On Vancouver Island, we’re all fairly well aware that an ocean view adds value to your home. If there were two houses that were identical in all respects, except that one had an ocean view, we would reasonably expect the resale price of that ocean view home to sell for a higher price than the one without. Of course, it’s difficult to ADD an ocean view to your home. In most cases, it’s either there, or it isn’t. But what if you could add something to your home that provided that market premium? What about solar panels?
In addition to the frequently cited benefits that solar panels provide – reducing your energy bills, extending the life of your roof, and of course, combatting greenhouse gas emissions and reducing our collective dependence on fossil fuels – can solar panels actually increase the resale value of your home? Let’s find out.
Landmark American Study
In 2015, the Lawrence Berkeley National Laboratory, supported by the U.S. Department of Energy, published the most comprehensive study to date regarding the value that solar photovoltaic (PV) Systems can add to home sales transactions. They analyzed nearly 23,000 homes (of which 3,951 had PV systems) in eight States over 11 years, and concluded that home buyers were consistently willing to pay “PV home premiums” across different states, markets, and home types. This premium seemed to remain constant even as the cost of solar panels decreased over the time span of the study.
The researchers uncovered what they called the “green cachet” – that is, that some buyers would be willing to pay a certain amount for any PV system on a home they were considering purchasing. The average premium (that is, the increase in sale price) was reported to be approximately (USD) $15,000 for home with an average-sized residential PV system. It’s important to note that the market seems willing to pay a premium for a system that is within its first 10 years, but that premium declines rapidly thereafter, in light of the rapid depreciation of the panels.
To add credence to the data from the Berkeley Lab, the American National Renewable Energy Laboratory also published a study that concluded that homes in the U.S. with solar panels “sell 20% faster and for 17% more than those without”.
Here on the Island
No similar comprehensive study has been conducted in Canada regarding market valuation and solar arrays, but here in BC a solar PV system on your roof can at the very least be a competitive differentiator over other homes in your area. While BC residents may feel that they’re more environmentally conscious than the average Canadian, residential solar power hasn’t really taken off on the west coast – although we do consume less than the national average of electricity consumption per household. So those shiny new solar panels on your roof will certainly set your home apart from other homes in your area!
There are, of course, fluctuations and idiosyncrasies in every real estate market – that’s the advantage of using a Realtor who knows your specific area! As a general rule, however, installing solar panels on your roof can help you stand out from the crowd, may speed up the sales cycle, and could potentially command a premium on your sale price. It might be worth a second look as an investment.
