Do Solar Panels Increase Home Value in San Francisco?

  • Timothy Farnham
  • 01/18/22

Energy efficiency is a growing concern among homeowners, and solar panels are a well-known resource in improving efficiency and helping the environment. The amount of money a homeowner can save by using solar power is attractive enough, but how do solar panels affect property value?

Solar Adoption is Growing
Two years ago, the U.S. had hit 2 million solar installations and the researchers at Wood Mackenzie Power & Renewables expected "...solar installations to double by 2023." In fact, Pew Research found that 46% of U.S. homeowners are considering residential solar panels.  

High demand can lead to a faster sale and/or a higher sales price, but there are still a few other factors that will impact the value of your home on paper.


Location Considerations
According to a 2019 Zillow Economic Research report, “During the past year, homes with solar-energy systems sold for 4.1% more on average than comparable homes without solar power. For the median-valued home, that translates to an additional $9,274,”

The report finds, however, that the increase in home value varies, sometimes substantially, by region. If solar panels are popular in your area, they may provide a bigger boost to your home value than in less popular areas.

Owned or Leased?
When you sell your home to a buyer who will need financing to purchase it, the appraiser has the final say in what the home is worth. Whether the solar array on your roof increases the appraised value will depend largely on whether or not you own the system.

The most common solar panel ownership scenarios, according to the appraiser guidelines at fanniemae.com, include:

  • The panels are owned. Owned panels may be included in the appraised value of the property.
  • The panels are leased or covered by a Power Purchase Agreement. Leased panels may not be included in the appraised value of the property.
  • The panels are financed as personal property. If the solar panels are financed as personal property (and therefore serve as collateral for the loan), they will do nothing to increase the value of the home.
  • The panels are financed as fixtures to real estate. Panels that are considered fixtures (permanently affixed to the property) can be used in the appraisal but only if they can’t be repossessed should the seller default on the terms of the financing agreement.

If you decide to purchase solar panels, you will likely be able to someday recoup the money you spent on them. If you’re located in an area where solar power is popular, your system may just help you to sell the home quicker. If you’d like more information on our local market conditions, reach out to me anytime.

 

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