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Real Estate

Study: Home values increase when solar panels get installed

Research considers appraisal values of homes across six states

A new study from The Appraisal Journal, the academic publication of one of the nation's largest association of appraisers, shows that homes that use solar panels are sold at a premium.

Some homeowners showed concern that solar energy would cost more than they could get back, however several studies now reveal that there is demand from homebuyers for solar energy homes, finding that buyers consistently have been willing to pay more for homes that use solar energy.

The average premium for all study areas is $14,329, which is 3.74% of the average sale price and equates to $3.78 per watt for the average-sized solar panel system, according to the report.

In recent years, more consumers have begun seeing solar power as a viable option.

SolarCity announced in 2014 that it created a new investment program with Bank of America Merrill Lynch to finance an estimated $400 million in solar power projects in 2014 and 2015. This enabled thousands of American homeowners to install solar panels with no upfront cost.

In some states, however, solar power has become less inviting. In Nevada, the state's Public Utility Commission voted to change the rates for customers with solar panels, according to an article by Sam Weber for PBS Newshour. Because their bills are lower due to the use of solar panels, regulators don't believe they are paying their fair share for the electric grid's operating costs.  

The report pointed out that, especially in areas with fewer comparable sales, because appraisers end up with only 20% of the study’s original pool of the sales of 208 homes with solar panels to use as comps due to proper listing of solar panel homes in MLS, and the existence of non-market-value transactions, they could face challenges.

The report suggests that lending appraisal guidelines and expectations should align with this reality and allow other forms of premium estimates when comparable sales are not available.

3d rendering of a row of luxury townhouses along a street

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