Does Solar Increase Home Value? What the Data Actually Shows

One of the most common questions about going solar is whether it increases your home's value. The answer is definitively yes for owned systems - but the amount varies, and leased systems can actually complicate home sales. Here's what the research shows.

The Data on Solar and Home Value

The most comprehensive study, from the Lawrence Berkeley National Laboratory (analyzing 22,000+ home sales), found that solar panels increase home value by approximately $4 per watt of installed capacity. For a typical 8 kW system, that's a $32,000 increase in home value. Other studies show similar results: Zillow found that homes with solar sell for 4.1% more than comparable homes without solar. The National Bureau of Economic Research found premiums of 3-4% for solar-equipped homes. The Appraisal Journal found premiums of $20,000-$30,000 for average residential systems.

The premium tends to be higher in markets with high electricity rates (California, Northeast), strong solar adoption (buyers understand the value), and good net metering policies. It tends to be lower in markets with cheap electricity, low solar awareness, and weak incentives.

Owned vs. Leased Systems

Owned systems (cash purchase or loan): Full value increase. Buyers view an owned solar system as a home feature (like a renovated kitchen) that reduces their electricity costs immediately. An owned system with no remaining loan balance is the cleanest scenario for a home sale. If a loan balance remains, it's typically paid off at closing from the sale proceeds.

Leased systems: Complicated. With a lease, the buyer must either assume the lease (which requires credit approval and willingness to accept the remaining terms), or the seller must buy out the lease before selling (often $10,000-$20,000+). Many buyers are reluctant to assume a 15-20 year lease commitment, and some lenders won't approve mortgages on homes with solar leases. Leased systems can actually slow down home sales and reduce buyer interest.

How Appraisers Value Solar

Home appraisers use several methods to value solar systems. The income approach calculates the present value of future electricity savings. The cost approach uses the depreciated replacement cost of the system. The market comparison approach looks at sale prices of comparable homes with and without solar. Not all appraisers are trained to value solar properly. If you're selling a solar-equipped home, request an appraiser with solar valuation experience and provide documentation including system size, age, production history, warranty information, and recent electricity bills showing savings.

Maximizing Resale Value

To maximize your solar system's contribution to home value, own the system outright or pay off any solar loan before listing. Keep detailed production records and maintenance history. Ensure the system monitoring app and accounts can be transferred to the buyer. Provide the buyer with warranty documentation and installer contact information. Include solar savings in your home listing description with specific dollar amounts. Work with a real estate agent who understands solar valuation in your market.

The Bottom Line

For owned systems, solar is one of the best home improvements for ROI. You save money on electricity while you live there AND recover most or all of the investment when you sell. The combination of utility savings plus increased home value means solar often pays for itself 1.5-2 times over during the ownership period. For leased systems, the value proposition is murkier. The savings are real but more modest, and the lease transfer process can be a friction point during home sales.