Does having a solar system increase my home’s value? Well…it depends.
As it currently stands, if you do not own the system, its value can’t be included in your home’s appraisal. In fact leased/PPA solar agreements may cause homeowners problems when they sell their home. One such problem is the monthly cost of the solar lease; it can be included in a buyer’s debt to income ratio. This reduces the number of people who can afford your home. However, if you own your system there is good news.
The FHA (Federal Housing Administration) REQUIRES that a solar system be included in the value of your home if you OWN the system. Not only do you have reduced electricity costs, but the value of your home is increased.
There are a couple different metrics for determining the increased resale value. One study shows that on average, a solar system increases the home’s value by $5,911 for every 1 kilowatt (kW) of power installed. Thus, a NEW5kW solar system adds an average value of $29,555 to the home.
Another way of determining the value of your system is the 1:20 ratio. For every $1 in energy bill savings you increase the value of your home by $20.
Solar can force appreciation, but only if you OWN the system. Not only does your home’s value go up, but homes with solar can sell 20% faster than homes without it. When all the benefits are factored in, solar can potentially pay a 200%+ return on your initial investment. Sounds like a “bright” idea to me.
John Jennings, III
John Jennings, III is a licensed Realtor® who works for Mid State Realty in Coalinga, CA. For more articles like this one go to johnjenningsrealtor.com. John can be reached at firstname.lastname@example.org and (559) 970-4312.