A common if disingenuous argument against the adoption of residential solar is that not only can systems be expensive, but that expense is a lost cause because solar systems devalue homes and the homes around them. Directly contradicting this, Zillow has released a report stating that homes with solar panels sell for 4.1% more than their generation-naked counterparts.
The premium was calculated by comparing sale prices and listings from March 1, 2018 to February 28, 2019, controlling for bedrooms, bathrooms, square footage and location.
This 4.1% average equates to $9,274 on average nationally, though the monetary mark is much more regionally dependent. For example, Riverside, California’s price premium average is 2.7%, almost 1/3 lower than the national average, however that 2.7% represents $9,926, obviously higher than the average and reflective of higher property costs in California.
The mark that really stands out both as a percentage and a numerical value is New York City. Solar homes in the Big Apple represent a bigger differential national average at 5.4%, which, and it’s well known how expensive property is in the city, translates into $23,989 numerically.
The Zillow report outlines the reasoning for this sale premium is a mixture of investment and taste. On the investment front, some homeowners are willing to pay more for a house with a system, rather than buying a different house and then working out the logistics of installing a system and paying for the materials and installation, which in some places could be more than the pre-installed premium. In other cases, solar systems aren’t the only features that contribute to this premium, as other luxuries like heated floors factor in.
With these variables considered, some buyers just want the system purely to see relief on their electrical bills if they know that they’re high energy users or because they are environmentally conscious.
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Local realtors tell me that lenders are not factoring in the lower ownership cost of a solar powered home, and thus not rating the income-expense-home loan ratio any different than a grid powered home. That needs to change to reflect the significant ($300-$500) monthly cost reduction of solar power.
Utilities are never calculated in debt-to-income ratio. Power/water/sewer/phone/cable…none of these bills have any affect on a borrower’s ability to be approved for a mortgage.
Average electric bill is ~$150 in Florida. That takes about an 8.5kW to cover completely, plus then houses still generally have to pay an interconnection fee on the grid (~$15). The savings are still significant, but more along the lines of $2,000/year on an average home with a system built to achieve parity (an equal amount produced as used), which is the most efficient. Extra generation is sold back at wholesale rate once per year, which is about 1/3 the value of the retail rate… so that’s why you don’t want to overpower a house.
Unless you’re in Hawaii, or I believe it was CT, RI, with the next highest rates, $300-500 is probably way too high an estimate for average homes.
Is there a link to the Zillow report?
Sure thing, here it is.
Sorry there needs to be better clarification on this. If you own the system outright paid cash and not making payments of any kind GREAT. Solar is a great option in some situation but not all. I have a brand new home here in Arizona. If we would have put on solar it would have cost us $760 more a year. 20 year lease who keeps anything for 20 years? I was not able to have my son for 20 years. He graduated and moved out.
Solar leases DO NOT BRING VALUE !!! Arizona Solar leases are an issue when it comes to selling the home. The lease payments can kill a sale. Most new home construction home will VOID the 10 year structural warranty. RUN THE NUMBERS
I am a Realtor in Arizona and was a Real Estate Broker in Minnesota and Wisconsin. Solar in that area is not an option.
Solar is a great option in some situation but not all. I have a brand new home here in Arizona. If we would have put on solar it would have cost us $760 more a year. 20 year lease who keeps anything for 20 years? I was not able to have my son for 20 years. He graduated and moved out.
Thanks for your perspective. Since this was your first time commenting I approved your comment, but we typically do not approve comments that include sections in ALL CAPS. It’s the internet equivalent of shouting.
Why would you rent something on your home…ownership is the key here. Not all solar companies are the same. Ownership comes with tremendous tax benefits.
Your Home, Your Power, Your Choice
Let me have Technical Data that I would install on my roof of 2 x 6 m. Those are weight, electric out put, voltage etc. And of course Price
If you paid cash for a 10kw system at $3/watt ($30,000 investment) and then get an average $9K premium at sell, that is a terrible pay back. If you spend $30,000 on kitchen renovation or additional bedroom or bathrooms upgrade, you will get a much larger percentage investment back. That is a terrible value add (almost like adding a pool where you can only hope to get a 20% price premium). Any realtor will tell you that don’t expect to get a large percentage of your investment back at sell for installing a pool. If you spend $30K on a pool you only get to bump the sell price a fraction of that (like $10k), making it like adding a pool which is considered a bad investment upgrade. And if you have a leased system, the new buyer has to qualify for the lease/PPA to purchase the house, or the existing owner has to buy out the lease and transfer to the new owner at a fractional cost recovery. It is like saying if want to buy my house, you have to take over the lease of the $30k BMW I have parked int the garage, qualifying for both.
