Solar Panels and Home Value 101 | SolarUnion
Solar panels are an excellent way to up your sustainability game and reduce overall utility costs. But did you know that installing solar panels in your home can actually raise its overall value in the long run?
Will solar panels increase your home’s value?
The primary driver for most people to switch to solar panels is the long-term cost savings that they can achieve by harnessing and using their own energy. However, industry trends show that solar panels do actually increase in your home’s value. The National Renewable Energy Laboratory (NREL) says that for every $1 you save on energy bills, the value of your home goes up by $20. So if you save around $600 per year, your home value increases by $12,000. As you save more on your energy bills over time, your home value increases as well.
Additionally, potential buyers have been more keen on the sustainability aspects of their future homes. Home appraises have found that homes with solar panels actually have a higher market value. In fact, 67% of potential home buyers value energy efficiency when looking at their future house. The more people value sustainability as an important aspect to their home, the more money they are willing to spend to achieve that. According to the real estate platform, Zillow, prospective buyers are willing to spend 4% more money on a solar powered home.
Factors that impact sale value
While installing solar panels is a near guaranteed way to up the value of your home, depending on certain factors, you can greatly increase these numbers.
Depending on where you live in the United States, the price of electricity can vary. In areas with high electricity rates, homeowners who install solar panels see the greatest amount of return. This is because most people only see a benefit in reducing overall utility prices. If you live in an area with steady or low electricity rates, potential home buyers may not see as great of a value in solar panels. This being said, electricity prices are only one of many benefits when it comes to solar power.
With the recent national, and even global, push towards living more sustainably, some states have seen growing local solar markets. Certain state governments have passed policies with incentives that work to benefit homeowners who have solar panels. These benefits can include subsidized costs to buy and install solar panels as well as tax benefits that become available when you make the switch. The ten states with the best solar markets include Massachuests, New Jersey, Virginia, Arizona, Nevada, Georgia, Florida, California, Texas, and North Carolina. Even if you don’t live in one of these states, you may still see a return on your investment when selling your home.
Understanding your ownership status in regards to your solar system is key in ensuring that you can have the highest return on your investment during the home sale process. In order to include a solar panel system in a home sale, you must legally be its owner. Proper ownership is also necessary when looking at government incentives for solar energy use. To be the “owner” of your solar panels, you must have either taken out a loan or bought the system outright.
For those who chose financing options like a solar lease, the ownership of the solar panel system actually still belongs to the solar provider. In order for you to gain ownership, you must buy out the lease or have the home’s new owner agree to take on the remaining amount of time on said lease. This can be a bit complicated as depending on the amount of time left on the lease, taking over the payments could be a substantial added cost that a homebuyer may not want to take on.
This may seem pretty straight forward, but homes with up-to-date solar panels systems are valued at a higher rate than homes with older systems. The standard of life of a solar panel system is between 25 and 35 years. Homes with a solar panel system that is 10 years or younger see the highest return. Homes with 15-year-old energy systems are close to the threshold of being too old. Realistically, after 15 years, the system can only give 10-20 more years of service at best.
Aside from age, homeowners that have taken care to stay up to date on their systems maintenance will see a higher return when selling. Homes with 15 year old systems that are regularly examined and maintained could offer more of a value than a younger system that has not been properly serviced over time. Most solar providers offer generous warranties that cover any defects or issues, so it is in everyone’s best interest to stay up to date with any fixes or adjustments that need to be made over time.
Where you choose to place your solar panels can matter to potential buyers. Ultimately, the most important factor in the placement of solar panels is where they can be the most efficient. After efficiency, the next thing that matters is aesthetic value, meaning if the panels are behind the home, on the roof, or in the front yard. It would be naive to think that potential homebuyers don’t care about the overall look of their future home. If you are able to choose an area of the home that is both efficient and aesthetic, you will see the greatest amount of return during the buying process.
Solar Tax Incentives
Installing solar panels can affect your taxes in a variety of different ways. Because installing solar panel systems raises the value of your property, it would in turn raise the property taxes that you’d need to pay. However, more than half of states have laws that make solar panel owners exempt from paying this percent increase. Depending on where you live, the tax law may vary. Additionally, there are local, state, and federal levels of tax credits and solar incentives. The federal solar tax credit offers a tax reduction that is equal to nearly a third of your installation costs.
Do homes with solar sell faster?
How fast your home sells can depend on a variety of factors, including geography, neighborhood, current market trends, and time of year. However, homes with solar panels have been proven to sell around 20% faster than homes without any panel systems.