Owning a rooftop solar system increases the value of a home for sale, and new research can help real estate valuation professionals determine how much of a premium an array adds.
Ben Hoen, a researcher with the U.S. Department of Energy’s Lawrence Berkeley National Laboratory, and Sandra Adomatis, appraiser and owner of Adomatis Appraisal Service in Punta Gorda, Fla., co-authored the report, ” Appraising into the Sun: Six-State Solar Home Paired-Sales Analysis.” The November 2015 study examined a sample of home sales in California, Florida, Maryland, North Carolina, Oregon and Pennsylvania.
Previous studies had used one of two methods to estimate the premium that solar added to a home’s value. The paired-sales appraisal method compared recent sales of two single-family homes, one with photovoltaic systems and one without. Statistical methods analyzed large samples of home sales.
The “Appraising into the Sun” study combined the two methods by using a smaller sample taken from a large database of 4,000 home-sale transactions in those six states. That dataset was from a January 2015 study, “Selling Into the Sun: Price Premium Analysis of a Multi-State Dataset of Solar Homes,” also by Hoen, Adomatis and others. For the more recent research, seven appraisers evaluated 43 pairs of home sales in their local markets. The appraisers compared the sale price of a property with PV to a similar home without PV, and they considered details such as how many days the property was on the market, the gross cost of the PV system on the date of the home sale, and the estimated net cost, which was the gross cost minus incentives and rebates.
The new research found that the appraisal premiums were in agreement with the results of the larger statistical study in factors such as income (using the online PV Value Tool), gross cost and net cost, and hedonic modeling results, which refer to the marginal contribution PV makes, based on a large sample in the statistical study.
Hoen says the recent study is more practical for valuation professionals in helping them assign a value to a home with PV. “The ‘Selling Into the Sun’ study used 4,000 transactions,” Hoen says. “An average appraiser would not be able to do that statistical study.”
The home sales took place between May 2010 and October 2014. The average home sale with PV was for $431,964, and the median was $405,000. The average PV system size was 3.78 kW, and the average age was 2.7 years.
The results varied by location:
In the San Diego metro area, the average premium for a home with PV was $17,127, which was 3.37 percent of the sale price or $4.31/W of the installed PV system.
On the Gulf Coast of Florida, the average premium was $12,760, which was 6.39 percent of the sale price or $3.45/W of the installed PV system.
In Baltimore, the average premium was $13,667, which was 2.52 percent of the sale price or $3.82/W.
In the Portland, Ore., area, the average premium was $10,600, which was 3.25 percent of the sale price or $3.92/W of the installed PV system. Also in Oregon, the average premium in the Bend metro area was $22,775, which was 5.41 percent of the sale price or $5.50/W of the installed PV system.
In North Carolina, in the Raleigh metro area, the average premium was $11,229, which was 3.61 percent of the sale price or $2.68/W of the installed PV system.
In southeastern Pennsylvania, the average premium was $16,377, which was 3.73 percent of the sale price or $3.24/W of the installed PV system.
You can read the full report here.