Increase the Value of Your Home: A Home Improvement with a High Rate of Return

A home owner only hopes to recover the money spent on improvements if they sell their home.  A few home improvements, such as updating kitchens or master bathrooms, might be lucky and get close to a dollar in for dollar back value.   Some home improvements, such as the addition of a pool, appear to add very little value to the home and may only be a “nice” feature.  It would be great to get 100% of your home improvement costs back – but for most, it is unlikely.

We are home owners in the 21st century and a home expense we can’t defer is our energy consumption cost.  However,  we can be strategic in how to face our month to month energy bills.  Tackling home energy challenges or fixing inefficiencies is a very different home improvement.  A renovated kitchen is a pleasure to cook in and attractive to view.  New attic or subfloor insulation offers something very different.  The pleasure comes each month in reduced energy bills, not in how lovely the attic  foam looks. The Appraisal Journal , October 1998, published an article written by Rick Nevin (who specializes in financial, statistical, and economic analyses) and Gregory Watson (a statistical analyst with ICF Consulting.)  Their article, titled “Evidence of Rational Market Valuations for Home Energy Efficiency”,  was a study that  investigated the investment of home energy efficiency improvements.  The authors’ conclusion was that the selling price of homes increased by $20.73 for every $1 decrease in annual fuel bills. Or, the home value increases about $20,000 for every $1000 saved in annual energy costs.  That’s a substantial win and money well spent.

In April 2011, the Lawrence Berkley National Laboratory published, “An Analysis of the Effects of Residential Photovoltaic Energy Systems on Home Sales Prices in California”.  This study evaluated homes with solar electric systems  to see if they sold for higher prices versus homes without solar electric systems.  The results of this study found strong evidence that homes with solar electric systems sold for a premium over homes without the solar power systems.

The Lawrence Berkley National Laboratory study is not alone in its conclusion.  Several other studies that evaluated the attributes of solar electric systems compared to increased home value, cost recovery and increased speed of home sale, also showed similar outcomes. These studies demonstrate that investing in a solar electric system is quite different from typical home improvements.  With solar electric systems, dollar for dollar cost recovery is a reality.



Filed under Consumer Warranty, Green Technology, Solar Energy, Solar Power, Sustainable Energy, Uncategorized

4 responses to “Increase the Value of Your Home: A Home Improvement with a High Rate of Return

  1. Just wanted to comment and say nice site, great to read from people with knowledge of this.

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  3. As a professional interior designer I must say I found this to be an excellent and very useful article. Looking forward to reading more.

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