There are many reasons for modern homeowners to go solar. Going green and reducing our carbon footprint is a great incentive, but how can solar panels benefit individual homeowners financially?
A solar power array can actually increase the value of a home. The amount of increased value is contingent on various factors. In most cases, a house with solar panels will spend less time on the market and sell at a higher price.
Are Buyers Looking for Homes With Solar Panels?
Rocket Mortgage — one of the biggest mortgage companies in the US — determined that 67% of households want solar panels. If you’ve installed solar panels, you’ve significantly expanded your home’s marketability.
Houses on the market with solar arrays are 24.7% more likely to sell over the asking price and spend 13.3% less time on the market. That sounds like a win-win for homeowners who make the switch to renewable energy!
With the growing awareness around climate change, people aren’t just looking at the square footage, bathrooms, or the newness of the appliances and roof — they’re also looking at how sustainable the home is.
Buyers want homes with pre installed solar panels because it’s one less household expense to add to their plate.
How Can Homeowners Save Money On Solar Panels?
The initial purchase price of a solar system can scare many homeowners away. However, numerous government programs can significantly decrease the upfront and ongoing costs of a residential solar array. Federal, state, and local incentives are available for homeowners to use to their advantage and start saving immediately.
Solar Tax Credits
The most widely-available credit for homeowners is the Federal Renewable Energy Tax Credit. This nationwide program provides a 30% rebate on the initial purchase costs. The rebate comes in the form of a credit on your taxes.
This credit will decrease to 26% in 2033 and 22% in 2034, so it’s better to take advantage of it sooner rather than later.
Incentives and Rebates
Local governments and utility companies also provide incentives and rebates to promote the switch to renewable energy.
In California, low-income families have access to the Single-Family Affordable Solar Housing (SASH) program. This initiative provides homeowners up to $3 per kWh when installing a new solar array.
Many states provide a property tax exemption on the added value a solar system may bring to a home. Any increase in value would not be subject to property taxes, saving the homeowner money over time.
Some states offer a sales tax decrease or exemption on solar equipment. For example, Arizona reduces the sales tax on solar components by 100%!
Most states have net-metering systems in place. These programs require utility companies to buy back the excess energy produced by a residential solar array. Many states even force utility companies to pay full market value for the electricity, giving homeowners a steady return on their investment.
How Much Do Solar Panels Increase the Value of a Home?
A home’s value increase depends on a variety of factors.
Age of the System
A brand new system will increase the value of a house more than a 15-year-old system. Renewable energy technology is changing fast, so decades-old systems may not provide nearly the benefit that a modern system can. Modern components like the EcoFlow 400W Rigid Panel will outperform anything made 10 to 20 years ago, thereby driving up the home value.
Condition
The condition of your panels can significantly impact house value; the better condition they’re in, the more they’re worth. Damaged and outdated panels decrease efficiency, reducing their potential energy generation and increasing the new buyer’s potential repair costs. If your solar panels are well-maintained, clean, and function properly, you’re more likely to attract potential buyers, and your home’s value will be higher than it would for a poorly maintained system.
Owning vs. Leasing
Homeowners sometimes lease a solar system when they can’t afford the upfront cost. This lease is tied to the house, requiring a prospective buyer to take over the monthly lease payments. Leasing doesn’t have nearly the positive effect on home value as a system owned outright.
Electricity Rates
Higher electricity rates make renewable, free energy more tempting. In California, for example, the cost of electricity can be over three times that of other states. It makes the payoff much higher and will correspondingly increase the home’s value.
Location
As mentioned above, some states are better suited for solar. It can be due to higher electricity costs, but other factors can affect it.
Some states have net-metering laws that force utility companies to pay the homeowner for excess energy production. A home that earns its own money will undoubtedly increase in value.
Other locations provide ongoing incentives for solar homes, like property tax exemptions. Houses in southern, sunny regions will harness more renewable energy than those in the north.
Another thing to consider about location is whether your state promotes solar conversion. The top ten states for solar include:
- California
- Texas
- Florida
- North Carolina
- Arizona
- Nevada
- Georgia
- New Jersey
- Virginia
- New York
This ranking comes from data on the total amount of solar capacity installed on homes and businesses through 2022.
