Zillow: Homes with Solar sell for 4% more than those without

[GilesMM]

I've often wondered the impact of solar on the value of a home for sale.  It can be impossible to quantify for many homes (unless lots of identical homes have sold nearby both with and without solar).  But Zillow says the typical value bump is 4%.  So, your $500,000 house is worth $20,000 more once you install solar, which is probably about what you paid for solar. So your solar panels may be essentially free.  This has a huge impact on the economics and also argues for not delaying installing solar just because you may be selling in the next few years.


We installed solar in 2022 and sold in 2024. If we got 4% more at the sale, then the extra more than covered the solar cost (and in fact the new owners have said it was a driver for them and they plan to expand it 50%).


https://www.zillow.com/research/solar-panels-house-sell-more-23798/

[tygertygertyger]

That sounds cool. We just signed a contract to get them installed on our roof, so one day I wouldn't mind making a bit (more) money off them. Though we're in it for the long haul... so I won't count my pennies before they sprout/hatch/whatever.

[dandarc]

I overpaid, so definitely not getting for free, but I can't but think there's a lot of variability on that. Right now trying to sell house - if anything solar seems confusing / a negative for the buyers we seem to be attracting.

Under contract as of the 10th (contingent on them selling their place in the same "stuff just ain't moving much" city that we are), so maybe after closing I'll ask if they factored the solar system at all and if so how much. Prior contract definitely tried to use solar panels as a negative, but I think were just kinda terrified of owning a house built in the 50's. Or their plan all along was to demand $30K off during the inspection period.

[uniwelder]

I wonder if there are more recent studies than Zillow's.  It was done in 2019 and when I do quick Google search, everything else that pops up refers to that same study.  This is a big hurdle in getting the public to adopt solar, so I'm hoping there's a research paper elsewhere.

Anyway, it's good to know there is some evidence that having solar adds value to a home. 

[Paper Chaser]

Trying to average benefits over the entire US seems pretty fruitless. There are places where solar works really well and is very appealing, and there are other places where it doesn't work that well, and is less appealing. If you live east of the Mississippi and north of the Mason Dixon, it's not easy to justify the cost initially, or paying more when purchasing a home that has solar equipment.

[dandarc]

Before subsidies anyway - there's a thread here where between federal, state, and local (maybe utility?) subsidies the cost in Chicago area was about $8500 for something like a 12 kw system - pencils out pretty well at that price, even with the less than ideal solar irradiance.

[GuitarStv]

After having them for more than a decade, I'm not sure that I'd pay anything extra for solar panels on a roof.

At least around here, squirrels constantly cause chewing damage to the wiring from the panels so it's difficult to keep the panels functioning year round.  We have a grid tied system and Toronto Hydro charges us 6$ a month to be grid tied (with a 600$ disconnection fee if you want to stop that).  If you want to replace your roof it can be pretty expensive to have someone disconnect and remove all the panels, and I'm not good enough with heights and the pitch of our roof to do it on my own.  We had a guarantee with the original company that did the install that they would uninstall the panels if roof work was necessary but they were bought out by Elon Musk's Solar City several years back and Solar City has made it quite clear that we'll need to sue them to try to get them to honor any part of the contract we originally had.  The panels also makes tax reporting a little more complicated each year as we have to declare and submit the sales tax we charge Toronto Hydro to provide them with power (and usually we find mistakes they've made in submitting our payment each tax time).  With a subsidized rate for solar we've done OK financially, probably clearing a couple grand a year but it has been a lot more work than I was originally expecting.

[GilesMM]

Trying to average benefits over the entire US seems pretty fruitless. There are places where solar works really well and is very appealing, and there are other places where it doesn't work that well, and is less appealing. If you live east of the Mississippi and north of the Mason Dixon, it's not easy to justify the cost initially, or paying more when purchasing a home that has solar equipment.

The linked article shows some variation and is even counter to what you suggest: NYC has the highest premium and Riverside, CA the lowest.


Alaska looks white on your map but from what I understand solar works well there partly from the benefit of cold increasing system efficiency.

[Michael in ABQ]

Former (commercial) appraiser here. When I was more active this topic came up frequently in an appraiser forum. The main problem was so many panels that were installed in the last decade are actually leased. If an appraiser could actually find decent data to compare the impact of owned panels on a house, it was usually too small to be measurable.

