Solar Energy…want to learn more about the most popular type of alternative energy in the Philadelphia Metro housing market?
This post is all about the property value impact of solar energy that every homeowner should know about.
Alternative energy is becoming more popular, especially solar energy, and if you’re anything like me, you are probably wondering how much value it adds to your property.
You are going to learn about the most popular type of alternative energy in Philadelphia and surrounding suburbs and when/if this amenity adds value to your home.
After you learn about these important facts to know about solar energy you are going to be well-informed when deciding to add this amenity to your home OR sell a home that already has solar energy.
This post is all about the property value impact of solar energy that every homeowner should know about.
Solar Energy in the Philadelphia Metro Market
You could ask 100 appraisers how much value the installation of solar energy adds to a property and you would probably get 100 different answers.
This is because every market is different and every property is different.
For example, in California, there are laws that mandate certain new construction homes to have a solar pv system.
In Pennsylvania we do not have any laws that mandate the inclusion of solar power in new construction homes.
However, in our state there are laws that require suppliers of alternative energy resources to include a specific percentage of electricity in the generation that they sell to Pennsylvania customers known as the AEPS Act.
The alternative energy resource in our area that is the most common is solar energy.
Solar Panels: Leased or Owned?
The solar energy in our market is typically generated via solar panels attached to the roof.
But, it’s rare in our market to find a homeowner that actually owns their solar panels.
Most homeowners install the solar panels through a lease contract or a non-mortgage financing agreement, which means the panels are not part of real property.
When buying or refinancing a home with solar energy certain rules will typically apply.
For instance, per Fannie Mae: Leased or non-mortgage financed solar panels are not permitted to be included in the appraised value.
Which means, if you do not own the solar panels, the appraiser cannot include them in the estimate of value of your home.
However, solar panels, whether leased or owned, do appear to make the property more marketable though… which means, it will attract more buyers…. which is a very good thing.
When we do meet a homeowner that actually owns their solar panels it can be very difficult to determine the impact on market value of the property…. because this occurrance is rare in our market area.
But, I have noticed it is becoming increasingly more popular for the homeowner to buy the solar panels.
The number of homes advertised with solar energy sold via the multiple listings in the Philadelphia Metro Area:
Year 2019 = 71 homes
Year 2020 = 89 homes
Year 2021 = 93 homes
Year 2022 = 106 homes
According to local solar panel expert, Steven Schmidt of Power Marketing Group : “More people are purchasing their solar panels now because the Federal Income Tax Credit allows them to write off up to 30% of the cost. Plus, they may also qualify for state incentives. Homeowners are happy because they can save money on day one with solar energy.”
When I began asking Steve about the costs involved I quickly realized the costs varied greatly according to many factors. Steve was knowledgeable and very friendly so if you have questions regarding the costs of solar energy for your home I would send your question here.
RELATED POST: Exactly How to Find the Right Real Estate Appraiser
The Value of Passive Solar Walls
We recently had an opportunity to appraise a home in Philadelphia with passive solar walls and were surprised at how much value this amenity added!
This particular rowhome had Trombe walls which were reported to be included during new construction of the house in the early 1980’s.
There is an entire block of these homes built with the Trombe walls and, although this feature is not plentiful in our market, we were able to determine a supported amount of added value since there was a history of sales on the same block.
Side Note: because Bev and I are complete number nerds who love to appraise unique homes this was really exciting for us!
Once we were able to confirm the information that we found in the market, it was determined that a rowhome in this market area with the Trombe walls was worth $25,000 more than a similar rowhome in the same market area. For reference: the sale price of this home was in the upper $200k price range.
Now, this does not mean that if you have a $500k home that installing solar energy will add $50k in value to your home.
It does not work that way.
The impact could be more or it could be less or it could be the same.
Every home is different and every market area is different.
Plus, these solar walls were 40 years old!
What’s my Solar Energy Worth?
I realize there are many websites that will tell you that solar energy adds X to the value of your home.
But, I have not found a magical reliable source on the internet yet.
Because there are just too many variables involved.
Therefore, realistically the only way to really know how much value this amenity will add to your property is to get a home appraisal.
So, bottom line is, if you are going to lease the solar panels then there is no need for an appraisal because we wouldn’t include it in the value of your home. Just focus on your cost of energy savings.
On the other hand, if you are thinking about purchasing solar panels it would be a good idea to know how much this amenity would impact the value of your home, in addition to your cost of energy savings.
Furthermore, it would definitely be a smart idea to get a home appraisal if you are thinking about listing your house for sale and you already own the solar panels.
