Is Solar Power worth all the hype?
In the past year, you may have had increased calls and visits from solar salespeople. With the federal tax credit expiring at the end of 2021, you might be considering such a purchase. We're all for green energy at Great Scott Realty Group, but we want to make sure our clients and friends have the facts about the value of solar systems in our region. 'Facts' provided by solar salespeople can range from misinformed to straight-up lies, so we consulted with local Realtors® and Appraisers to present you with the best information available.
Factors that affect the value of adding solar power to your home:
1) Where do you live?
In some regions, sellers may get 3% to 9% more for solar-powered homes. In our area, market values are not affected. In fact, solar panels can make some homes a little harder to sell. Nearly half of our buyers ask us to avoid solar-powered homes for cosmetic reasons or because they believe it will require more maintenance or cause roof leaks.
2) Do you own the system?
Leased systems can sometimes hurt both the marketability and the market value of homes in our area. Leased systems are fine if your only goal is to reduce your carbon footprint and decrease your monthly energy costs.
3) How much money will you save?
This can vary depending on the consistency of your energy needs and the variable rates of your energy plan. Do you use less electricity in the spring and fall? Are your rates higher in the summer? How much will your solar system cost (include finance charges if you’re not paying cash)? These factors should all be considered when calculating your potential savings. Don't rely solely on the calculations provided by your salesperson!
True or False? 'Facts' our clients have heard from solar salespeople:
You can get a federal income tax credit. - TRUE
The IRS is indeed offering a tax credit for installing a solar system. The tax credit was 30% for systems installed in 2019, 26% for systems installed in 2020, and 22% for systems installed in 2021. Although Congress may renew the initiative for future years, currently it is set to expire at the end of 2021. Speak with your tax professional for details or read more here.
The system will pay for itself in a short time. - FALSE
Because the only real value of solar power in this area is the environmental impact and the energy savings, you can expect it to take many years to recover the cost of your solar system. The amount of time can vary from 7 to 20 years or more, depending on the cost of your system and how much it saves you per year in energy costs.
Your home value will increase by $10,000, $20,000, $40,000. - FALSE
The market in our region does not currently support an increase in home value for solar systems. It really doesn't matter what I think solar is worth OR what the solar company thinks it is worth. All that really matters is what homebuyers have paid for homes equipped with solar power. At this time that amount is no higher than the same home without solar power.
Solar is clean energy and great for the environment. - MOSTLY TRUE
Solar energy is widely believed to be a clean source of power, however, the production of solar panels is not. On the positive side, after 20 years of use you'll probably produce four times the amount of energy used to produce your panels - so that's still pretty awesome for planet earth! As U.S. factories find ways to go green in the future, the positive impact of solar energy will be even greater!
Solar energy has a lot of value for its impact on the environment and possibly your energy costs, but it does not currently impact the market value of most Texas homes. We expect this will change in the years to come, but heading into 2021 you should not expect any changes to your property value because of a solar system installation. There’s always an off-chance that a buyer could come along that is willing to pay 3% or 4% more for a solar home and does not need a mortgage approval because they have so much cash, but the odds are not in your favor! If you need help determining the current market value of your home, please reach out to us!