Lower electricity bills and a smaller carbon footprint are the two primary reasons why people go solar. From the moment your photovoltaic (PV) system goes online, your monthly utility statements shrink — as does your negative impact on the environment.
But the benefits of going solar don’t stop there. Done correctly, installing PV panels can also dramatically boost your home’s property value.
How Much More Attractive are Homes with Solar Panels?
The exact amount of any potential property value increase can depend upon your geographic location and the size of your installation. But according to a nationwide study by the US Department of Energy’s Lawrence Berkeley National Laboratory, resale values increase an average of $4 for each additional solar watt installed.
This means that a standard 5kW system could increase your home’s value by as much as $20,000.
Additional research from the Appraisal Institute supports these findings. As America’s largest professional association of property appraisers, this organization works closely with solar stakeholders to determine the impact that green power investments have on property values. The Appraisal Institute found that, for every $1 in annual electricity bill savings that solar panels provide, home resale values go up an average of $20.
Even if your installation only reduces your monthly power bill by $42, that still translates to a $20,000 increase in your home’s ticket price.
But how does this work exactly? Why are homebuyers so eager to pay extra for solar?
Why Do PV Installations Increase Property Values?
There’s really no mystery. Future home buyers like solar energy for the same reasons you do – it helps to reduce electricity bills and shrinks your carbon footprint. So, once the new buyers move in, those benefits become theirs automatically.
If you were thinking about remodeling your kitchen or adding a guest bathroom, think again. Going solar consistently offers higher ROIs than almost any home improvement you could ever make:
- While you live in your current residence, you receive all of the financial and environmental savings directly.
- Once you move, you receive a much higher asking price for your home – often more than what you initially paid to have the panels installed in the first place.
Even better, your home will also sell more quickly. According to the Department of Energy, solar-enabled properties spend up to 50% less time on the market.
This means less waiting, faster settlements, and fewer headaches.
How Solar Leasing Affects Resale Values
However, these benefits we’ve mentioned mostly go to homeowners who buy their solar installations outright using cash or loans. If you finance your PV system using solar leases, calculating property values becomes a little trickier.
With a solar lease, you basically receive a brand-new PV installation for free. And you only pay for the clean electricity your leased panels generate. Because these monthly energy payments are less than what you used to send to the utility company, you enjoy instant savings.
Essentially, you are renting solar panels and saving money in the process. In addition, your carbon footprint shrinks substantially.
However, leases are 5, 10, or 20-year contracts, so in order to sell your home, the next buyer must take over your leasing agreement:
- Some prospective homeowners will be happy to pay a premium because they’ll benefit from lower bills and less pollution.
- Other buyers may be unwilling or unable to assume responsibility. You may have to buy out the remaining portion of your solar lease contract or find someone who is prepared to pay top dollar for your home.
Leasing is still a great option for those who want to go solar without spending money upfront. But this financing approach is best suited for homeowners who plan on sticking around for a while.
Check out more home improvement tips at the Direct Energy Blog!