Home Improvements: How Much Does Solar Add to Property Value
Did you know that 10.6 Gigawatts of solar power was added in 2018 alone in the USA? To put that in perspective, the average nuclear power plant produces 1 Gigawatt or enough to power 725,000 homes.
It’s a staggering statistic, but what you really want to know is: How much does solar add to property value? A lot of factors go into real estate pricing and adding solar to it is one more.
You’ve already had the labor, design, and paperwork finished and done. Pricing plans and a relationship with the utility is already underway. Why shouldn’t you sit back and reap the benefits of your success?
Well, nothing is cut and dry, but we’re here to give you the answers.
By the Numbers
The average US homeowner uses 914 kWh per month. But the price of solar can change per state, as well as power consumption. According to Zillow, there is no large city in the US that will lose property value when installing solar.
Every roof and house is different. Let’s say you’re installing 6 kWh of solar, and you’re in Washington state, for example.
At $2.69/W, you’re looking at an average of about $12,000 (after tax credits), depending on the solar panel installers you go with.
The national median price increase to real estate in a study in 2018 gave a number as high as $9,274. While this doesn’t cover the whole installation fee, it’s pretty substantial. 77% kind of substantial.
Some Things to Consider
There are just a few things to consider about Solar. For example: Do you get sun exposure? Do you have a pitched or flat roof? What’s the cost of electricity locally?
We’ll go over these and other questions about solar-paneled homes.
Roof Pitch
If you’re going to get a solar panel for home use, you might want to know if it’s an advantageous angle to your roof. Straight vertical or horizontal solar panels are not as efficient. Most roof angles are pretty good, though.
If you have a flat roof, you might have to consider freestanding solar panels. This is often what a commercial building contends with. Roofs are typically flat on warehouses and other industrial complexes.
Additionally, if you’re in an apartment, you might not even have a roof!
Geography: What’s your Angle?
Speaking of pitch and angle, what angle are you relative to the sun? Latitude plays a major role in power home solar and roofing solutions. In addition to the latitude issue is state pricing.
Florida and Washington state are at completely different ends of the country but offer the two cheapest installation rates. One is the sunshine state, and the other is known for gloomy, rainy weather (don’t let them fool you).
Meanwhile, Colorado in the middle of the country, with its bluebird days and high elevation, has one of the highest installation costs.
Local Electricity Pricing
Solar isn’t the only game in town. If you’re next to a nuclear power plant, the pricing might be quite low. Unless there is access to very low-cost fossil fuels, nuclear is still the cheapest per kWh output (and the least-lethal power generation source per kWh, historically).
Nothing says that you can’t still produce power and sell it back. You’ll still have near-standstill utility prices, except when you draw power at night. Having cheap electricity nearby is a bonus for the times you can’t send power to the grid.
Frequency of Power Outages
Speaking of sending power to the grid, if there are power outages you aren’t sending power out. If your area is unreliable, the system will still be producing energy for you, but not send it out.
Therefore, you aren’t offsetting your nighttime usage.
It’s not a huge deal as you can still work from home during the COVID-19 “new normal” of remote work, without fear of your Wi-Fi going out during a Zoom meeting.
Reliability is king.
Age of the Solar System
As with all things, age brings inefficiency (unfortunately). When you get older you’re not as good as you once were, you’re as good once as you ever were. The same is true of your solar cells.
What does it mean? Well, the first modern solar panel is still working, after 60 years. After 25 years, the expected efficiency is about 20% of the original.
This means that the older your system, the less you can get as a premium on your real estate sale (if they ask).
State Benefits
In addition to the federal tax credit system (ITC), at least 12 states offer incentives to their residents and homeowners, including Colorado. Because a place has a high installation rate, and the federal tax credits only go so far, state initiatives may bridge the gap.
In addition, there are other local initiatives that could sway you.
Buyer Perception
Of course, this is the largest contributor. If you get a green buyer, who loves solar and loves that you’ve already pushed for a green initiative, more power to you!
Perception is why we buy tons of furniture for open houses we would never sit on. Buyer perception is the highest contribution to a good offer for your home than anything else.
If the buyer doesn’t like the neighborhood, even a star property won’t sell for its potential price. It’s all perception.
So, How Much Does Solar Add to Property Value?
How much does solar add to property value? The short answer is $9,274—but it’s never that simple—and you know it, too. Working on averages alone would be a faulty decision-making process.
It depends on your state, your roof area and configuration, and a hundred other factors. Engineers are there to take care of the details and give an accurate estimate of cost and savings.
On the bright side, those savings are something you can pass along to homebuyers. With the premium of having the system already installed and the hard work already done.
If you liked this article, check out our other exciting stuff! We’ve got fun for the whole family if you read on.
