A single U.S. household uses an average of 11,000 kilowatt-hours (kWh) of electricity every year. This can result in hefty utility bills and interest in home solar panels has spiked in recent years as homeowners look for ways to lower their costs.
What many neglects to take into account, however, is the effect that adding solar panels will have on the market value of a home. Here’s what every homeowner considering solar should know about how solar panels impact the appraisal value of a home.
Solar Panels Add Value
Nationwide, the data is consistent. Adding solar panels to a home will increase the property’s market value.
On average, installing solar panels translates to an increase in home value of around four percent. While that can sound small, it works out to over $9,000 for median-priced homes.
That said, how much of an increase individual homeowners can expect will vary. Factors that influence solar’s impact on home valuation include:
- Home size and style
- Home energy efficiency
- Solar system type
- Geographic location
Of these, geographic location is the strongest predictor.
Homeowners can expect the highest returns on investment (ROI) in metro areas on either coast, such as:
- Los Angeles
- New York City
- San Francisco
In areas like these with high costs of living, homeowners see greater savings on their utility bills from going solar. As a result, the demand for homes with solar is high. This can translate to ROIs of nearly five-and-a-half percent, or more than $23,000 of increased home value.
How to Weigh Solar Costs vs Benefits
It is not uncommon for homeowners to struggle when trying to weigh the costs of installing solar panels versus the prospective benefits. Even if they know the average rate of return, they may not be clear on what that translates to in dollars for their home.
Fortunately, making this determination doesn’t have to be difficult.
The first step is asking “what is the value of my home?” Homeowners who are unsure of their home’s value can use an online home value estimator to find out.
Then, they can multiply their home’s current value by either the average home value increase (four percent) or their local average if they know it. They can use a home value calculator to assist if desired.
This will give them a relatively clear look at what to expect.
Alternatively, homeowners can contact a solar installation company. This may be the best home value estimator option. It will also give homeowners a solid understanding of actual costs, timelines, and benefits.
Importantly, homeowners should keep in mind that the value of adding solar panels to their homes will increase over time. As utility bills continue to climb, demand for homes with solar panels will also go up.
Calculating the Appraisal Value of Home
It is up to real estate agents to help their clients understand what is involved in determining the appraisal value of a home. Explore our blog today for tips and resources on how to offer unparalleled education and support to your clients.