Do solar panels add value to your home? I asked that question to myself after installing my solar panels over 2 years ago. My initial reason for installing solar panels was not to increase the value of my home, but I was tired of paying over $500 per month in the summer months when I was running the air-conditioning 24/7. (My average bill was $300 per month from the previous 12 months.)
Adding solar panels absolutely saved me money in the short and long run. And I received some additional benefits, as well, from the 30 percent federal tax credit which expires in 2019. The calculation of determining your savings can be complicated depending on whether you lease or buy and how many & where the panels can fit on your roof top. In my case, I financed a 6.54kW system (20 Panel – Sunpower 327W E20 & Sunpower Inverter) at 2.99% over 12 years with no money down resulting in a $227 per monthly payment after receiving my 30% tax credit which was used to pay down my hybrid no-interest loan amount. My initial savings was $73 per month! Since then, utility rates have gone up significantly further increasing my savings. It was a “no brainer!” Oh by the way, the price of panels have become more cost competitive in the last 2 years making the savings even greater for anyone purchasing now.
So, do solar panels add value to your home? The answer is yes—but only in certain circumstances.
When Do Solar Panels Add Value to Your Home?
If you purchase a solar panel system for your home, those panels can add value. But just how much value do solar panels add? Estimates vary.
A group of economists studied data from solar panel installations in San Diego and Sacramento counties from 2003 through 2010 and made a surprising discovery. They found that homeowners with solar panels could recoup almost the full price of the installation upon sale of the home. Essentially, a solar panel system added a premium of about $20,000 to the home’s selling price.
According to research from the National Renewal Energy Laboratory, each kW of an installed solar panel system can add $5,911 to the value of your home. The typical home system produces 4 kW of power, which would increase your home’s value by $23,644.
A study by Lawrence Berkeley National Laboratory examined home sales in the San Diego metro area in 2012 and 2013. All of the homes with installed solar panels showed a price premium. The average boost to home value was $17,127.
While there’s no exact number for how much value solar panels add to your home, many groups agree that purchasing a solar panel system can boost the sale price. Of course, this added value is on top of all the money you save on your utility bill.
When Do Solar Panels Become a Liability?
As the studies cited above show, purchasing solar panels does add value to your home.
A leased solar panel system, on the other hand, can be a liability.
As the Los Angeles Times reported, leased solar panels can cause headaches for homeowners who want to sell. Some potential buyers won’t go through with the sale unless homeowners buy out the remaining lease payments, which can cost $15,000 or more.
While a solar panel lease can be transferred to the new buyer, home-buyers are often reluctant to take over the payments. They have to qualify for the lease themselves. If they’ve already maxed out their borrowing capacity to purchase a home, adding in the solar lease payments may push the home out of reach.
Fannie Mae says that solar lease payments must be included in a borrower’s debt-to-income ratio. On top of that, the solar leasing company (the true owner of the panels) must have insurance to cover any property damage resulting from malfunction or faulty installation, which can also complicate the home sale.
Do leased solar panels add value to your home? Not according to Fannie Mae. Those lending guidelines specifically say that leased solar systems and solar power-purchase agreements (PPAs) cannot be included in your home’s value when it’s appraised.
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In summary, solar panels save money on your monthly bills and can increase the value of your home. It is important to note that not all solar panels are created equal with each manufacturing offering different prices, warranties and some manufactures even waive the warranty if your home is within so many miles of the coast exposing the panels to the corrosive marine air. If you want to talk solar, it is one of my favorite subjects to discuss besides the aspects of climate change. You can reach me anytime at (858) 342-6810 or clink on the link Ask Broker Mark if you have any written comments.
