Build a raised deck or add a new steel front door, and your investment will likely return if you need to sell. But do energy saving features like solar power systems follow the rule? A recent study that included residents of California has shown that homeowners who install photovoltaic solar panels can recover nearly all the investment if they decide to move. And that comes on top of yearly energy savings. Let’s expand this finding and see what you as a homeowner can do to make it work.
Variables that count
According to a research by the U.S. Department of Energy operated National Renewable Energy Laboratory (NREL), each additional $1 in energy bill savings from your solar panels adds $20 to your home’s value. This empirical claim, however, depends on a number of factors including:
The size of your installation – Increases in the property value are directly related to the number and quality of solar photovoltaic panels that are installed.
The value of your home – Larger houses are usually in for a higher nominal boost in property value. Still, the increase often stands for a smaller percentage of the total home value.
The location of your home – Some more active markets like the State of New Jersey usually yield higher returns on installations when compared to less developed markets. If the house is located in a liberal community with strong environmental consciousness, there is an even greater payback.
Experiences in the U.S.
The data from sales records of single family homes and building permit data in San Diego County and Sacramento County between 2003 and 2010 published by the National Bureau of Economic Research revealed interesting findings. The authors found that solar panels added a $20,194 premium to the sales price of the house. It’s worth noting that the houses were in the mid-$500,000 range. Efficient photovoltaic panels aren’t cheap. The average system totals $35,967, but with subsidies including the federal tax credit, it drops to $20,892. It seems that the homeowners are able to recover approximately 97% of their investment. And this only adds to savings through reduced energy bills.
Compared to other improvements
If you are in the solar panel upgrade business strictly for increasing the resale value, there are other options to consider, as well. According to Hanley Wood’s 2010-2011 Cost v. Value report, a new steel front door brings a 102% payback. A luxury kitchen remodelling, by contrast, brings only a 60% payback. Eventually, it depends on your personality whether you get more enjoyment in preparing meals Gordon Ramsey style on a new granite countertop or explaining the technology behind your mini solar power plant.
The majority of Australians believe that homes equipped with solar power systems are more valuable than those drawing electricity strictly from the grid. A 2015 survey from realestate.com.au and Origin Energy discovered that 85% of Australians identify solar roof panels as something desirable when buying a home. What is more, the survey positioned solar energy on the top of green home improvements as related to adding value to the property. Following are energy-efficient appliances with 79%, solar water heating with 78%, water tanks with 70% and water saving fixtures with 47%. In addition, three quarters of renters in Australia said they would pay additional rent to live in a property that uses solar panels.
Roof as overlooked asset
By the words of Phil Craig, Executive General Manager Corporate Affairs at Origin, people should look to their roofs as a valuable asset. If the research shows that solar photovoltaic panels could become a boost for homeowners who are selling, Australians should start investing in their ‘roof space’. Anyone who is looking to sell or lease a property should consider adding a 5kW solar system, as well as making sure that their real estate agent highlights that in the online listing.
If you are having any doubts in purchasing a solar power system for your home, these studies should boost your confidence. Apart from making annual savings in reduced electricity bills, rest assured that a green energy upgrade will return your investment if you decide to sell, or at least make your property more competitive in the overcrowded real estate market.