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The Selling Price of Sacramento Homes with Solar Panels Increases by 3% to 7%

By : Next Level Energy | June 27, 2019

An analysis done by an online real estate website named Zillow showed the amount that homes with solar systems sold for as against those without solar systems. In the United States alone, it was found out that homes that had solar power had about 4.1% more sales than homes that didn’t. This summed up to over 9,250 of most homes.   

In the result of the analysis, Zillow made sure to include the fact that homes with solar power had varying premiums depending on the state of the market. The metro area in New York city which had homes with solar panels sold for 5.4% more than others. This is a median premium of $24,000. Whereas in Riverside California, homes sold for only 2.7% more. A median premium of $9,930. 

In the article were two California markets and the increases in their sale prices.  

  • San Francisco: 5.4% increase – $41, 650 more 
  • Los Angeles: 3.6% increase – $24,295 

The above information was only based on a single study by Zillow, which wasn’t detailed. A lot of factors affect the price at which home buyers are willing to buy homes with solar panels. They are: 

  • The primary market rate at which homes are sold in a particular community 
  • How good the solar power system of the homes is 
  • The general effectiveness of the solar panels in a particular area 
  • The degree to which solar power is valued in a community 
  • Does the homebuyer see the importance and use of the solar power system while pricing the home? 

A Lawrence Berkeley National Laboratory found that the amount of energy produced in a home determines the home price premiums rather than the home’s price. How long the system had been in use was also considered. 

Lawrence Berkley National Laboratory did an analysis of 43 pairs of homes sold in 6 states. The states were Maryland, Pennsylvania, California, North Carolina, Florida, and Oregon. After carefully matching the homes together and making comparisons, there was a striking difference between them. While one home had a solar power system, the other didn’t. 

There was found to be a median average sale price increase with homes that had solar panels. This was 2.91%. Homes in California located in the San Diego metro area were found to be selling for a little above average. This was 2.92% 

What To Consider Before Paying For A House With Solar?  

Despite all of the above results, there are things to keep in mind and consider when buying homes.  One of them is the age of the solar power systems varies. While the Solar panels on Californian homes were as old as 11 years, those in Florida were all below the ages of 4 years. The pricing for homes varies depending on how effective and useful the solar power systems are. The ages of solar power systems in Pennsylvania were not up to 2 ½ years. So the price of a home with a 15-year old system should not be the same as that of a 3-year-old system because solar panels depreciate in lifespan and efficiency over time.   

It was further explained in the study that the value of a home should not be the determining factor in anticipating the price of solar power. Homes with lower values might possess a high-quality system while homes with a higher value might have low-quality systems.  Having put this into consideration, it would seem unreasonable to pay more for a house that has a smaller system. 

Lawrence Berkeley clearly stated that: 

“Price per watt is the appropriate metric for valuing solar power systems, not the premium as a percentage of the home sale price, which is an inconsistent metric that widely varies by the PV system sizes and by the prices of homes.” 

In the United States, on average, the price for solar power homes is $3,145 per Kilowatt. While in California, the average is between $4,260 per Kilowatt according to their study. 

Solar Powered Houses In Sacramento  

While Californian homes were studied by the Zillow and Lawrence Berkeley, Sacramento houses were not in their research work and therefore no information was forthcoming from their end. However, in 2011, some economists in the National Bureau of Economic Research went ahead and studied the dynamics of premium price in Sacramento. The number of homes sales that took place in the state between January 2003 and November 2010, about 90,000 were studied all including the homes that were using solar power system at the time. This information was recorded in a paper titled “Understanding the Solar Home Price Premium”.  

While Lawrence Berkeley recorded the amount of energy the solar power systems produced, they did not have that. They only made a comparison between the prices of homes that had solar power systems and those that didn’t. From findings, the homes with solar panels had a higher percentage increase in their selling price than homes that do not have it. it was about a 4% increase.  Further findings made: 

Some streets are termed solar streets; this is because they had solar-powered homes lined up against each other. Such homes sold for 3% more than the usual price.   

Homes which powered by solar energy but not on solar streets sold for about 7% more than the actual price. 

Meanwhile, homes in areas like San Diego which has college graduates as homeowners and the owners had hybrid vehicles, the prices of the homes were more than the average prices. 

Other Factors To Consider 

Although a solar power system would normally affect the price of a home, there are other factors to consider. The value of the solar system of home differs based on the buyer and the seller’s perspectives. While observing some homes in Sacramento, some observations made by Ryan Lundquist. These observations were: 

  • Recouping Investment: When homeowners are about to sell their homes, they often have the intent of getting back the amount they paid for the solar power system. But in most cases, the price at which it was bought doesn’t compare with what the price is now. In most cases, the old ones were usually more expensive.  
  • Age: The older the solar system, the less the effectiveness and its productivity. A newer system would naturally have a longer life span than an older one. 
  • Actual CostIf there had been a reduction during the initial transaction of the home, this would affect the decision of the homeowner when reselling. 
  • Duration of Usage: A home might come with the advantage of having a solar system that would save the buyer the cost of paying power bills for the next years. Such a buyer would, of course, be expected to pay for that service. But peradventure the buyer only intends to stay in the home for a 5-year period? 

There are situations where the owner of a home might give the solar system on a lease. This means that the solar system would be a financial burden on the buyer of the home, meanwhile, the solar system would be considered a feature and included in the cost price of buying the home. The best bet for home sellers would be to pay off their lease before they consider selling the homes.  

These and many more factors should be carefully put into consideration when selling a home. But even in all these, the truth still remains that a home with a solar system is a home with more worth.  

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