Do solar panels add value to your home? Let’s be honest: It’s not the first question people ask when they think about making the switch to solar. Instead, most people decide to add solar panels to their home because they’re tired of paying hundreds of dollars to the power company each month.
Adding solar panels can absolutely save you money in the long run. And you’ll get some additional benefits, as well, like the 30 percent federal tax credit.
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.
And when RC Energy Solutions spoke with Nicolas Jonville, a knowledgeable real estate broker with the Jonville team of Keller Williams Realty, he told us that savvy buyers will pay a premium for a solar system that’s owned outright. “If the system is owned free and clear, it’s not an exact number, but appraisers usually add 50 cents on the dollar for the solar system. So, if someone spent $30,000 on a solar panel system, the appraiser might add $15,000 in value to their home,” Jonville said.
While there’s no exact number for how much value solar panels add to your home, experts 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, homebuyers 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.
Get More Information on Buying vs. Leasing Solar Panels
Check out our blog post on the pros and cons of buying vs. leasing your solar panels. We personally believe that purchasing your solar panels outright is a smart move. You save more money on your power bill, you can take advantage of the 30 percent federal tax credit, and you add value to your home. And with solar financing options that allow you to purchase solar panels with no money down, buying your solar panel system has very little downside.
To learn more about how solar panels can help you save, contact us for a free in-home consultation. We’ll assess your current energy usage and make recommendations to help you save money while increasing the comfort and beauty of your home.
We look forward to hearing from you.