1. Solar adds a higher percentage of resale value – from 87% to 157% – than any other home improvement.
As a homeowner, you undoubtedly know that Remodeling Magazine is the “bible” when it comes to evaluating the resale value of home improvement projects. While the magazine doesn’t include solar electric systems in its Cost vs. Value report every year, it has placed the investment in solar panels recouped at resale at 87%.
What’s interesting about this number is that it is both the lowest estimate of solar’s resale value among several sources and the highest estimate among the projects the magazine evaluates every year. The two next best investments in the Mid-Atlantic region are a deck addition (83.9%) and vinyl siding replacement (82.6%).
It’s important to remember that a solar thermal or electric system will rise in value as energy rates rise, while all other home improvements will depreciate.
At the other end of the scale, California-based solar power analyst Andrew Black (“Financial Payback on Residential California Solar Electric Systems”) stated that “A solar electric system compares very favorably with other home improvements in percentage of cost recovered. Often, a solar system can recover much more than 100% of its cost, and this percentage actually increases over time as electric rates rise." Big solar power systems can recoup as much as 157% percent of their cost in value returned, Black reported.
2. Banks and mortgage companies say solar increases property value
Simply put, “Solar electric systems increase property value by decreasing utility operating costs.” According to the Appraisal Journal (Nevin, Rick et al, “Evidence of Rational Market Valuations for Home Energy Efficiency,” Oct 1998, www.ongrid.net/AppraisalJournalPVValue10.98.pdf), a home’s value is increased by $20,000 for every $1,000 reduction in annual operating costs from energy efficiency.” The 1999 update of this EPA-funded study can be found at www.ongrid.net/AppraisalJournalPVValue10.99.pdf
Although this study is “old,” it is the still the standard for real estate appraisers and mortgage companies.
3. Home buyers will pay more for a solar home – and they sell faster
According to a 2006 Roper survey, half of consumers surveyed said they would pay up to 10% more for a solar-equipped house.
(Source: “Here Comes the Sun,” Investor’s Business Daily, www.topvoipnews.com, Aug. 18, 2006)
The Palm Beach Daily News reported that “With energy costs remaining at near-record highs, homeowners are looking to energy-management systems and other sustainable design elements to help reduce the financial burden of high utility bills, according to a survey of architects by the American Institute of Architects. . .” AIA Chief Economist Kermit Baker said, “There is strong demand for green-home design features and products like solar panels, geothermal heating and cooling, and water-reclamation systems."
(Source: “Real Estate News and Notes,” Palm Beach Daily News, Dec. 12, 2008)
And finally, the L.A. Times reported that “Solar-powered homes are starting to outsell traditionally electrified new homes in several markets . . .”
(Source: “Sun-powered homes defy a cool housing market,” Elizabeth Douglass, Los Angeles Times, Sept. 25, 2007)
Of course, home improvements are not all about dollars. If you haven’t already read about the many reasons people feel good about installing solar, you can do that here. [ link to Why Solar?/Motivations page ]