The impact of solar systems on home valueApril 17th, 2012
Sandia National Laboratories has just released a new tool for real estate appraisers called PV Value™. The tool, available for download here, seeks to standardize how home values are affected by solar installations.
Up until recently, a report released in October of 1999 by The Appraisal Journal was the only real estate industry report to consider what investments in a home’s energy efficiency did to a home's value. The report on energy efficiency improvements showed that for every $1 reduction in annual utility bills, whether from solar panels or double pane windows, the value of a home increased by about $20. In 2006, the National Renewable Energy Laboratory’s report “A New Market Paradigm for Zero-Energy Homes” used newer data to show that installing solar on a home realized greater returns on investment than remodeling the bathroom or kitchen, particularly when combined with government incentives and rebates. Solar, particularly in the financially-savvy and environmentally-minded San Francisco Bay Area, serves as an important market differentiator
A few facts on solar for homeowners and real estate agents:
- Lawrence Berkeley National Laboratory’s eight and a half year study on the impact of solar on California home values found that “California homes with PV systems have sold for a premium over comparable homes without PV systems.”
- A 2006 National Renewable Energy Lab study of California homes found that solar panels increased a home’s value by 17% and reduced its time on the market by 20%.
- Unlike most home improvements, the increased value of a property as a result of solar is excluded from the property tax assessment (Cal Revenue & Taxation Code §73).
- If a house has been on the market for a while and is not selling, installing solar can be a great way to sell it faster and for a better price. Luminalt has worked with numerous real estate agents throughout San Francisco to leverage solar to their benefit - properties with solar in San Francisco are eligible for a one-third reduction in the local transfer tax.
- The Department of Energy’s office of Energy Efficiency & Renewable Energy found that homes with solar sell twice as fast as homes without solar – even in depressed markets.
- The National Solar Homes Partnership found in 2007 that 91% of Californians see energy efficiency as an important factor when considering the purchase of a new home; 70% of Californians said that the cost of the monthly electric bill was an important factor in their decision to buy a new home.
- A study by Farhar and Coburn found that High-Performance Homes (i.e. energy efficient homes with solar) increased in average value 55.4%, as compared to the 44.7% seen among comparison homes.