Calculating the value solar panels add to your home value can take many turns. The one agency that is not afraid to tackle the challenge is your local property appraiser and tax collector. There are local property tax authorities that have incentives where they exclude their estimated value of solar panels from your property tax.
I will go through the following different methods of estimating the increased home value solar panels could bring:
- Less on utilities equals more for mortgage payment
- Zillow analysis shows on average a 4.1% increased value
- Savings per kilowatt
- Annual savings Multiplier
Less On Utilities More For Mortgage
If your solar panels reduce your electric bill by $100 per month your home value increases by $22,000. The calculation takes the $100 per month that is not being spent on utilities and uses it for the mortgage. If you assume a 30 year mortgage at 4% you can spend 22,000 more on a solar home.
Zillow Analysis shows on average a 4.1% increased value
Zillow conducted a research project comparing homes with solar vs homes without and in general they found that homes with solar had on average a 4.1% higher value1.
Zillow goes on to say that personal preference plays a role with 80% of home buyers say energy-efficient features are important. I believe this figure has increased since their 2019 study.
Savings Per Kilowatt
A study from Lawrence Berkeley National Laboratory found resell values increased by $5,911 per kilowatt of solar power you solar panels produce. For example, a 4 kilowatt home solar system increases your home resale value by $23,644.
Annual savings Multiplier
The National Renewable Energy Laboratory cites a study in the Appraisal Journal2 that states your home resale value increases by $20 for each $1 saved annually. So if you save $1,000 annually with solar panels you could see your home value increase by $20,000.
There are many different methods to estimate the increase to your home value once you install solar panels but what is clear is that it does add value. It is quite likely that home buyers will add solar to their list of ‘nice to haves’ as our culture shifts to green energy.