Do solar panels increase home value?

Key Takeaways

• Fannie Mae/Berkeley research homes with homeowner-owned solar panels sell for nearly 2% more than non-solar homes.

• Whether solar panels increase your home value depends on their age and desirability in your location.

• Solar panels at the end of their life or in a lease agreement can be seen as a liability.

Installing solar on your home is a big upgrade, so it should boost your home’s value, right? Well, the truth it complicated. Whether a solar panel system adds value depends on how its appraised, along with the condition of the system and what buyers are looking for. We’ll break down the added value of home solar in this article.

Do solar panels increase home value?

As a baseline, solar panels can increase home value by about 1.6%, but you may see higher increases of up to 6.8% in some markets.

What solar home value studies say

Here are three studies on home value before and after solar panels we’ll cover:

The main study we’re citing for this article is Solar at High Noon: Solar Home Premiums in a Rapidly Maturing Market by Jaclene Begley (Fannie Mae) and Ben Hoen (Lawrence Berkeley National Laboratory). 

This study was completed in 2021 and included data for 554,947 real estate transactions from 2011 through 2020. While it’s a few years old, it’s still the most complete study in the field. The conclusion? Homeowner-owned solar panels increase the value of a home by 1.6% on average. 

Zillow also released a study in 2019 that showed solar panels increased value by 4.1%, and SolarReviews performed another study based on Zillow’s parameters in 2024 that showed an increase of 6.8%. These studies used fewer years of data and transactions, but they show that solar homes in some markets can fetch high premiums.

It’s completely possible for your home to get a valuation almost 7% higher because of solar panels. However, you should also be prepared to only recoup a percent or two in home value since this is the reality for many homeowners.

How much do solar panels add to home value?

Considering the different studies above, homeowner-owned solar panels could add anywhere from $11,200 to $47,600 to the price of a $700,000 home. Considering the average 5 kW system costs $17,823 before incentives and tax credits, that’s not a bad return on your investment.

You'll see the highest returns in regions with elevated energy costs and environmentally conscious buyers. Cities like Seattle and Baltimore and areas in California show the best value increases typically.

What affects how solar panels change your home’s value

Your home value and solar panel system have a complex relationship. It’s not as simple as looking at your installation receipt and adding a few thousand to your home price.

Appraisal

Real estate appraisers don’t always correctly identify solar panel systems in the home description. The Fannie May/Berkeley study above found appraisers didn’t flag about 25% of homes that had solar panels. They also don’t often note whether the system is homeowner-owned or leased on the appraisal report. This can affect the ultimate sale price of your home once you’re negotiating with a buyer.

System age

Solar panels don't last forever, and new systems have better value than older ones. Say you install a brand-new system today. If you sell your house a few years from now, you can expect buyers to be excited about the condition of the panels. But if you wait 20 years to sell your home, you might have a harder time finding a buyer who wants to deal with an old solar panel system. Even with regular maintenance, solar panels lose efficiency over time.

System size

Solar panel systems that cover 100% or even a bit more of the energy of a home are likely to entice buyers. Having a bit of extra energy coverage means future homeowners can add an EV charger or home addition without needing to upgrade the system.

Roof condition

Before installing solar, it’s a good idea to have a roofing company check out your roof. You don’t want to put panels on an older roof that will need to be replaced in the coming years. This would negate any value increase from solar since an appraiser will let buyers know about the state of your roof.

Solar panels can help you sell your home faster

Whether or not you get to add 7% to your price, solar panels can definitely speed up the real estate transaction. Many buyers are looking for homes that already have systems installed. Selling your home faster can save you money by limiting carrying costs if you have another property. You also get to move out of your home quicker and start the next chapter, whether it’s a new job or a change of scenery.

Ownership vs. leasing solar: Does it affect home value?

Deciding between owning and leasing solar panels greatly impacts your home's future value and potential return on investment.

According to the Berkeley/Fannie May study cited above, homeowner-owned solar systems can add about 1.25% to 2% to your home’s value. However, non-owned systems have little effect or even slightly decrease your home’s valuation. Leasing arrangements complicate future home sales and add less value overall, so think twice before entering a solar lease.

Here are some of the complications to think about:

• Lease transfer requirements during property sale

• Potential buyout costs for terminating the lease

• Lower overall property value increase compared to owned systems

• Local market conditions and buyer preferences

• Tax incentives aren’t applicable to leased systems

How to market a home with solar panels

To maximize your property's appeal, focus on key selling points that resonate with modern buyers in your area. Whether you’re working with a real estate agent or doing a for-sale-by-owner, consider the following:

• Providing specific data on your system's size, output, and installation date.

• Quantify monthly electricity savings with actual billing statements to demonstrate long-term financial benefits.

• Emphasize environmental impact through reduced carbon footprint calculations.

• Showcase aesthetic integration of all-black panels or solar tiles and any smart home features.

When listing your solar-equipped home, include system specifications, warranty information, and performance data. Being transparent helps buyers understand the tangible benefits while justifying the premium pricing.

Final thoughts: Should you invest in solar panels on a house?

To recap, solar panels may increase your home value by 1.6% or even more depending on the market. However, your main reason to install solar panels should be to enjoy using energy from the sun and reducing your electricity bills. It’s an added benefit that solar panels can increase your home’s value, but don’t install them just for that purpose. If you’re looking to get solar just to boost home value, solar panels might not be for you.

FAQ about solar panels and home value

Below are a few frequently asked questions about how solar panels can increase home value:

How much do solar panels increase home value?

Different studies show solar panels can increase a home’s value by anywhere from 1.6% to 6.8%. The value you get from solar panels depends on the system’s age, efficiency, and size, along with market factors.

Is it harder to sell a house with solar panels?

Selling your home with solar panels isn't harder when you own the panels or can pay off the financing with your home sale. However, the situation gets tricky if you lease the panels, since you need to buy out the lease or hope a buyer would want to take it on.

Do solar panels really save you money?

Yes, solar panels save you money. We found the average 5 kW system saves owners $16,367 over 20 years after paying for itself (not including tax credits or incentives).

What is the biggest drawback of solar panels?

The hefty upfront cost of about $10,000-$25,000 hits your wallet hardest when installing solar panels. Other downsides of solar panels include challenges with roof compatibility and weather-dependent performance to weigh against long-term energy savings.