyone talks about how adding rooftop solar panels to your home can help reduce your energy costs, but when it comes to understanding how solar affects the resale value of your home, most people are relying on anecdotal information, or else quoting a Zillow study from 2019 showing that PV panels added about 4.1% to a home’s selling price.
A lot has happened since 2019, however, and the world is a very different place. With that in mind, the analysts at SolarInsure decided to see what the numbers looked like today – and they found that homes with owned solar panels sold for 5-10% more than comparable homes without solar.
SolarInsure’s dataset focused on single-family residences in major California cities. The data included 2,350 sales of homes with owned rooftop solar PV systems, 1,790 home sales with third-party solar leases or PPAs, and 860 sales of homes without solar.
“Our study of over 5,000 homes shows homes with owned solar panels tend to sell for 5–10% more than comparable homes without solar, reflecting buyer demand for long-term energy savings and stability,” writes Ara Agopian, a SolarInsure analyst with over two decades in solar and risk management. But that caveat of owned solar panels makes a huge difference. “Third-party-owned systems (leases/PPAs) do not consistently increase home value or resale value, as buyers may be wary of taking over contracts.”
Leasing v. buying
While I’m a huge fan of short term leases with plenty of “outs” for consumers, solar leases and Power Purchase Agreements (PPAs) are different animals. They tend to be long-term commitments lasting 10 to 25 years, and with a full payout being the only real “exit clause” built in. That means any potential buyers would have to assume the lease themselves, or that the seller has to buy out the lease before closing.
Not the end of the world, but it can slow things down and hurt your ability to negotiate if you’re looking for a quick sale. With that in mind, many homeowners could choose to finance their solar system through a “conventional” loan or a home equity line of credit (HELOC). In that case, you would own your panels (and, ideally, the home battery system you got with it) from day one, even if you were still paying them off over time. And, because the ownership is clear in those cases, the solar panels can more easily be considered part of the home, like the kitchen appliances or furnace.
Financing also offers flexibility in structuring payments, with some homeowners choosing short-term loans to pay off the system quickly and others use longer-term HELOCs to spread costs out over a longer timeline. In either case, ownership ensures that the value of your solar installation can be transferred seamlessly to the next buyer – and it could even pay for itself.
From a return on investment standpoint, value increases can’t be ignored. The average size of a solar installation in the US is 7.4 kW; at $3/W, a customer would spend just over $22,000 on their installation. If the home is valued over $310,000, the homeowner would recoup more than the cost to install their panels once they solar.
That said, if you’ve convinced yourself that you are definitely, 100%, never ever moving and resale doesn’t matter to you, leasing can reduce both your up-front and monthly costs, making it a popular choice.
That’s not to say that leasing, financing, or even paying cash is the best way to go for everyone. It’s important to get several quotes from reputable installers and find out about what options they recommend, then work with a trusted financial expert to determine the best path for you.
SOURCES: SolarInsure, Yahoo! Finance; featured image via QMerit.
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