There is an intense debate on whether solar panels affect home value. Solar panels are not only good for the environment, but they also escalate the value of your home. Many studies have revealed that homes with solar panels fetch better prices than other similar homes in the same area. In States like California, there is widespread usage of solar panels.
Installing a solar panel can help improve the value of your home by three to four percent. However, it is essential to understand specific facts about solar power, such as the cost of installation, benefits of solar energy, how solar power affects the overall value of your home. It is also essential to understand why buyers always prefer solar-powered homes.
According to research conducted by the Solar Energy Industries Association, Americans are significantly investing in solar energy. In 2018, solar energy systems installed could power a total of 12.3 million homes. Findings from an online analysis reveal that installing solar panels raises the value of a home by an average of 4.1% across the United States. For a home valued at 226,300 dollars, for instance, installing solar panels can raise the value of the house by 9,274 dollars. The analysis entailed comparing homes with solar power systems with those without that were listed for sale and sold between March 1, 2018, and February 28, 2019.
You can forecast the increase of your property’s value after solar installation using the National Renewable Energy Laboratory Guidelines. With a solar system in place, every one dollar in energy bill savings raises the value of your home by twenty 20 dollars.
The Effects of Solar Power on State to State Home Value
The exact increase in home value may vary from state to state. Although the average home value boost after installing solar panels is 4.1% across the US, the rise in value varies from place to place. An online study revealed that although the increase in home value after installing solar energy systems vary depending on the location, no area recorded a decrease in home value after installing solar panels. This study focused on various metropolitan areas while evaluating the effects of solar panels on home values.
Of all the areas analyzed, homeowners in New York enjoy the highest improvement in home values after installing solar panels. A home valued at 440,400 dollars in New York would gain a premium of 23,989 dollars after solar installation, translating to a 5.4% increase in value.
In San Francisco, a home valued at 955,200 dollars would appreciate by a premium amounting to 41,658 dollars, translating to a 4.4% increase in the home value.
The analysis further reveals that a home in Orlando valued at 368,300 dollars before solar panels installation would record an increase in the value of 4.6% after installing solar panels or a premium of 10,994 dollars.
In California, for instance, the average increase in resale values for homes with solar power systems is 5,911 dollars for a 1-kilowatt solar power system installation. The cost of a medium-sized home can increase by 18,324 dollars after installation of a 3.1-kilowatt solar power system.
The home value rises as you upgrade your installation. For example, installing 5Kw solar panels would improve the cost of a medium-sized home by 28,555 dollars. The increase in value is based on current utility rates and house prices. The benefits derived from the installation of solar power systems depend on the cost of electricity as electricity prices go up, the advantages of solar energy increase, boosting the value of solar-powered homes.
Apart from fetching relatively higher prices, solar-powered homes also sell faster than properties without solar installations. Homes with solar installations are twenty percent more likely to sell quicker than homes without solar energy. In today’s crowded housing market, there is no better way to make your property stand out and fetch a better price than installing a solar power system.
Installing a solar system in your home will only improve the home value if you are the owner of the system. If you acquire the solar panels through lease, you are not the actual owner, and the panels will not be included in assessments of your property value. While examining the effects of solar energy systems on home values, the focus is on owned solar energy systems.
Are Solar Panels Worth Installing?
The average payoff of 9,274 dollars based on national median home price will cover a big part of the cost of solar panel installation. An online report reveals that the average cost of a home solar system was 18,300 dollars before tax credits in 2019. After tax credits, the costs reduced to 12,810 dollars. With the low prices of installing solar power systems, you can reap endless benefits from solar panels. A residential photovoltaic system that would have cost 50,000 dollars ten years ago would currently cost sixty percent less.
When buying solar panels, you will enjoy generous tax credits, further lowering the costs. However, the benefits derived from the installation of solar systems may vary depending on several factors. As you evaluate whether solar panels are worth installing, there are several factors that you should have in mind:
The value you derive from installing a solar power system depends on the site of your home. If your home is located in states with developed solar markets such as New Jersey and California, you will yield much higher returns than homes located in less developed solar markets. You will have the best return on investment for your solar energy units in places with high electricity costs. Your system will also offer more value in states that have well-established incentive programs for solar energy.
