Solar panels now boost home values by up to $79,000, new study reveals

Think solar panels only add a modest bump to your home's value? Think again. New research analyzing 5,000 California home sales shows that solar installations are driving property value increases of 5% to 10%—more than double previous estimates. For the average $790,000 California home, that's an eye-popping $39,500 to $79,000 boost in resale value.

This isn't just about monthly electric bill savings anymore. The data shows solar panels have become one of the most valuable home improvements you can make, delivering returns that exceed traditional renovations while providing decades of energy independence.

But homeowners have just a few months to capture both this home value increase and the 30% federal tax credit, which ends after December 31, 2025. With the average solar panel system costing about $29,000 before incentives, that means missing out on about $9,000 in savings. And after the tax credit disappears, existing solar installations could become even more valuable to homebuyers who want to avoid paying full price for new systems.

For years, the solar industry relied on a 2019 Zillow study showing solar panels added about 4.1% to home values. But recent research conducted by SolarInsure provides a newer picture. It analyzed 5,000 California home sales between 2020 and 2023, comparing 2,350 homes with owned solar systems against 860 comparable homes without solar and 1,790 homes with third-party-owned solar.

The findings are striking: Homes with owned solar panels sold for 5% to 10% more than similar homes without solar, a significant jump from Zillow's 2019 study.

System age played a smaller role than expected. Solar installations over five years old still earned a 5% to 6% premium, while newer systems saw 7% to 9% increases. This suggests buyers value the long-term savings potential more than the newest technology.

To ensure accurate comparisons, researchers matched each solar home with three non-solar properties of similar size, age, and amenities in the same area. They also used the Case-Shiller Home Price Index to account for market fluctuations over the study period.

According to EnergySage data, the average 12-kilowatt system costs about $29,000 before incentives. With the 30% federal tax credit, that drops to roughly $20,000. So, if your home's value increases by just 5% due to solar, you could recover your entire investment through increased property value alone—before counting decades of electricity savings.

After the tax credit ends, homeowners will pay more to install solar themselves, making existing installations even more valuable to homebuyers who want to avoid that premium.

Several factors drive solar's impressive impact on home values:

• Guaranteed cost savings: Buyers are purchasing decades of reduced electricity bills. With average household electricity costs skyrocketing, solar represents protection against future rate increases.

• Energy independence: As power outages become more frequent and utility rates climb, solar paired with storage offers stability and resilience.

• Quality investment signal: Solar installation demonstrates that homeowners have made thoughtful, long-term improvements to the property.

• Immediate benefits without upfront costs: New homeowners inherit the solar system's benefits without the initial investment or installation disruption.

• Growing market awareness: As solar becomes mainstream, more buyers understand and appreciate its value proposition.

The new research confirms that ownership makes a big difference when it comes to going solar. Homes with third-party-owned solar—leased or power purchase agreement (PPA) systems—showed no value increase compared to homes without solar.

This distinction becomes even more significant given the current federal policy. While the residential tax credit ends December 31, 2025, the commercial tax credit continues for systems that begin construction before July 2026 or are placed in service before 2028. This means companies offering leases and PPAs can still claim tax credits for systems, but homeowners won't see those savings reflected in property values.

From a buyer's perspective, leased systems can present complications. New homeowners inherit monthly payments and contract obligations without gaining ownership of the system. Complex lease transfer processes can actually complicate sales and deter some buyers.

In contrast, owned systems represent a clear asset that reduces ongoing expenses while increasing property value. This is why many solar experts recommend purchasing rather than leasing your system—especially right now, with federal tax credits available to directly offset costs for owned systems only.

Compared to other popular renovations, solar delivers superior returns. National Association of Realtors data shows complete kitchen remodels recover about 60% of their cost at resale, while bathroom renovations typically see 50% cost recovery.

Solar panels can offer 100% cost recovery through property value increases alone, plus ongoing electricity savings. Unlike renovations that primarily enhance aesthetics or comfort, solar provides measurable, quantifiable financial benefits.

The installation process also favors solar. While kitchen or bathroom renovations can disrupt your home for months, solar installation typically takes just one to two days and is minimally disruptive to daily life.

Even without federal incentives, solar remains a smart investment for most homeowners. Equipment costs have dropped significantly—EnergySage Intel’s latest Marketplace Report shows prices hit record lows of $2.50 per watt in late 2024, down from over $3.80 per watt in 2014. 

Rising electricity rates further improve solar's value. Household electricity costs are expected to increase substantially as utilities expand capacity to meet growing demand.

With the 30% tax credit ending after December 31, 2025, and new research confirming higher-than-expected property value increases, the investment case for solar has never been stronger.

But this research proves something equally important: Solar's value extends far beyond temporary federal incentives. The 5% to 10% property value increase reflects the market's recognition of solar as a valuable, long-term asset. It’s one of the few home improvements that can pay for itself through property value increases alone and then deliver decades of additional savings.

When homebuyers purchase homes with solar, they gain energy savings and grid independence—benefits that remain compelling regardless of federal policy. The tax credit ending isn't the end of rooftop solar; it's just the end of an opportunity to maximize your investment in a technology that buyers increasingly value and demand.