Let’s face it, you may not be selling your house anytime soon. With mortgage rates hovering near a two-decade high and a lack of available housing inventory nationwide, the real estate market has dramatically slowed from the frenzied pace of all-cash bidding wars we saw during the pandemic. But there’s an upside to a sluggish housing market – especially when it comes to going solar.
When the housing market is stagnant, it's a smart time to invest in meaningful home improvements like solar panels. They'll increase the value of your property, save you money off the bat, and improve your quality of life. If you’re someone who purchased or refinanced your home during the pandemic, you likely managed to secure yourself a historically low mortgage rate, which means you’re probably not moving anytime soon.
That makes right now the perfect time to go solar. The longer you plan to stay in your home, the more direct financial benefits you’ll realize from installing a solar energy system. You’ll gain immediate savings on your electric bill, if not eliminate your bill completely, and you'll likely be able to sell your property at a higher price down the line.
While it’s true that adding solar panels to your roof is an expensive investment, costing an average of $20,000 to $30,000 before tax incentives and rebates, both the short and long-term financial benefits make it a sound economic decision. The average EnergySage customer breaks even on their solar investment in eight or nine years. “Think about solar like any other home improvement project you’d complete before listing your home,” said Spencer Fields, director of insights for EnergySage. “It adds more value to your home, but if you’re going to put the time and money into investing in it, why not also get to enjoy the benefits of solar while you still live in your house instead of just transferring them to the new owners?”
The more expensive your current electric bill, the greater your savings from going solar will be. The average U.S. electric bill is around $130 a month, which means savings of almost $1,600 in your first solar year. If you live in a state with a high cost of electricity like California, where the average monthly electric bill is almost $250, that means you’ll save about $3,000 on electricity costs the first year you go solar.
Even if you’re planning to sell your home as early as spring next year, it still makes sense to install solar panels in high-demand areas like Boston or New York where buyers will pay a premium. Homes with solar panels sell for 4% more on average than comparable homes without them, according to Zillow. That translates into almost $10,000 more on average going straight into your pocket. In a popular area like New York, homes with solar sell for 5.4% more on average, earning you as much as $24,000 more when you sell.
“It's a great time to be preparing for the spring and increasing your home's value because the demand is there,” said Adam Shulman, licensed realtor with Remax Destiny in Cambridge, Mass. “This spring is going to be competitive in terms of the number of buyers who are not just looking, but want to pull the trigger and make offers. Those offers are going to be the strongest for homes like ones that are equipped with solar panels.”
The average homebuyer tends to skew younger, and younger buyers are more eco-conscious and value environmentally friendly home improvements more than previous generations, said Shulman. Although wanting to save money is the most popular reason EnergySage customers go solar, 36% of EnergySage customers say the primary reason they want to go solar is to help the environment.
“The home sellers who will see the greatest bang for their buck are the people who make those kinds of improvements now,” said Shulman. “They're going to get the highest sale price come spring.”
That doesn’t mean there’s not a significant financial benefit to going solar for older homeowners or buyers, however. In fact, going solar when you’re retired or close to retirement is one of the smartest economic decisions you can make.
When you’re on a fixed-income, financial experts advise eliminating as many bills as possible because getting rid of expenses is critical to making your nest egg last. If you retire and you operate on a fixed-income, your electric bill will continue to eat away at a higher portion of your annual budget because electricity rates increase on average about 2.5% every year.
“It’s not just interest rates overall that are increasing – electricity prices are too, meaning you’re paying more every year for the same amount of electricity,” said Fields. “While inflation looks like it’s cooling off, electricity prices will almost certainly continue to grow. In California, for instance, the state’s own analysis suggests that rates will increase by 10% per year (or more) over the next five years. Going solar is a quick way to reduce or eliminate what you owe your utility every month, or to lock in what you pay per month for electricity for the next 25 years.”
Going solar means you can avoid electricity rate increases regardless of how you pay for it. If you can't afford to pay for the system outright you can take out a solar loan. You'll have monthly payments to make, but there's a good chance your loan payment will be less than your electric bill was. It will also be a fixed monthly payment that remains consistent over the lifetime of your loan, so it won’t continue to rise year after year like your electric bill will. There are many bills affected by inflation and interest rates you may not be able to get rid of, but thanks to solar, your electric bill is one that you can have control over.
Older Americans are purchasing houses to live out their golden years more than ever before: last year, Baby Boomers overtook Millennials as the most active generation of homebuyers, making up 39% of market share. That means there’s a lot of about-to-retire or recently-retired Americans who can reap the fixed cost and no cost benefits associated with installing solar panels. If you’re closing in on retirement, whether you plan to age in place in your current home, or you’re looking to downsize and buy a new home, adding solar panels to your roof will help you manage living on a fixed budget much more efficiently and stretch your retirement savings by locking in your costs.
Regardless of your age, if you’re stuck in your home for a few years until the housing market starts to pick up again, installing a solar energy system allows you to reduce or completely cut out your ever-increasing electricity costs. It boosts the value of your home when you do sell – especially because the two main demographics of homebuyers are Millennials, who value purchasing environmentally friendly homes, and Baby Boomers, who greatly benefit from the fixed costs of solar. Plus, you’re helping the environment at the same time, no matter how long you live in your current home or who you sell it to next.