Why Solar Panels Can Add Thousands of Dollars to Your Home’s Value
There are many benefits to installing solar panels that homeowners are aware of: they increase your energy savings, reduce your carbon footprint by using renewable energy, and can even make you money. a healthy tax deduction. But did you know that solar energy also increases the value of your home? We dove into how solar panels can add thousands of dollars to your home’s value.
A 2019 Zillow report reported that homes with a rooftop solar system sold for 4.1 percent more than comparable homes without solar. For the median home, that’s about $9,300. And homes with solar panels are 24.7 percent more likely to sell for more than asking price, according to real estate listing site Rocket Homes.
Tony Accardoa Compass real estate agent in Los Angeles County, says solar is a “huge selling point” in his conversations with potential buyers.
“If there were two identical houses, but one of them didn’t have solar panels and was $50,000 cheaper, the house with solar panels would sell first,” Accardo told CNET.
Here’s what you need to know about how and why solar panels increase the value of your home.
How Much Solar Panels Increase the Value of a Home
You can take advantage of tax benefits when you purchase and install a solar system on your roof. One of the most significant benefits is the federal solar tax credit.
How much premium you’ll pay for a solar system on your roof when it comes time to sell depends on a number of factors, including where you live, your electricity costs, and what type of system you have.
What’s most appealing to homebuyers is how much of your home’s energy needs your system can cover. If it can supply it all, that could reduce your electric bill by an average of $1,500 per year — equal to about $37,500 over the life of the system.
Read more: How long does it take for solar panels to pay for themselves?
“If solar panels aren’t on the buyer’s wish list, it’s something they want to install themselves,” Accardo said. “They want to offset the energy costs and have a better resale situation for themselves.”
Solar energy is even more attractive than a swimming pool, he added.
“An older couple looking at your house might not think much of you having a pool. Or they might even see it as a burden,” Accardo said. “This is direct savings that everyone can benefit from.”
Where you live matters
The value of a solar installation varies significantly by market. Not surprisingly, buyers in states where electricity bills are higher put more premiums on solar panels.
In January 2023, household electricity bills were highest in California, Illinois, Michigan, New York, New Jersey, Pennsylvania, Wisconsin and across New England, the Energy Information Administration.
With solar capacity to power more than 13.9 million homes, California has by far the largest residential solar market.
Below are the top 10 states for solar energy, based on data from the Solar Energy Industry Association about the total amount of installed solar energy up to and including 2023 and the number of homes that can be supplied with that energy.
States with the best solar markets in 2023
| Rank | Stands | MW of installed solar energy (cumulative) | Number of homes that can be supplied with electricity (roof and utility capacity) |
|---|---|---|---|
| 1 | California | 46,874 | 13,904,267 |
| 2 | Texas | 22,872 | 2,677,486 |
| 3 | Florida | 13,912 | 1,663,089 |
| 4 | North Carolina | 9,310 | 1,169,056 |
| 5 | Arizona | 7,675 | 1,173,331 |
| 6 | Nevada | 6,382 | 1,150,989 |
| 7 | Georgia | 5,913 | 710.506 |
| 8 | New York | 5,560 | 980.034 |
| 9 | New Jersey | 5,276 | 904,948 |
| 10 | Massachusetts | 5,070 | 912.036 |
Many of these states offer credits to homeowners who sell excess energy back to the grid. And at least 36 states offer property tax exemptions for a home solar system. So while it will increase the value of your home, it won’t increase your tax bill.
A 2015 analysis Research from the U.S. Department of Energy’s Lawrence Berkeley National Laboratory found that buyers in California, Connecticut, Massachusetts, Minnesota, North Carolina and New Jersey paid $15,000 more for a home with a typical 3.6-kilowatt photovoltaic solar system. (The equivalent of about $4 more per watt generated.)
Specific metropolitan areas have also emerged at the top of the list when it comes to solar panel adoption: In 2022, they were most popular in Los Angeles, San Diego, Honolulu, Phoenix, San Jose, San Antonio and New York City, according to a study by the California Environmental Research and Policy Center.
In New York, having solar panels increased the sales price of a home by 5.4%, compared to the 4.1% increase nationally. Zillow reported in 2019For a median-priced home in the Big Apple, that amounted to about an extra $24,000.
Look at this: How Transparent Solar Panels Can Power Your Windows with Renewable Energy
Electricity prices remain high
Although inflation figures were high at the beginning of the year, The Fed still predicts it will reach 2% by the end of the year. However, Mark Wolfe, executive director of the National Energy Assistance Directors Association, said Today in the US that electricity prices could rise by as much as 10% in 2024.
Read more: Here’s How Solar Panels Can Save Homeowners Money
When asked about their reasons for installing solar panels, almost all (92%) homeowners who have installed them or are considering doing so said that it would save them money on their energy bills, Pew Research Center reported.
“People are not altruistic,” Accardo said. “They are interested in solar because of the savings, not because of the environment.”
Will a solar installation always increase the value of your home?
It’s highly unlikely that a well-maintained rooftop solar system will ever lower the value of your home, Accardo said. Even if you don’t have solar panels, buyers can pay more for a home with a roof covering that fits well to install them later.
But changes in state regulations could make solar less attractive as a selling point: California recently changed its solar incentives from a net metering system, where homeowners get a credit of nearly a dollar for excess energy, to a net billing system where your surplus is sold to the utility at a significantly lower rate.
According to the Commission, systems installed after April 14, 2023, could cost homeowners 75% less if they do not also have a home battery. California Solar and Storage Associationthe state’s largest solar trade association. (Existing systems fall under the current net metering structure.)
Similar policy changes have led to a decline in solar adoption in Hawaii, Nevada and Missouri, the nonprofit said. Environment America reported.
New Tariffs and Regulations in Arizona almost doubled how long it takes for solar panels to pay for themselves, leading to a 50% to 95% drop in adoption, EA reported. (Despite being the sunniest state in the union, less than 200,000 homes (In Arizona they are solar powered.)
The condition of your panels and your home also play a role. If a buyer sees that they need to invest in repairs, that will likely drive the price down.
And as other states implement net billing, it’s becoming increasingly important to pair solar panels with a home battery backup to get the best value for your home.
For more information about solar panels, Find out how to avoid scams and learn about big changes to California’s solar subsidies.
