In my last post, “Will Solar Sales Stay A Professional Position,” I mentioned that my previous career had been in the real estate and mortgage industries.  In response to that post, I got a call from a guy who was curious about the impact solar electric systems had on real estate values.

I have to be honest here: I told the guy that I didn’t know, that my gut level was that they would be treated about the same as swimming pools are. That is, in certain markets they would add value, but seldom add enough value to justify installing one (at least on simply this basis) and that in other markets they might even detract from value.

The guy was taken back with my answer! “Oh no!!!! They’ve got to add value because they save people money on their electric bills." 

He went on to say that people would pay more for a home if it had a solar electric system because solar electricity was helping to save the planet!

Well, as I told the guy, I really didn’t know because I had never looked into it. So that’s what I did this morning. I called and talked to 3 different real estate appraisers from here in the Los Angeles area and they all said basically the same thing: "It's too soon to tell."

I then got on this site and searched the term, “Real Estate Values.” I found an article that was posted here last September by Nami Sung of SunRun called, “How Does Solar Power Impact Home Value." The article basically says that a solar electric generation system will increase the value of a home. 

Specifically, she quoted The US Department of Energy as saying, “a solar home will sell twice as quickly as a home without solar."

So, which is it? Do homes with solar electricity systems sell faster and for more money than homes without such systems? 

While I would love to say that they do, I have to say that I’m with the appraisers on this one. It’s simply too early to tell. In the long run they just might; but in the here and now, it's not clear that they do.

Most homes are purchased with the buyer taking out a mortgage – and mortgage financing almost always requires an appraisal; the appraiser is going to have to prove that the “improvement” adds to the value. In order to prove this, the appraiser has to provide “comparables” or other properties that are similar to the subject property that have sold recently.

As of today, there simply aren’t enough properties with solar energy systems that have sold to be able to provide this proof. 

That’s not to say that that this will always be the case – but for now it is. And anybody who says that investing in a solar electric system will definitely increase the value of their home is doing that potential customer a disservice.

I know that this isn’t what people want to hear. But there are a lot of other reasons for justifying the installation of a solar system.

As Ms. Sung pointed out in her article:

1. All other things being equal, a home with a lower electric bill will indeed tend to sell faster. 
2. Electricity demand is increasing in most major markets and this increase in demand combined with projected higher fuel costs for utilities will probably lead to higher electric bills for most consumers; having a solar system installed will help insulate consumers from these potential price shocks.
3. Homes with solar systems have smaller carbon footprints. And while not guaranteed to continue, more and more people are considering this in their economic decisions.
4. While payback periods will vary, in most installations where a system is justifiable, the system will indeed pay for itself in a reasonable amount of time.
5. It’s a great thing knowing that you're doing your part to lessen our dependence on foreign oil and improving our environment.
6. You can become independent from your local utility (at least to a certain degree).

So, there you go. I’m curious to see what you all think. Your comments, as always, are greatly appreciated!

Bob “Free As The Wind” Mitchell