According to real estate database and economic research company Zillow, in most areas of the U.S., the answer is absolutely!
We already know that adding solar panels to your home helps save energy costs and helps the environment, but can it also increase the home’s value?
According to Zillow, in some states, the answer already is—yes.
Not only can adding solar panels to a home save energy costs and help the environment, it also can potentially increase a home’s value. During the past year, homes with solar-energy systems sold for 4.1% more on average than comparable homes without solar power. For the median-valued home, that translates to an additional $9,274. The idea of adding solar panels to a home is viewed as an upgrade. Just like a renovated kitchen or a finished basement, home buyers across the country have been willing to pay a premium of about $15,000 for a home with an average-sized solar array.
If anything, homeowners need to evaluate the return on investment from investing in solar panels. According to Zillow’s latest research, installing solar panels not only helps reduce current monthly utility bills, it can potentially increase the home’s value compared to homes without solar panels.
“There is an increased demand for green living. More than 8% of buyers now say energy-efficient features are important in selecting their home,” said Sarah Mikhitarian, Zillow senior economist.
“We are increasingly finding that these attributes are important to prospective homebuyers. This is part of the reason that there is a premium associated with it,” adds Sarah Mikhitarian. “The other piece is that there is true value provided by solar panels — namely, future energy savings.”
Zillow’s research found that sale premium varies substantially by market.
In Riverside, California, for example, homes with solar panels sold for 2.7 percent more than comparable homes without—a markup of $9,926 for the median-valued home in the metro. In the greater New York City metro, solar-powered homes have a premium that is double that of Riverside. At 5.4 percent, that’s an extra $23,989 in value for the typical home in New York.
Zillow calculated the solar premium by comparing homes with and without solar panels that were listed for sale and sold from March 1, 2018 to February 28, 2019. They controlled for observable attributes of the homes, including bedrooms, bathrooms, square footage, age of the home and location.
It can be concluded that the reason homes with solar panels sell for more than those without, is because they can provide substantial future energy cost savings. For homeowners who know they consume a lot of power, these future savings are worth spending a bit more money upfront.