….so your saying I pay $30k and own it and I get $9k on top of no power bill for 25+ years ($150 x 12 x 30 = $54,000), a tax credit for $7,800, as well as my NJ state credits of $15-20k….yeah super dumb idea is what people say when they have no clue
The solar lease/power purchase agreement locks your rates in at the low solar rate structure. Utility rates are predicated upon the price of coal, oil, natural gas and utility controlled grid delivery; moreover, homeowners save from day one, typically around 20%. Selling your solar home? Show’em your utility bill !!! It’s simple. Sunlight is free and installation & maintenance is paid for by the Solar Provider. Why all the ambiguity in solar? Essentially, solar is taking over the residential energy market, which accounts for the reaction from solar’s rival, big energy, and its local adjunct, your hometown utility company. Solar leases from a strong solar company, save families $$$ from day one. Period. 🌞
Denis – I truly understand what you are saying. I do over 130 + home transactions a year. I see a small amount of the homes – new construction homes that have solar. your lease comment is incorrect. about 5% actually have the same solar lease payment through the full 20 years. most have yearly increases of 2-5%.
understanding what your true ROI (return on investment). When was the last time you had anything for 20 years? My son moved out at 18. I did not even get to keep him for 20 years LOL.
If you saw how many people are being taken advantage of, it would make you sick.
Technology changes every 36 months. That means 6.6 times technology would have changed.
Solar is not taking over the residential energy market. the Midwest has very very little solar its to cloudy, rainy and snow to your arm pits. trust me I lived there 45 years of my lift.
All I am saying is older homes yes, it might be a great option. you should be doing new windows and add a little extra insulation in the attic along with solar in some situations is your best option.
then working with strong solar companies. Then strong solar companies I can think of 5 here in Arizona. Voiding you new home construction 10 year structural warranty is not worth it. All I am saying is evaluate the real $$$$$. My wife and I just did a new evaluation. after 20 years on a lease it would have cost us $8,400 more over the 20 years.
I’ve done the math many times. It almost always makes sense to purchase the system and take advantage of the ITC if you have the tax appetite. All leases have escalators in them, something lease sales people like to gloss over.
Don’t lease your system, buy it! Unless you have some serious problems that need to be addressed (electrical upgrades), you shouldn’t pay more than $3/W. After the Federal Tax Income Credit, you should have paid about $2/W, all said and done. That makes sense just about anywhere and you’ll make your money back if you sell your home. Leases and PPA’s are detracting from all the great things that solar brings to everyone.
A number of people need to look at the HERS rating for homes. the scale is from 0 – 155. Zero means you are off the grid. well,septic,solar etc. Builder have to build to the standard UBC -(universal building codes) . Following those guideline should give you a rating around 100. Most builders implement higher standards. most homes are 59-69 area. very energy efficient. Do not lease the system. after you have been in the home a year. Review your bills for the year and work the numbers.
I had a person come in to my open house today saying his solar was awesome and he only paid $70 a month for electric. I said that is great and what is you lease payment? he said that’s not important. I said its all a part of acquiring the electric. His payment was $225 a month. basically $300 a month. All I can say is wow. I can’t wait for the roof tiles.
Zillow does not necessarily hit the mark on home evaluations. Sometimes Zillow is close. All in all, I would contact a local realtor to see what the comps are in the area.
My first solar PV system was installed in 2005 and was used for 12 years before we sold the home. Listed the house on the market in the middle of summer, the off home buying time of year. Got a full price offer by noon of the day it was listed and signed the sales contracts by the evening. The realtor said she has done this for 20 years and has never had an escrow open in one day of the listing. Of all of the homes in the area for sale, our home with solar was picked out. So, I’d say it’s right up there with mentioning like energy star A/C, water heater, appliances. These types of ‘enhancements’ help sell the house.
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