This week, SunPower by Green Convergence invites House Match Management to contribute to our solar blog with some interesting information about solar and residential resale value
-SunPower by Green Convergence
Do you want to increase your home's value?
Not only do solar panels benefit the environment, but they also benefit your home's resale value as well. As more buyers are looking for energy-efficient properties, the odds are in favor of solar panels.
Nowadays, the installation of solar panels has become one of the most straightforward ways to increase your home value. However, there are certain aspects you should keep in mind to make its value actually grow.
In this article, House Match Management goes over the various ways that solar panels can affect the value of your home. After reading this piece, you'll gain a better understanding of the relationship between the installation of solar panels and your property's worth.
The Starting Point: Do Solar Panels Increase Your Home's Value?
Let's start with the question that is on every homeowner's mind when planning to install solar panels: are these going to boost my property's worth? The short answer is: yes!
According to the Lawrence Berkeley National Lab (LBL) report, each watt of solar power adds around $3 to your home's value. And, in California specifically, each watt could add about $4 to your home's worth.
A simple calculation shows that your home outside of California could appreciate up to $15,000 after setting up solar panels. That's because a 5-kilowatt solar system generates 5,000 watts of power (5,000W x $3 = $15,000).
Are There any Other Reports on Solar Panels and Home Values?
Smart homeowners never rely on a single report in case there are hidden biases affecting the research results. If that’s the case, the conclusions could easily be affected by the type of data introduced by the researchers.
Luckily, the LBL report isn't the only authority report on how solar panels affect home values. A Zillow research study conducted in 2019 showed that homes without solar power are sold for 4.1% less than comparable homes with solar power.
When you take a median-valued home, a solar powered home can be priced at an additional $9,274. However, it's important to keep in mind that the particular increase in percentage points varies between states and cities.
We also can use a study undertaken by the Appraisal Journal. According to their numbers, your home's value increases $20 for every $1 reduction in annual electricity bills. For instance, a solar energy system that saves you $300 a year results in a solid $6,000 to the value of your home.
What Affects the Cost of your Solar Energy System?
Now, let's take a closer look at how the cost of a solar energy system gets formed. There are various factors affecting the final price and we are going to list all of them for your convenience. The percentage estimates below can vary from installer to installer or in different utility areas or city jurisdictions.
- Solar panels. Generally, the solar panels account for around 30% of the total costs. Check the “cost per watt” as this is the most important indicator when it comes to choosing your panels.
- Inverter. Inverters turn direct current from your solar panels into alternating current that can be used in your home. You can expect the inverter to make up for around 10% of total costs.
- Balance of System (BoS). This term is used to describe all necessary components of a solar system except for the actual solar panels. Usually, these account for 20% of your total expenses.
- Permits and inspections. The permit and inspection costs depend on where you live. These are about 20% of your total costs. For instance, you may need approval from your HOA.
- Installation. The expenses related to installation are similar to permits and inspections. They are around 20% of the total costs you'll incur. These costs also depend on where you live.
Finally, keep in mind that buying a residential solar system could cost you on average between $15,000 and $45,000. The huge price difference emerges from the power disparities. You can get a system from as little as 3kW up to 9kW or more.
What about Operational Costs?
You need to account for the operational expenses. This can include repairs, maintenance, insurance, and anything else that results in running costs after a successful installation. It’s important to check the warranties from your solar installer to make sure they cover not only repair of faulty panels, but removal and shipment as well.
In terms of operational costs, it’s difficult to determine averages. Not all homeowners need to conduct repairs on their systems in the following years after the installation. Insurance premiums depend on your unique circumstances.
Final Note: How Solar Panels Affect Your Home’s Value
Solar panels are a great way to increase the value of your home in an environmentally friendly way. A number of studies have proved this to be true. While the upfront costs may be high, you will see your home’s worth rise. It’s important to find a solar dealer who will install the most aesthetically pleasing solar arrays possible. An installer who is also licensed as a roofer and electrician can run electrical conduit through the attic, relocate roof vents, and take other measures to make sure that when your house eventually goes on the market, solar will be seen as a great enhancement to your property.