November 09, 2023•5 min read
You’re probably here because you’re curious about how much more your home could be worth with solar installed on it. We’ve got you covered with SolarTLC
We completed research on how homes are valued with energy upgrades like home solar panels. We found several sources of solid information on the subject and compiled them here. You may also be curious how to compute a rough estimate of your home value increase, so we crafted an easy-to-use guide, as well.
In this article, we’ll review solar and home sale studies from around the country, provide home value calculation examples, and review valuation factors which affect the value of solar homes most.
Solar panels increase property value
Let’s start with a thought experiment. Say you were thinking about purchasing one of two identical homes, right next to each other on the same street. The only difference is that one of them has enough rooftop solar power installed on it to completely eliminate a $200 monthly power bill. The other has an empty rooftop.
That’s $2,400 a year in savings when buying the solar home instead of the one next door. Not only do you save big on electricity every year, you’re also reducing your carbon footprint and avoiding the impact of future utility rate increases by producing your own power.
Logically, it’d make sense that the solar home’s value would be significantly higher than the home without solar panels. But, the question is, how much more?
The exact answer depends on a few factors we outline in the next section, but we’ll cover three studies which help get us to a ballpark range you can feel comfortable with first.
Use our home solar calculator to help you estimate home value increases
To quickly and accurately calculate how much solar you do need, we recommend using our get estimate tool. That information, combined with the formulas above can also help you quickly estimate your expected property value increase with solar.
In the section below, we provide an example of how to create a ballpark estimate of the value of your home with solar panels installed using our calculator and the above formulas.
Our calculator takes the following factors into account in order to give you an accurate estimate of your installation costs and solar savings:
- Your available roof space
- Your utility company electricity rates
- Available solar incentives
In our example, we use Zillow as well, to help you get a gauge on your initial real estate value without solar.
When you enter your address into a search engine like Google, you’ll quickly find a Zillow link to your property. On that page is a listed “Zestimate value”, or the amount your home would probably sell to a new owner for based on sale data from similar types of homes.
Find out how much a rooftop solar system will cost you. Get a free estimate now! https://solartlc.com/get-estimate
Calculating a ballpark range for home value increase
Assume our calculator above estimates a 6kW solar panel system would be best for your energy bills of $120 a month.
- You could quickly estimate a $30,000 home value increase from the Lawrence Berkeley Labs formula (6kW x $5,000).
- From the Appraisal Journal article citation, $120 of monthly utility bill savings is $1,440 annually. Multiply that by 20 and you get an expected market value increase of $28,800.
- Finally, using Zillow and the National Bureau of Economic Research study, consider you have a Zestimate of $550,000 for your property. A 4% increase in home value would be $22,000.
In this way, your ballpark estimate for a 6kW would be anywhere from a $22,000 to $30,000 increase in home value.
Factors that change the relationship between solar and home sale prices
There are a couple of factors that will affect the price of your home sale, including the age of your PV system and your location.
Age of the PV system
If you installed your solar power system in 1995, you can’t expect to garner as much home value as a photovoltaic system installed in today. Solar modules are way more efficient than they used to be, and as such, are more valuable the newer they are.
The calculations above assume the solar panel installation has at least 20 years of good life left in the system. In the case of the Appraiser’s Journal formula, that’s why they used the multiple of 20.
Your location
Solar panels last in excess of 25 to 35 years, and depending on where you live, they can be income-producing and cost saving assets. Utility costs vary widely across different regions, as do other solar policies, such as solar property tax exemptions.
Listed below are important geographic variants on home value increases with solar power.
Solar system ownership status
If a home has solar panels on it, but the current homeowner doesn’t actually own the system.
That’s because the panels are not actually part of the property, someone else owns them! Even though electricity bill savings will be present, at any time the leasing company can remove their panels if they wanted to.
A new buyer would also not qualify for any local solar incentives like renewable energy certificates, since those were forfeited to the leasing company upon system installation.
Final thoughts on home value increase with solar panels
Unlock a Brighter Future for Your Home and Your Wallet! Transform your property into a green oasis while increasing its market value. Don’t miss the opportunity to save on energy costs and contribute to a sustainable planet. Contact SolarTLC today and let us guide you towards a brighter, more environmentally conscious tomorrow!
