Residential Photovoltaic Systems Now Adding Measurable Home Appraisal Value

February 3, 2016

Consider the most popular home improvement projects that a homeowner might complete in order to add value to their home. Depending on where you live, this may be a new deck, updated siding, a new roof or maybe a bathroom renovation. In their list of Top 15 Home Updates, HGTV includes the following:

  • Kitchen Remodeling (98.5% return on investment at resale)
  • Attic Bedroom Conversion (93.5%)
  • Basement Remodel (90.1%)
  • Room Addition (83%)
  • Wall and Floor Updates (40%)

But new market research shows that the average payback for PV solar systems that were installed prior to a home being sold is $3.57/watt. This figure was arrived at by taking a 6-region average in the US, weighted according to solar power system costs in various parts of the country.

This means that for an average-sized home of 2,500 square feet that undergoes a 3 kW solar power system upgrade, the return at home resale will be $10,710. This is in addition to the savings in lowered electricity costs during the use of the home prior to selling it. What’s more, this return is even higher for the state of Florida, at $12,760.

States like California which have a much more mature market of homes with installed solar power systems have already adapted to this new approach to appraising homes, whereas appraisers in other states are still learning how to calculate the value of solar power systems when arriving at a final home value. So how are they running their numbers?

Often times, residential real estate appraisers rely on the valuation methods endorsed by trade associations like The Appraisal Institute. With more and more studies being released that indicate how final values are climbing pursuant to solar power system installations, it’s just a matter of time before an industry valuation standard is applied and solar power system values begin to normalize.

Until then, it’s still clear that an investment in solar power generation systems has measurable returns when combined into the overall value of a home for sale.