Solar Panels & Home Values: A Research Analysis

Investing in a solar system for your home is getting more popular. Homeowners want to cut down on electricity costs and help the environment.

We are often asked if solar panels make your home worth more? Does it give you a good return on your investment?

We looked at data from 5,000 home sales in California. We wanted to see how solar panels affect home values. Our study found that homes with solar panels sell for 5-10% more than similar homes without them.

This price boost only happens if the homeowner owns the solar panels. This means buying them outright or getting a solar loan.

However, homes with solar panels owned by a third party don’t see any value increase. This includes leases or power purchase agreements. This shows that owning solar panels is key to increasing your home’s value.

Table of Contents

• How does having solar panels impact a home’s value?
• Research Data & Methodology
• Key Findings – Do solar panels add value to your home?
• Value Drivers for Owning Solar
• Limitations of Third-Party-Owned Solar
• Conclusion – Do Solar Panels Add to a Home Value?

How does having solar panels impact a home’s value?

The solar industry in California has grown meaningfully in the last decade. Solar incentives and sunshine have made it appealing for homeowners. Over 1.8 million California homes now have solar panels as of 2024.

Homeowners choose solar for savings and to reduce their carbon footprint. But, they often overlook how solar affects their home’s value. This is a big financial consideration.

Research Data & Methodology

We looked at 5,000 homes sold in California between 2020-2023. We focused on single-family homes in major cities. The data included:

• 2,350 homes with owned solar PV systems
• 1,790 homes with third-party-owned solar (leases/PPAs)
• 860 homes without any solar installed

We matched each solar home with three non-solar homes nearby. These homes were similar in size, age, and amenities. This helped us compare prices fairly.

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We used the Case-Shiller Home Price Index to adjust prices. This accounted for market changes during our study.

Key Findings – Do solar panels add value to your home?

Our research showed that:

Homes with solar panels sold for 5-10% more than similar homes without them.

This means a typical California home of $750,000 could sell for $52,500 more. The premium varied by region but was seen everywhere.

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Homes with leased solar systems didn’t sell for more. Their prices were the same as homes without solar, even though owners saved on bills.

The age of solar systems mattered little if homeowners owned them. Systems over five years old sold for 5-6% more. Newer systems sold for 7-9% more. Buyers value long-term savings over new technology.

Value Drivers for Owning Solar

Several factors make homes with solar panels more valuable:

Cost Savings – Buyers recognize and are willing to pay a premium for the 25+ years of projected utility bill savings solar provides. This adds up to significant amounts over the system’s lifetime.

Desirable Aesthetics – Solar panels make a home look modern and attractive. This appeals to eco-conscious buyers.

High-Quality Build – Installing solar panels shows a home has been improved for the long term.

Financial Incentives – Past solar rebates, tax credits, and net metering policies made solar more attractive.

Increasing Awareness – As more homes go solar, the market values this investment more.

This mix of savings, appeal, and equity leads to higher resale values in California’s housing markets.

Limitations of Third-Party-Owned Solar

None of these value drivers apply to homes with solar panels owned by third-party companies through lease or PPA contracts. Here are a few likely reasons why leased solar does not increase resale values:

No Asset Ownership – Since the homeowner has no equity stake, no tangible asset or infrastructure improvement is reflected in the home’s market value.

Unclear Cost Savings – Solar leases often have complex pricing that can provide limited cost savings and even escalate costs over time, negating this value driver.

Contract Obligations – Transferring leases/PPAs to new owners is a hassle that can scare away some buyers and complicate or devalue transactions.

Inability to Capture Incentives – Third-party owners, not homeowners, capture most of the benefits of solar rebates and tax credits.

This lack of direct financial incentives or accrued ownership interest prevents homeowners from realizing increased property value for hosting a leased solar system compared to not going solar at all.

Conclusion – Do Solar Panels Add to a Home Value?

Our research shows that owning solar panels is the best choice for increasing home value in California. This is compared to leasing or paying for solar power.

Homes with solar panels owned by the homeowner see a 5-10% price increase. This is compared to similar homes without solar panels.

Over 5,000 recent home sales were studied. Only homes with owned solar panels saw their value go up. For California homeowners, solar panels can add $20,000 to $50,000 to their home’s value.

This increase comes from long-term savings on electricity, making the home more attractive, and state incentives. These factors make solar panels a smart investment.

Third-party-owned systems don’t boost home value as much. Homeowners save on electricity but don’t own the panels. This shows why owning solar panels is key for maximizing financial gains in California.

From saving money each month to increasing property value, the data supports owning solar panels.

This approach offers long-term savings and higher property value. It strengthens a homeowner’s financial position now and in the future.