Do Solar panels bring up the value of a property?

The American Association of Realtors say that home values increase by at least the cost of the solar installation. This makes them a better home improvement investment than kitchen or bath remodels. They improve the cash flow of the homeowner and are gaining acceptance.

I’m a little scepticle of this of this finding, even though I wish it were true.

From a cash flow perspective, this is an interesting question. Normally, if you were to finance the purchase of solar panels, it wouldn’t be for 30 years. If you buy a house with existing solar panels and take out a 30 years mortgage, it would be interesting to project the cash flows. The outflows principal and interest payments versus projected lower electricity bills.

Retscreen.net has simulations using actual equipment and with hundreds of weather collecting sites worldwide. Dial in location, equipment and cost of the system with the cost of electricity and the (projected) inflations to energy as well as maintanence. Payback is better with solar water heat, however.

With the certain increase in grid power generation costs there is no doubt about the value of solar installations (at least here in Australia). The cost of adding solar power to a home is more than recouped in the sales price.

There is a much easier way to calculate the increase in property value from solar (or any energy saving measure for that matter).

The Appraisal Institute, the world’s largest trade organization for professional real estate appraisers, has done quite a bit of research on this matter and has published a very simple formula to determine the increase in property value.

For every $1 in annual utility savings, you should expect $20 back in increased home value.

So, a system that eliminates $2,000 in annual electrical charges would increase the value of a home by $40,000 in the first year. The study that determined this formula has been quoted by reputable organizations such as Wells Fargo. You can see for yourself, here:

[URL]http://acroelectric.com/fileadmin/reference/what-remodels-offer-the-most-payback.pdf>link.

The actual report is only about 8 pages, and a reprint is available here:

[URL]http://www.acroelectric.com/fileadmin/reference/efficiency-market-value.pdf>link

One thing to keep in mind; however, is that pricing of real estate is a rather subjective task (more so in some real estate markets than others). If you want an appraiser to include the increased value from solar, you will need to give them copies of this information, and they will need to understand that the system reduces the occupant’s cost of living.

There are even “green” mortgages available from some lenders that take into account issues such as grid-connected solar systems. The idea is that if you’re not spending $200/month on electricity, you could be spending that same amount of money on your mortgage.

Remember, this is true for other home improvements as well, such as: dual pane windows, new insulation, attic fans, etc.

I am always looking for good sites about green living and alternative energy. I have found this one:
link
Check it out, I like it.

Curious how the home value issue changes when the solar panels are on the ground. We’re considering an installment but I’m concerned with the visual impact of 60′ of paneling out in our field, which is only a few acres. Proportion seems like an important factor.

I think nowadays, it would not matter to most. I think more people are more concerned with the environment and saving money as compared to how it looks.