Manage episode 296947829 series 2915908
Installing solar panels on your home could give you a big boost in value. A new study from Porch.com shows that the average solar-powered home is worth $680,000 which is almost 50% more than the average home in a given area. But it also depends on where you live.
Hi I’m Kathy Fettke and this is Real Estate News for Investors.
Porch.com tallied the number of listings and the average sales prices for the top 500 most populated U.S. cities. It then eliminated the cities that didn’t have at least five solar-powered homes for sale. That left 175 cities in 29 states, and the District of Columbia. (1)
It also surveyed homeowners to ask them about home prices in their areas, and how much more solar-powered homes were going for. But the difference in the added value was substantial from city to city.
Wide Range in Added Value
Pensacola, Florida had the biggest increase in value for homes with solar. The average is $615,000 which is three-and-a-half times the average home price in that area. At the opposite end of the spectrum is Billings, Montana. It was the only city where homes with solar panels were worth less than homes that had them. The average home in Billings costs $286,000, while the ones with solar average just $170,000, according to this study.
The state where solar-powered homes are the most expensive is California, because home prices are so high to begin with. But in some cities, solar did add a substantial amount of value to an already higher-priced home. For example, in the city of Concord, solar increased the value by 113%, on average. In Fresno, it was 89%. But in Santa Monica, the difference in value was negligible, at just 1%. Twenty-five California cities were included in this analysis and were spread across that spectrum.
Studies Show Varied Results
Other important studies on this topic include one from the Lawrence Berkeley Laboratory in California. It was done in 2015 and found that solar panels add $4 per watt to the value of your home. As reported by the Solar Nerd, if you have a 6 kW system, the value of your home could increase by $24,000. That’s an attractive number because in 2015, the average cost of a solar system was “less” than $4 per watt. (2)
The study authors the higher value may be due to buyers who are willing to pay a little extra for solar because it’s environmentally friendly. They call it a “green cachet” or the “Prius effect.” That study dug into 12 years of data and almost 23,000 homes in 8 states. It also made adjustments to the results to account for different features of the homes, such as square footage, number of bedrooms, and the location of the homes.
Zillow conducted a study in 2019 and found the premium for a solar home was 4.1%. That adds about $10,000 onto the value of a home in the median price range. In San Francisco, a home typically sells for around $1.45 million. The added value for that home would be about $60,000. That study also adjusted for various attributes of the home. (3)
According to Homelight, the Office of Energy Efficiency and Renewable Energy states that solar will likely increase the value of your home, and that buyers are willing to pay about $15,000 more for a home with an average-sized solar system. (4) As you can see, there are wildly different figures for the value of solar-powered homes. And not everyone agrees that they are an attractive feature for all homebuyers.
A Contrarian Viewpoint
In Sacramento County, real estate agent, Michael Miller, told Homelight that: “Some people value solar, but it’s on a case-by-case basis.” That’s mostly because the seller doesn’t actually own their solar systems. He says: “A seller may own the solar outright, but in other cases, they may be involved in a lease where a third party owns the equipment. In other scenarios, the seller may have purchased the equipment with a loan.” And that would create a lien on the property. Miller says some buyers tend to steer clear of solar-powered homes involving a lease or a lien.
He also believes that as more people adopt solar, we may see a standard develop on the added value. And that of course, people like the energy savings that solar power provides. But, one thing noted by the Porch.com researchers is that even though prices for solar panels are coming down, they are typically found on more expensive homes.
You’ll find links to these studies in the show notes at NewsForInvestors.com.
Thanks for listening. I’m Kathy Fettke.
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