For many home buyers, a house equipped with a solar panel system can mean instant and long-term savings — and it’s something sellers can use to get more money during the sales process. Data shows that solar panels increase home values. Read on to learn more.
Key takeaways:
Solar panels are more likely to increase home value if you live in a solar-friendly state, such as California or Texas.
Reports have shown that homes with solar panels are valued 4.1% higher than homes without solar panels.
Solar panels may not always increase home value, but can make your home sell faster and over the asking price.
How much do solar panels increase home value?
A 2019 Zillow report found that solar installation increased a home’s value by about 4.1%. With the median U.S. home price at $417,700 in 2023, it could mean an increase of as much as $17,125.
“Eco-friendly homes are trending right now in the current market,” said Brady Bridges, the owner and broker of Reside Real Estate in Fort Worth, Texas. He’s seen a steady 3% to 4% increase in solar home values.
In 2021, Zillow asked buyers what they looked for when buying a new home. It found that 67% of buyers considered energy efficiency to be “very to extremely important.”
Will solar panels impact my home sale?
Solar-powered homes often sell both faster and at higher prices than non-solar homes.
A 2015 study by the U.S. Department of Energy’s Lawrence Berkeley National Laboratory (Berkeley Lab) conducted between 2002 and 2013 — the largest of its kind — found that buyers in six out of eight states surveyed would pay up to $15,000 more for homes with solar capability.
In its 2021 survey, Rocket Mortgage found that homes with solar panels sold an average of 13.3% faster than comparable homes without solar panels. The study also found that homes with solar panels were 24.7% more likely to sell over their asking price. So, if you’re looking for an efficient way to upgrade your home for an upcoming sale, solar panels may be the answer.
Consult a real estate professional with experience selling homes in your area to get a firm idea of how your solar system could affect your home sale.
Factors that influence how much value solar panels add
How much value solar panels add depends on several factors, including where you live, your local electricity rates and how you paid for your system.
Electricity rates
If you live in a state with high energy rates, solar panels will likely have a more significant impact on your home’s value. This is because homeowners in states with high electricity costs — such as California, Colorado, Florida, New Jersey, Texas and New York — stand to save the most on energy each month.
Solar panels save homeowners an average of $137 on monthly utility bills; annual savings are often in the thousands of dollars.
Thirty-eight states offer a solar buyback or net metering program. These programs allow solar homeowners to sell excess solar energy back to the traditional power grid and save even more money — or even make money — each month.
Location
Living in a sunny state known for its solar-friendly policies can also affect how much solar panels increase your home value. Potential home buyers in sun-soaked states like Florida, Arizona, California, Texas, New Mexico, Hawaii and others can anticipate solar systems that absorb much more sun power — and produce more energy cost savings — than in states like Illinois, Ohio and Vermont.
In addition, homes in states with better solar programs and incentives often see a larger impact on perceived (and actual) home value. According to the Solar Energy Industries Association (SEIA), the top 10 states for solar energy are:
- California
- Texas
- Florida
- North Carolina
- Arizona
- Nevada
- Georgia
- New Jersey
- Virginia
- New York
If you live in one of these solar-friendly states, you likely have access to dozens of professional installers, maintenance crews and other support staff. These keep solar installation costs lower and make panel upkeep easier.
Ownership
According to a 2021 Berkeley Lab study, paying for your solar panel system in full upon installation will result in the greatest increase in home value. This is because you won’t be impacted by interest and finance charges.
However, contrary to popular belief, financed or leased solar panels won’t decrease the value of your home. Leased panels may make the sale of your home more challenging because the buyer will have to either take over the lease or have the panels removed.
System type and condition
New homeowners don’t want a solar system that doesn’t work. If your solar panels are already nearing the end of their life or need repairs or upgrades, they may be more of a nuisance than an asset.
The newer a solar system, the more value it has for potential buyers. Solar panel systems less than 10 years old are more attractive to potential buyers. Most solar systems last between 25 and 40 years, and most have warranties that ensure proper operation for up to 30 years.
Damaged solar panels will produce less energy than unblemished panels and may require hefty repair costs, deterring potential buyers. If you clean and maintain your solar panels regularly so that they function at optimal efficiency levels, they’re more likely to impact your home’s value positively.
Can solar panels decrease my home’s value?
You may not always see a notable increase in home value when you invest in a home solar system, but solar panels should not decrease your home’s value. However, it’s worth noting that an outdated, non-functional or poorly installed solar system can affect curb appeal which, in turn, may have a negative impact on the value of your home.
Do solar panels affect property taxes?
Solar panels are considered property enhancements, so they may increase your home’s overall value and property tax assessment.
Some 35 states offer solar tax property exemptions, meaning solar homeowners don’t have to pay property tax hikes when solar panels raise their home’s tax valuation. (Twenty-five states have sales tax exemptions.) In some states, this is a 100% tax exemption. Other states offer a smaller percentage discount. Check your state for which incentives apply to your home or talk to a tax professional for guidance.
How can I maximize my solar panel investment?
A high-quality and professionally installed solar panel system can raise the value of your property and help your home sell, so you’ll want to install the right system that’s perfectly designed for your home.
Depending on where you live, you may also benefit from federal and local solar incentives or decide to invest in a solar battery for even more solar power capability:
- Solar incentives: The federal government offers a federal solar tax incentive (ITC) that allows you to credit up to 30% of the total cost of your solar panels back during tax time. You may also be eligible for rebates from your local energy company or tax credits from your state. Some states have better solar rebates and incentives than others, so contact a solar installer in your area to see what’s available.
- Solar battery: With a solar battery, you can store extra energy produced during the day and use it when there isn’t sunlight, such as at night, during an energy outage or on a cloudy day.
- Net metering: If you live in one of the 38 states that has a net metering policy, you can sell any excess energy back to the power grid. This allows you to credit that energy later or even make money off any extra energy your solar panels produce.
Bottom line
Solar panels can add value to your property, and if you live in a top solar market, you’ll see the most value added to your home.
However, not every home will see such a drastic impact on their property value. “Some homes might get an appreciation of home value by around 20%, while some might not get anything,” said Jake Rockwell, the owner of Medford, Oregon, real estate firm the Rockwell Group.
Still, solar panels add value in other ways than appraisals. The majority of buyers consider energy efficiency to be important to their home search, so solar panels will almost always be a selling point.
