Do solar panels increase the value of your home?
The big question is by how much (pic via bluegreenhouse).
One good way to calculate this is to determine how much the system impacts the affordability of the home:
- Determine what the savings and income of the system will be over a year.
- Look up the prevailing fixed interest rate for new mortgages.
- Use the savings/income of the system to back out an implied mortgage.
It sounds a bit more complicated than it is.
Here’s an example.
Let’s say you have a system that produces $2,000 a year in savings/income. If the prevailing fixed mortgage rate is 5% (or 0.05), then the increased value of the home is:
That would be $2,000 divided by 0.05 ===> $40,000
That’s not bad. Not bad at all. It’s one of the few improvements to a home that actually increases its value (kitchens on down, don’t).
However, this is not at all unusual with real resilience.
Real resilience makes it possible to prosper in good times and bad. It isn’t only valuable in a disaster.
PS: What would a system that produces $2,000 a year in saving/income cost? Not as much as you think. In fact, payoffs can be under 2 years, depending on where you live and how you install it. I just finished a solar report that is going to blow the lid off of this entire industry.
PPS: My motto: say more with less.