SOLAR INCREASES HOME VALUE AND MAKES IT EASIER TO SELL
by Shen Ge
Solar Home For Sale!
By now, most people know that a residential solar system can help the environment and save the homeowner money on electricity bills. However, here’s some more good news! New research sponsored by the Department of Energy through the SunShot Initiative shows that buyers are willing to pay more for homes with rooftop solar panels — a finding that may strengthen the case for factoring the value of sustainable features into home appraisals. According to a recent study led by Lawrence Berkeley National Laboratory and Sandia National Laboratories, 23,000 home sales in 8 states from 1999 to 2013 shows home buyers are willing to pay more for homes with host-owned rooftop solar systems.
Researchers found that buyers were willing to pay a premium of $15,000 for a home with the average-size solar photovoltaic system (3.6 kilowatts), compared with a similar home without one. This means they’ll pay an additional four additional dollars per watt of solar power. For Simplify Solar which provides a solar system from 3 kW to 10 kW, this translates to an increase in home value between $12,000 and $40,000.
The Lawrence Berkeley study also found that homes equipped with solar panels tend to sell 20% faster than similar homes without them. The housing market is driven by the same factors as every marketplace — supply and demand. More and more prospective home buyers want a residential solar system as part of their next home. If your house has one and the other houses in your area do not, buyers will look first at your house and be willing to pay more to purchase it.
More than half a million U.S. homes had solar installed in the U.S. by the end of 2014. “Previous studies on PV home premiums have been limited in size and scope,” says Ben Hoen, the lead author of the new report. “We more than doubled the number of PV home sales analyzed, examined a number of states outside of California, and captured the market during the recent housing boom, bust, and recovery.”
“As PV systems become more and more common on U.S. homes, it will be increasingly important to value them accurately, using a variety of methods,” says co-author Sandra Adomatis, an appraiser who helped develop the Appraisal Institute’s Green Addendum. She noted, “Our findings should provide greater confidence that PV adds a quantifiable premium to a wide variety of homes in California and beyond.”
The growth in home PV systems means realtors needs reliable methods to value these homes appropriately. The solar market is still young and many real estate appraisers are not informed about the value of a rooftop solar system, and what it adds to a house. However, Gerard O’Connor, an appraiser on Long Island, says Fannie May has just amended its rules to allow appraisers to include the value of a home solar system when doing a home appraisal. That one change could help boost the number of home solar systems on American homes substantially.
Download the new 2015 report, “Selling into the Sun: Price Premium Analysis of a Multi-State Dataset of PV Homes”, as well as a fact sheets, and a summary slide deck here: http://emp.lbl.gov/publications/selling-sun-price-premium
Interested in more of Shen Ge’s posts on solar energy and other energy-related posts? Follow the author on Twitter @shenge86.