Evidence That Solar Power Increases Home Value

U.S. homeowners looking to sell their homes are having a very difficult time finding buyers these days.   And even those able to attract buyers often must settle for offers substantially lower than they would have received just a few short years ago during the housing boom.

The most recent Case/Shiller report on home prices is sobering.  While prices have rebounded a bit from the lows of 2008 (thanks in part to a federal home buyer tax credit instituted in 2008, which has since expired), prices began to slide again in late 2010 and into 2011, suggesting that a residential real estate double dip is within the realm of possibility.

After years of over-building, investment speculation and consumers spending more than they could afford (with easy credit  NINJA loans from the banks), it appears that the great recession of 2008 seems to have delivered a knockout punch that has left the residential real estate market down for the count.

Despite all this negative data, there is a bright spot, particularly for homeowners who have embraced solar power.

The US Department of Energy (through the Lawrence Berkeley National Laboratory) just released a report yesterday finding strong evidence to suggest that homes with installed photovoltaic systems sell for a premium over homes without solar systems.

The study was conducted in California and analyzed a dataset of more than 72,000 homes that were sold from 2000 through mid-2009.  2,000 of the homes in the study had solar systems installed at the time of sale.  The average size of the PV system was 3,100 watt capacity.  The study found that homes with PV systems in place on average sold for $17,000 more than their non-PV installed counterparts.  That translates to approximately $3.90 to $6.40 per watt.

The report also found that newer systems fetched a higher premium than older systems.  This price disparity is to be expected with any cutting edge technological system, but particularly with solar, where the technology is still being refined and a new system is likely to be more efficient than an older system.

So, does this mean that homeowners across the country should run out and install solar panels on their roofs?  Not necessarily.  Remember, this study was conducted exclusively in California, so a homeowner in rainy Seattle may not receive the same type of resale benefit installing a PV system as a homeowner in sunny San Diego.  But for those homeowners living in fair weather climates, it's a compelling upgrade to consider.

And, as this study shows, having an installed photovoltaic system might be a differentiator to help sell a home in a very crowded marketplace.

Image Credit: Living Off Grid