New Report Finds Solar Adds Value to Homes in Six States
Whether or not solar panels actually add value to a home had been up for debate for a long time. The Lawrence Berkeley National Laboratory (LBL) has dispelled this in numerous reports, previously in just California, and now in six different states. The report builds on previous research that shows an average solar array of 3.6 kilowatts added $15,000 to the price of a home.
In LBL’s latest report on the issue: “Appraising into the Sun: Six-State Solar Home Paired-Sales Analysis,” the lab worked with the Appraisal Institute to determine the value of homes with solar on the market as opposed to those without. In the past some appraisers had offered mixed reviews as to whether solar increased the retail value of a home. The new report, primarily authored by the Appraisal Institute’s Sandra Adomatis, offers reassurance from appraisers of the value of solar power and should give homeowners an added incentive when considering solar power.
“These results will benefit appraisers, real estate agents, and mortgage lenders who increasingly encounter PV homes and need to understand the factors that contribute to, and detract from, market value,” says study co-author Ben Hoen, a researcher in the Energy Technologies Area of Berkeley Lab. The soaring growth in U.S. home PV systems—which totaled more than half a million homes in 2014—highlights the need for additional valuation options.
In the report LBL and the Appraisal Institute investigated the sale of 43 pairs of comparable solar and non-solar-powered homes using the paired-sales valuation technique, which compares recent sales of comparable homes to estimate premiums created by extras like solar arrays. The report found that in all six markets solar panels add value to homes.
“Many appraisers and lenders prefer the paired-sales valuation techniques that are standard in the real estate community, but comparable pairs of PV and non-PV homes are not always available, which can result in PV systems on some homes receiving no appraised value,” explained Adomatis. She helped develop the Appraisal Institute’s Green Addendum and has written and spoken extensively on valuing green features. “One of the most important contributions of our study is to show that paired-sales analysis accords with cost, income, and statistical-modeling approaches to estimating PV home premiums. Lending appraisal guidelines and expectations should allow these methods for estimating PV home premiums when comparable sales are not available.”
In their analysis seven appraisers from across the six states determined the value of solar power on homes. The analysis confirmed the modeling in the 2013 report, which found solar added $15,000 to a home’s value—or about $4 per watt.
The actual individual premiums paid for the solar powered homes varied on a number of factors, including the underlying system and market characteristics including installed price, retail rates for electricity, and time of sale. As such, report recommended valuing solar power on these homes considers such factors. The report also noted that there was no consistent difference in days on the market between solar powered and non solar powered homes.