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When you make improvements to your home, it’s smart to consider how they will impact its value. While conventional wisdom suggests that updating your kitchen, renovating your bathroom, or building an addition are the best ways to increase your property value, there is another significant improvement you may not realize: installing a solar energy system on your roof.
Does Adding Solar Panels to Your Home Increase Its Value?
The simple answer is “yes”. Installing solar panels generally increases your home’s value.
Homebuyers are willing to pay more for a solar-equipped home for several reasons:
- Reduced or eliminated electric bills: Solar panels can significantly lower or even eliminate your electricity costs.
- Protection from Increasing utility rates: Solar panels generate electricity for 25+ years, providing long-term savings.
- Environmental impact: Solar panels produce emissions-free electricity, reducing your home’s carbon footprint.
If you’re considering solar as a way to boost your home’s resale value, remember that increased property value is just one financial benefit. There are also substantial month-to-month savings on your electricity bill, which can be redirected to other investments.
How Much Can Solar Panels Increase Your Home’s Value?
Several studies highlight the value solar can add:
Lawrence Berkeley National Laboratory (LBNL): Their 2015 “Selling Into the Sun” report found that homebuyers are willing to pay approximately $4 per watt of installed solar capacity. For a 6-kilowatt (kW) system, this means an added $24,000 to your home’s resale value.
Zillow (2019): This study found that homes with solar panels sell for 4.1% more on average. The increase varies by geography, with solar-powered homes in the greater New York City area seeing a 5.4% increase in value.
National Renewable Energy Laboratory (NREL): Published in the Appraisal Journal, this study indicates that solar increases home value by $20 for every $1 reduction in annual utility bills. For instance, a solar system that saves $400 annually would add about $8,000 to your property value.
Solar panels can indeed add value to your property by enhancing its market appeal, increasing resale value, and offering significant energy savings. However, the extent of the added value depends on factors such as location, system size and quality, ownership status, and overall energy efficiency of the home. By understanding these factors and considering the local market conditions, you can make an informed decision about investing in solar panels and their potential impact on your property’s value.