You may notice a pattern that many of these states also offer extensive credits or incentives for solar, leading to the high rates of installation. So, while adding solar in many of these states will increase your home’s value, it won’t increase what you owe in taxes. Check if your state has exemptions in place!
Can Solar Panels Have an Impact on Property Taxes?
Yes, solar panels can have an impact on property taxes. In some states, they are subject to a property tax exemption. If the array adds value to the home, you don’t have to pay property taxes on that increased value.
Solar Panel Property Value Studies
A recent study by Zillow determined that the national average for solar property value increases was 4.1% or $9,274 for a median-valued home. The rise in value varies wildly depending on the exact location. For example, homes in New Jersey experienced an average 9.9% increase in property value.
Research reported by the National Association of Realtors suggested that solar panels may increase the value of a home by 56%. Homes equipped with a solar array sold for an average of $680,000, or about 48% more than comparable homes in the area.
Factors to Consider When Going Solar
There is more to consider than a property value increase when going green.
Local Incentives
Net-metering laws enacted in many states benefit homeowners. These laws require utility companies to buy back any excess energy produced by a residential solar array. Some states take this one step further and force utility companies to pay fair market prices for the power!
Some utility companies — including those in San Francisco and Sacramento — provide cash incentives for installing a new residential system.
Energy Consumption Rates
How much energy does your household use? And what are the electric rates in your area?
If you are frugal with your energy usage or live alone, you may not require a full-fledged solar system. And if your state’s utility costs are cheap, you may only partially reap the monetary benefit you hoped to receive.
In these situations, opting for a smaller system, like a solar generator, may make more sense. Whole-house solar systems aren’t for everyone, and options like the EcoFlow DELTA Pro Generator let you reap the benefits of renewable energy without outfitting the entire house. It’s just another way that homeowners can go off-grid and reap the benefits of renewable energy without the additional installation costs or other headaches.
Your Location
Many of the benefits will depend on your exact location. Do you receive 3 hours or 5 hours of peak sunlight per day? What are the utility costs? Does your local government have net-metering laws, or does your excess energy go to waste?
Explore the laws and incentives in your area regarding solar power before installing a new system.
Installation Costs vs. Time
Do you want to put in the time to install your own solar power system? DIY installation can save you thousands of dollars that you’d end up paying for professional labor. However, it will also take up weeks of your time.
Hiring a professional may make more sense depending on your budget and other priorities. Weigh your priorities when it comes to time and money savings.
Do Homes With Solar Panels Sell Faster?
Homes with solar panels installed sell at an average of 20% faster than homes without them, according to an extensive study by the National Renewable Energy Laboratory. The reason for this is likely because a solar system is an attractive feature that buyers know will save them money in the long run. When solar panel systems come fully paid off with the house, potential buyers enjoy savings on their energy bill for the length of the lifetime of the panels.
Frequently Asked Questions
Yes, studies show that solar panels can make houses more saleable, selling around 20% faster and for 17% more than homes without a solar system feature. Buyers know that these renewable energy systems will save them money and provide energy independence.
Solar panels add value to a house. The amount of added value will vary depending on location, utility costs, the age of the system, and other factors. A recent study from Zillow found they add an average of 4.1% value to a home, which is a little over $9,000 for the average home.Â
Yes, solar panels can increase the appraisal value of a home. The value difference is especially true if you own the solar array yourself. Alternatively, leasing the panels may hurt your appraisal value. The decreased value is because the new homeowner must take on the monthly bill for your lease.Â
Actually, it is easier to sell a house with solar panels. In fact, recent research from Rocket Mortgage suggested that the average home with solar panels will spend 13.3% less time on the market!
Do Solar Panels Make Sense For Your Home?
In most cases, solar panels are an excellent choice for homeowners. They provide a substantial return on investment if you plan to stay put for a while. It’s a smart move, especially if you install a modern, integrated Smart Home Ecosystem.
If you’re planning on selling your home, a solar panel setup will provide added value for your home. They should make sense for your home unless you live in a location where the sun never shines.