Will solar increase the property value of our home? According to one study by Zillow, it does. But what’s this based on, really? Homes in California, Texas or the whole country? The data for the graph (see below) was collected between March 1st, 2018 to February 28, 2019 nation wide. So basically, pre-covid times. A couple new factors have occurred that may alter that percentage in the Texas area. In this article, we will cover a few factors that can impact property value for a Texas home with solar panels.
Another popular website attempted to replicate the Zillow study for 2024 and found solar homes sold for 6.8% more than similar non-solar homes. However, Solar Reviews was limited in their data due to some states not disclosing selling price and date of sale, including Texas. Furthermore, the study was done by the website named “Solar Reviews” that has a financial interest in showing favorable numbers. Then again, so do we. That’s why for this article, we will not attempt to replicate a nationwide study but instead provide a list of key factors that impacted solar and property values in Texas since the 2019 study.
The desire to know a home grew significantly throughout 2020 to 2023 thanks in part to the need for isolation as well as low interest rates. The price for homes sold at record breaking highs and for the most part hasn’t declined much even with the increase in interest rates. As more people sought to cash in on the rising demand for homes, more buyers were exposed to the option of solar-powered homes. The COVID factor likely increased the value because of the unpredictability of the times. The idea of a solar-powered home most likely would have given a sense of comfort and security.
From 2022 to 2023, Texas’ population grew more than any other state (nearly half a million people). Although growth in purchases has declined since July 2023, the American dream remains vivid. Most of it came from people migrating both abroad and from other states, especially California. For those that don’t know, all new homes built in California are required to have solar panels (or another green energy source) on their property, therefore many of these new migrants are familiar with solar and already know they want it on their home. This would increase the value of a home with solar.
Many Texans lost power during the winter freeze of 2021 which revealed the need for greater independence from the grid in case of another natural disaster. Based on current predictions of weather forecasts, there will likely be more natural disasters in the future due to extreme weather conditions. Having helped hundreds of Texas homeowners since the freeze, we commonly heard the memories of being left without power and families needing to huddle together for warmth. The event made home batteries more lucrative and because batteries need an energy source to function, solar panels make the most sense for anyone wanting power during a crisis. This would increase the value of a home with solar.
Time Magazine issues multiple articles defaming nation-wide solar companies that left homeowners in debt for solar panel systems that don’t work. Ultimately this sort of behavior is bad for everyone, including other solar companies. Texas (and the rest of the country) are still experiencing the side effects of another national solar company declaring bankruptcy. Some people believe solar is a scam, and that it’s impossible to make a return on an investment. Although many have had their system produce better than expected results, skeptics aren’t wrong to be wary. There is little regulation and oversight for solar companies, making it easier for nefarious actors to charge an exuberant amount or go out of business only to start a new one doing the same thing. Without similar regulations as the ones in the real estate industry, property owners are forced to do the research themselves on how solar works and which solar company is actually trustworthy; something that is hard to do when several different solar programs exist, utility companies offer different incentives, and all solar companies want their business. The system should be functional for over 30 years, but there will be bumps along the way. If a system cannot prove to be operational and was installed by a company no longer in business, the solar panels would not increase the property value .
There’s also the concern a chosen reputable solar company does great work, but then goes out of business a few years later. If a customer’s system stops working they’re left searching for a new company to troubleshoot it. Which is, surprisingly, not that easy. Solar companies rarely want to touch a system they didn’t install. By doing so, they put themselves at risk of accusations that they caused panel degradation, which could be the case or not. This makes choosing the right installer critical to maximizing the benefits of solar power.
Based on these factors, solar panels are likely to still increase property value. However, real estate agents and buyers need to be educated on how a solar panel system should look and work before making the purchase. It would be wise for a proactive real estate agent to determine who installed the system and their operational status before negotiating with the seller on price. If the company is no longer in business, this could be a huge negotiation chip for the buyer, especially if the seller cannot confirm the system is producing.
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