- The Energy Costs in Your Area
The value derived from a solar energy system highly depends on the energy costs in the area under consideration. Energy bills vary from state to state. In Massachusetts, energy costs are seventy percent higher than the national average. In Kentucky, energy costs are twenty percent lower than the national average. Therefore, investing in PV solar panels in Massachusetts would have a better return on investment and would boost the value of your home more than having a solar power system in Kentucky. You would take a much shorter period to recover the cost incurred in installing solar panels in Massachusetts but a relatively more extended period in Kentucky and other states with low energy costs.
- Solar Panel Financial Incentives
The value derived from installing solar panels will vary from one state to the other depending on the financial incentives available. As a homeowner, when you buy a solar panel instead of leasing, you can enjoy tax credits of up to sixty percent. If, for instance, you buy panels worth 20,000 dollars, you could save up to 6,000 dollars. It is important to note that for you to enjoy the tax credits, your taxable income must be higher than the thirty percent credit amount. In some states, the cost of installing PV panels may be much lower. New York offers further twenty-five percent tax credits for solar panels.
- The Nature of Your Roof
The value reaped from adding solar panels to your home will also depend on the kind of your roof. For instance, even if you reside in a state that has high-energy bills, you may not enjoy the benefits of solar panels if your roof does not receive sunlight. Homes situated in sunny states and have good exposure to the sun reap the benefits of solar energy the most. Nearby buildings or trees should not shadow the roof for solar panels
- The Size of the Solar Power System
The increase in the value of your home also depends on the size of your solar power installation. The increase in home value depends on the number and quality of solar panels installed. The more advanced the installation, the higher the improvement in home value.
- Value of the Home
Larger homes receive higher boosts in amount after the installation of a solar power system. However, the increase may only represent a small fraction of the overall home value.
Are Solar Panels Cheaper than Electricity?
According to recent statistics, the average American home spent 124.47 a month on the electricity bill. Given that solar panels require an upfront investment, you may wonder if they indeed save you money. How can you determine savings from solar panels?
- Monitor your Electricity Usage
Consider your electricity costs from the previous year. What is your yearly electricity bill? By estimating your annual electricity bill, you can tell whether solar energy will be a good option. The more money you spend on electricity, the more you are likely to benefit from installing solar panels
- Calculate Your Energy Consumption
The average American household consumes 10,400 kilowatt-hours per year. By determining the amount of energy you use per year, you will be able to choose a solar panel that will meet your needs.
- Calculate the Cost of Solar Panels
After identifying, a solar power system that will meet your electricity and energy needs, obtain some price quotes from various dealers. When determining the cost of solar panels, consider the tax credits and additional incentives in your state.
- Project your Energy Spending
Consider the average amount of energy you spend and the average cost of energy in your area to project your usage for the next 25 years. Project the amount of electricity and the electricity cost you are likely to incur for the next 25 years. When projecting the electricity costs, you should make a provision for utility cost inflation. For instance, you can assume that your electricity costs will increase by 2.2% per year.
- Compare the Projected Bills with Cost of Installing Solar Panels
After getting the projected cost of energy and electricity for the next twenty-five years, compare it with the cost you will incur to buy and install solar panels. Ensure that you consider all the expenses that come with solar panels, including the installation costs. This will help you determine how much you will save if you install solar panels in your home.
Why Home Buyers Prefer Solar Powered Homes
Homebuyers are willing to pay a premium for homes installed with a solar energy system. Installing a photovoltaic system is an energy-efficient upgrade, thus its ability to increase home value. Most homeowners prefer solar electricity and water heating systems. The solar panel installation process is straightforward and mess-free, yet it yields many benefits. Why do buyers value solar-powered homes?
