It is likely that you have heard a lot of talk in recent years about the benefits of adding solar panels to your home. The fact is that recent years have seen many homeowners choose to invest in solar panels as a way to reduce their carbon footprint as well as their electric costs, which caused the solar industry to grow by 59% each year between 2006 and 2016. This should not come as a surprise considering that improved technology, and an abundance of incentives, have made solar panels more affordable than ever.
However, before you choose to invest in adding solar panels to your home, you may find yourself wondering how doing so would affect your home’s resale value. Fortunately, the current popularity of solar power means that homeowners stand to see substantial returns after investing in a solar system. If you are on the fence about adding solar panels to your home, here are answers to common questions homeowners have about the value of residential solar systems.
The Value of Residential Solar Systems: What Homeowners Need to Know
Overall, adding solar panels to a home is seen as a positive investment that can show great returns, similar to other home improvement investments such as kitchen remodels. The fact is that with energy costs going up, and the threat of climate change on many people’s minds, environmentally-friendly and energy-saving upgrades are key selling points for many prospective home buyers. Not only can homeowners then see substantial returns on their investment when they go to sell a house with solar panels, but their house may even be easier to sell with a solar system. Recent data shows that homes with solar panels actually sell faster than their counterparts, simplifying the sales process.
What Kind of Return on Investment Can I Expect to See?
Of course, the big question you will likely find yourself asking is exactly how much you can expect solar panels to add to the value of your home. Ultimately, this depends on a variety of factors including the size of your home, the number of solar panels added, and the location of your home (as certain areas see higher returns on investment). However, the average U.S. home saw a 4.1% increase in value after having solar panels added. Depending on the value of your home, this can represent a significant return on your initial investment, which would be on top of any money you would have saved over time by making your own electricity.
How Much Does a Solar System Cost?
You may also find yourself wondering whether the initial cost of investing in solar panels is justified given the returns you will see on your investment. However, you may be surprised by just how affordable solar panels can be. Innovations in technology and an increase in production has led to a drastic reduction in the cost of having solar panels installed. While the average solar system cost homeowners $40,000 in 2010, this average dropped to $17,000 by 2018. Furthermore, your actual cost is likely to be lower once state and federal incentives and rebates are taken into account. We’ve calculated that in Western New York, the average cost of a solar installation is $6,378 after tax credits. You are therefore likely to see a significant return on your investment when purchasing solar panels for your home.
Does it Make a Difference if I Lease or Buy My Solar Panels?
When considering adding solar panels to your home, it is important to remember that you are likely to only see a return on your solar system if you purchase your solar system outright. While many homeowners see a solar lease or a PPA (Power Purchasing Agreement) as an attractive option as it lowers their upfront costs, you likely won’t see any of the higher sale price returned to you as profit if you do not own your solar system, as you will likely have to pay off the lease or PPA agreement as part of the sale. Due to the tax credits and the NYSERDA incentive in NY, the average NY solar customer would pay only slightly less per month for a leased system that they would never own. Once a bought system is paid for it will provide many years of power with no, or very little cost, and will be covered by the long term warranty..
By investing in adding a solar system to your home, you will not only be doing your part to help the environment, but you will also be making a smart investment in your property.