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Solar Increase the value of a home

Solar Increase the value of a home

Not only is solar a great investment for providing homeowners with positive cash flow, it also is a great way to increase the value of your home. Based on a recent study by Lawrence Berkeley National Laboratory (LBL) the average value increase per home with a solar PV system is $5,911.00 per installed KW. This is great news for homeowners looking to get into solar as it clearly shows that the investment has a clear return both on the operating cost of the home and the equity value of a home.

In a green energy home, the saving are much greater than just the increased investment value of the home. Let’s take an example of a house that before green energy investments had an average operating cost of $400/month for its utility bills. Now through green systems like solar PV, Hot Water and Geothermal it is able to reduce the cost by 75% leaving the homeowner with a $100/monthly bill. That is a $300 reduction in the operating costs and money straight into the pocket of the homeowner. However, the question is, what someone would pay to acquire that reduced payment steam of a zero-energy home. If we look a standard mortgage over 25 Year period, a reduction of $300 per month payment would mean that a purchaser would have to invest/pay another $52,700 to reduce the mortgage cost by $300 based on a 4.79% interest rate.

So, to look at this another way a Zero Energy Home that reduces the energy cost by $300 per month or $3,600 annually would be worth an additional $52,700 in resale value. Not to mention over the 25-year mortgage period the home owner has saved $90,000 and increase the value by $52,700 for a net gain of $142,700 on their solar investment. Now try to find any other investment with that kind of return!

Similar studies have also been applied to geothermal systems. It has be suggested that the value of a geothermal system is $20 for every dollar it can reduce energy costs annually. This is great news for geothermal owners who are seeing hire asking prices for their home upon resale.

If you combine the two study’s showing a return on the investment and a return on the cash flow savings, investing in solar can be a huge payback to the pocketbook. Just knowing that if you decide to sell your house, not only will you get more money but you will most likely sell quicker before other similar properties as consumers are showing an increasingly demand for clean energy alternatives.

One thing to note about the increased value in home prices is that they are based on today’s energy costs as well as house values. So, a homeowner that invests in solar today will find even greater returns when the energy costs continue their upward trend. Home values also continue to grow especially in Canada and the US.

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