Does Adding Solar Increase Property Values?

Q: I am a homeowner in my early 70s. We purchased our current home a little over a year ago in a rural area of Wisconsin. We are considering going solar in order to better control our electric bills. There are tax and rebate incentives that make the upgrade to our home lucrative on paper at this time.

Do home solar systems increase home values? We got a couple quotes and the payback looks to be about 11 years. Are there other things we should be aware of?

Do solar panels increase the value of your home?

A: More homeowners are thinking about going solar, especially if they qualify for tax breaks. We’ve run the numbers for our house, too.

But timing is important. The one thing you didn’t mention in your email is whether you believe that you’ll stay in the home for at least the next 11 years. Your math says if you stay for 11 more years, you’ll break even. This means the savings from the installation of the solar panel system will equal the cost of the system.

Let’s suppose you move before the end of the 11th year. You might not recover the cost of the installation of the system. But that’s true with many other home improvements. Others may increase the value of the home but only by a percentage of what you spent on the improvements.

How much more value does solar add to your home?

So, we can’t tell you whether adding solar panels will increase your home’s value. But, whether they will may depend on what your neighbors are doing and where you live.

Let’s say you go ahead and install the solar panels. Now, you list your home at a higher price to compensate for the expense of installing the solar panels. If your home is the only one for sale with solar panels and there are 20 other, similar homes for sale that don’t have solar, you may find buyers don’t care. Many buyers would rather pay less for their home and simply pay higher utility bills.

Do solar panels make it harder to sell your home?

On the other hand, if all the homes in your area have solar panels, and you don’t install them, it might detract from your ability to sell your home for the same price point.

Your local real estate agents will be a font of information. You should talk to several agents in your area and ask what they are seeing with regard to solar and home values. If they tell you that buyers are looking for homes with solar panels and are willing to pay more to get a house that already has them installed, then you may be able to fully recover your investment. Armed with information from these real estate professionals, you’ll make a more informed decision.

Keep this in mind: before you invest in solar panels, make sure that your roof is in good condition or fairly new. You don’t want to go to the expense of installing the panels and then find out that you need to take them off to put on a new roof. It can be very expensive to remove and reinstall the solar panels.

If your roof has up to 10 years left, you still might want to wait before installing the solar panels. Otherwise, you have to weigh the solar tax benefits against keeping your roof for another 10 years or so. We don’t know what a new roof would cost but that is a factor to consider.

Best of all worlds? You need a new roof now and could install the new roof and then the solar panels.

Finally, you’ll spend time and effort (beyond money) to find and contract with a solar panel installation company. You have to decide whether you will lease or buy the system. In either case, you need to know what the costs are to maintain the system while you own it and what the costs will be if you sell the home. If you lease the system, the solar panel company may require a payment to transfer the lease or contract from you to the buyer.

Good luck and let us know what you decide to do.