- Protecting the Planet
There has been an aggressive sensitization on the need to preserve the environment. There is also an emphasis on the adverse effects pollutants have on the planet. Having a solar powered home that relies on energy from the sun to produce electricity helps reduce pollution arising from burning fossil fuels. Burning fuels result in the release of greenhouse gases such as carbon dioxide, and these affect the environment.
- Energy Costs Savings
Homebuyers will always go for solar-powered homes due to the energy cost savings they offer. Although buyers incur higher costs of buying the houses, they later enjoy low energy bills that help them recover the amount initially invested in purchasing the home.
- Renewable Source of Energy
The most rewarding benefit of solar energy is that it is a renewable source of energy. It can be tapped from anywhere in the world, and it will always be available as long as the sun is available. Unlike some other sources of energy, you cannot run out of solar energy in your home. Therefore, homebuyers are willing to pay more for a solar-powered home to tap from the benefits of a reliable energy source.
- Diverse Usage
Solar energy is applicable for many purposes, such as photovoltaic-generating electricity, or solar thermal-generating heat. Solar energy helps produce electricity even in the interior areas. All types of appliances in a home can run on solar energy
- Low Maintenance Costs
After a solar panel installation, homeowners do not incur hefty maintenance costs. As long as a professional install the solar panels, they will run for a long time without calling for any form of maintenance. It is vital to keep the solar panels clean. Regular cleaning is essential and does not cost much. Solar panels come with an extended warranty period and will not need replacement now and then. After investing in a solar-powered home, buyers spend very little on solar panel maintenance and repair work.
- Immediate Return on Investment
Solar energy offers more than a 200 percent return on investment, considering the energy cost savings benefits it provides. Unlike other investments in the market, you start enjoying the benefits of solar energy immediately after installation.
Getting Started with Solar Power Systems Installation
Given the immense benefits of installing solar panels and the generous return on investment that solar panels offer, every homeowner should consider installing them, of course, if the area of residence is suitable for the adoption of solar energy. While deciding to install a solar panel in your home, you should consider:
- Which Solar Panels are Best for my Home
To reap the best returns from your investment in solar panels, you have to choose the best type of solar panels. There are numerous photovoltaic systems from different manufacturers. When choosing the right one for your home, always insist on quality. You can go through several expert reviews to understand the pros and cons of different photovoltaic systems.
- How Many Solar Panels are Needed
Two factors that will determine the number of solar panels needed for your home: your location and your average electricity usage. Your location determines the amount of solar energy the panels produce. The solar panels yield high energy levels in sunny areas. The electricity needs of your home will also determine the number of panels needed. The more the energy you need in the house, the more you should invest in additional solar panels.
- The Durability of the Solar Panels
When choosing the right photovoltaic solar system, consider the durability. Investing in cheap systems that do not last will jeopardize the value of your home. During assessments of home prices, homes with durable solar energy systems fetch higher prices. Quality solar panels come with lengthy warranty periods as their manufacturers have confidence in them. The warranty period may vary from 25 to 30 years or even longer, depending on the manufacturer. Durable solar panels will last much longer after the warranty period expires.
- The Installation Process
The solar panel installation process is intricate and requires professional expertise. As a homeowner, you may feel tempted to purchase an installation kit and personally organize installation to save on installation cost. During the installation process, there is a possibility of damaging the equipment. It would be tough to claim a solar warranty if you do not hire a professional to install your photovoltaic system.
Solar energy is a cheaper alternative source of energy that saves homeowners remarkable energy costs. Solar energy can run every appliance in the house, and it is just as effective as electricity and more affordable. Homeowners can choose from a wide range of solar panels depending on their energy needs.
While selling homes, solar powered homes are the most preferred by buyers. The houses always fetch higher prices than homes without solar energy. Moreover, these homes sell much faster than homes without solar power. Even with the extra cost, homebuyers are always willing to pay more as they later reap the benefits that come with solar energy. For a solar energy system to boost the value of a home, the homeowner should be the actual owner of the system. Leased solar power systems are not assets but liabilities and are, therefore, not considered when calculating the value of a home.