Do Solar Panels Increase Home Value? Cost, Factors, & Outlook
Solar panels are devices that convert light, typically from the sun, into electricity. They are a form of renewable energy, and they can be found in everything from large groups called solar farms that provide energy for the power grid to portable versions used to power items like radios or flashlights.
In recent years, homeowners are no longer just turning to new roofs to increase home value but also looking into adding solar panels. According to some estimates, residential solar power installations rose 34% from 2020 to 2021.1 So why are so many homeowners hopping onboard the solar panel train? Not only are they good for the environment, but also, they can decrease your monthly electricity bill and solar panels increase the value of a home.
Do Solar Panels Increase Home Value?
Yes, solar panels will increase home value. Several factors come into play when determining the exact amount, but solar panels do add value to your house. They will also typically result in a higher sale price.
While the cost of installation averages between $15,000 to $25,000 (before tax credits or incentives which could lower the cost by 30%), the subsequent increase in home value and decrease in electricity bills is often worth it in the long run.2
How Much Do Solar Panels Increase Home Value?
How much solar panels increase home value will depend on a variety of factors. By one account, solar panels have been said to increase the value of a home by $20 for every $1 reduction in the homeowner’s annual utility bill.3 For someone who saves $300 in electricity bill fees a year, this savings translates to $6,000 in increased home value.
Other noteworthy numbers and statistics regarding solar panels and their value include the following:
- From March of 2018 to February of 2019, homes with solar panels sold for 4.1% more than comparable homes without. This increase equated to an average of $9,274 more.4
- An old study from 2006 found that homes with solar panels sold 20% faster than comparable homes without.5
- Over 80% of home buyers agree that energy-efficient features like solar panels are important to them.4
As demand for renewable energy sources increases, the outlook for home value also appears bright. According to one survey, 8 out of 10 Americans want builders to offer solar power for new homes, and 50% said they would pay up to 10% more for a solar-equipped house.3
Factors that Impact the Value of Solar Panels
While the consensus is that solar panels increase home value, by what amount can vary greatly. There are several factors that can impact how much solar panels increase property value and ultimately, how much money goes back into your pocket when you go to sell your home.
Location
When it comes to real estate, you have probably heard the phrase, “Location, location, location.” While this common saying often refers to the neighborhood where the house sits, location is also a big factor when it comes to the value of a home with solar panels.
Taxes, electricity rates, and demand are all location-dependent factors that can affect how much solar panels increase a home’s value. Some local and state municipalities give better tax breaks or credits than others for having solar panels. Higher local electricity rates can make solar panels more beneficial in the long run. Also, some states like California and Texas get more sun and have a higher demand for solar panels that can bump up the sale price of the home.1
State of the Panels
While solar panels add value to a home, the state of the panels themselves can also make a big difference regarding their worth. Solar panels can typically last around 25 to 30 years before their energy production declines by a significant amount. Because of this decline, older solar panels are usually considered less valuable than newer ones. In rare cases, solar panels may be damaged by extreme weather or other external factors that can also lower their value.6
Solar Panel Ownership
One of the trickier factors that could impact how much solar panels add value to your house is their ownership. Some homeowners own the solar panels that are attached to their home, but others lease them from a third party. If the solar panels are owned by a third party, the homeowner will likely pay a monthly fee to that company.
In some studies, leased solar panels have been found to not be as valuable as those owned by the homeowner, but other studies suggest that the impact of third-party ownership on home sale value appears to be small or in some cases, negligible.7,8
Maximize Your Home Value
If you do own a home with solar panels or are looking to buy a home with them, there may be ways to maximize their value. To get the most bang for your buck, check your state and local laws to make sure you are taking full advantage of any credits, tax breaks, or incentives. You can also look into net metering and solar batteries to see if they would be beneficial for you.
If you do not have solar panels but are considering selling your home soon, you will want to do your research. While solar panels increase home value, the upfront cost may or may not be worth the resale boost depending on your situation. Fortunately, there are other ways to increase the value of your home.
At Curbio, we help homeowners like you find the pre-listing house updates that will give you the greatest return on your investment and let you walk away with more money in your pocket. The best part is, there is 0 down and 0% interest until closing. Talk to your real estate agent today about partnering with Curbio or check out more of our resources for homeowners.
Sources:
- U.S. Energy Information Administration (2021). Record numbers of solar panels were shipped in the United States during 2021
- Nerd Wallet (2022). What Do Solar Panels Cost and Are They Worth It?
- National Renewable Energy Laboratory (2008). Planning for PV: The Value and Cost of Solar Electricity
- Zillow (2019). Homes With Solar Panels Sell for 4.1% More
- National Renewable Energy Laboratory (2006). A New Market Paradigm for Zero-Energy Homes:The Comparative San Diego Case Study
- Energysage. How long do solar panels last? Solar panel lifespan explained
- Berkley Lab. Survey of Buyers, Sellers and Realtors Involved In San Diego ThirdParty Owned Solar Home Transactions – A Qualitative Assessment
- Social Science Research Network (2021). Solar at High Noon: Solar Home Premiums in a Rapidly Maturing Market