Cost != value. A $50,000 swimming pool may add zero value, or even lower the value of a home because some buyers don't want the risk and cost of upkeep or would prefer to have that space available for other things. Conversely, spending $20,000 on adding a second bathroom could add $50,000 in value.

I would assume that at best you might get 50-75% of the depreciated value of any owner solar panels on a residential sale. If a new buyer could replicate the current system for $30k - and it's 5 years old and you assume a 20-year lifespan that means you might expect to get $11-17k in additional value. It could be much lower than that though. I would take any data from Zillow with a massive grain of salt. Their ability to accurately predict home values was proven to be very poor when they tried actually buying and selling houses themselves. In New Mexico for instance where property sales data isn't public record, they're useless.

[uniwelder]

Trying to average benefits over the entire US seems pretty fruitless. There are places where solar works really well and is very appealing, and there are other places where it doesn't work that well, and is less appealing. If you live east of the Mississippi and north of the Mason Dixon, it's not easy to justify the cost initially, or paying more when purchasing a home that has solar equipment.

The map you provided is a little misleading because its irradiance measured on a horizontal surface.  Once you tilt panels and put them on a sloped roof, that irradiance increases in places of higher latitudes.  For example, where I live shows about 4.25-4.50 from the map.  When I plug my info into pvwatts.nrel.gov with panels at 0 degrees, I get 4.40, which agrees with the map.  However, when the panels are tilted to 35 degrees, the number goes up to 5.09.

Compare a system in my town versus Phoenix, Arizona.  The same panel setup in Phoenix will produce almost 30% more electricity.  If I want to match that, I'll need 6 more panels on my roof (30 instead of 24), but the inverter stays the same, the permits and hours of labor are all pretty much the same.  Extra panels and racking don't add a proportional cost to the system.  The biggest variable is probably the labor rate of the area--- living in a HCOL city or LCOL rural.

Because states vary so wildly in their incentives, I feel like that is the biggest driver to whether adding solar is worthwhile to most people, as well as deciding to buy a house that already has it installed.  In my state, there are no incentives, besides the federal that I can't use.  Another poster, @zolotiyeruki lives in Illinois, where the state seems to almost be giving them away.  That's an enormous difference in value for a prospective homeowner.

[GilesMM]

Former (commercial) appraiser here. When I was more active this topic came up frequently in an appraiser forum. The main problem was so many panels that were installed in the last decade are actually leased. If an appraiser could actually find decent data to compare the impact of owned panels on a house, it was usually too small to be measurable.

Cost != value. A $50,000 swimming pool may add zero value, or even lower the value of a home because some buyers don't want the risk and cost of upkeep or would prefer to have that space available for other things. Conversely, spending $20,000 on adding a second bathroom could add $50,000 in value.

I would assume that at best you might get 50-75% of the depreciated value of any owner solar panels on a residential sale. If a new buyer could replicate the current system for $30k - and it's 5 years old and you assume a 20-year lifespan that means you might expect to get $11-17k in additional value. It could be much lower than that though. I would take any data from Zillow with a massive grain of salt. Their ability to accurately predict home values was proven to be very poor when they tried actually buying and selling houses themselves. In New Mexico for instance where property sales data isn't public record, they're useless.

Good points.  But the Zillow analysis was off comparable sales, not an estimate of value or a forecast.  If they had enough similar houses to compare prices, they found the houses with solar sold for more.  But correlation should not imply causation or at least not full causation.  I would guess that homes with solar are owned by more engaged owners who maintain them better so every part of the house is better on average, from HVAC to yard to paint, etc.  This will change going forward as solar gets much more common.  In Nevada now, more than 40% of homes have solar installed so I would imagine that enough to get past the early adopters who also maintain their homes fanatically.  And if 40% of homes have solar, many people will be putting a premium on it.


The Zillow home buying disaster had little to do with forecasting generally but in forecasting specifically.  They would assign an average value to a house and the owner, knowing it had problems which would make it hard to sell, took their offer and left them with a turd.  Their model had the unintended consequence of screening for sellers with troubled homes that their algorithm (based on size, location, etc) had no way to detect.  Sellers with good homes had no interest in selling to Zillow.