We know solar panels are increasingly being added to properties to cut down on energy costs and reduce emissions from other heating sources, but does that translate into value for homeowners?

A reader of The McEnearney Blog recently asked us a question about the resale value for homes with solar panels. Did it help, hurt or have no impact at all?

It wasn’t as easy a question to answer as we thought. 

When we last addressed the topic of solar panels in 2020, it was a topic garnering a lot of discussion but not a lot of clarity about what impact it had in the housing market. And while there has been plenty of homeowner education about other popular green tech in properties – such as energy-efficient appliances, sustainable construction material, improved insulation – the insight on solar panels remains clouded as to what that means in actual dollars for home value.

Each year the National Association of Realtors® releases a report on sustainability issues facing the real estate industry. The 2023 REALTORS® and Sustainability Report – Residential was released in May and showed that a majority (63%) of agents and brokers said promoting green technology in listings is “very” or “somewhat” important. 

When it comes specifically to solar’s value to a home, 34% (a 2-point drop from 2022) said properties with solar panels increased the perceived property value, compared to 17% who said it decreased value and 29% that said they had no effect (19% said they didn’t know the impact on value). Also, 38% of agents and brokers said that days on market was neither longer nor shorter for properties with solar panels and 37% believed the difference in time on the market due to the solar panels was unclear. 

The green home features that Realtors® believed were most important to clients include windows, doors and siding (39%); proximity to frequently visited places (37%); a comfortable living space (37%); and a home’s utility bills and operating costs (25%). Solar panels don’t make the cut of top features cited.

However, of the top five (out of 12) sustainability issues facing their markets, four were questions about solar panels with most agents and brokers citing the need to understand how solar panels impact a transaction (35%), understanding lending options for energy upgrades or solar installations (33%) valuation of solar panels on homes (32%) and the lack of MLS data about home performance and/or solar installations (25%). 

In short, there are still a lot of questions about how solar panels are impacting home values and for a feature that can cost anywhere from $16,000-$23,000 to install. So, we asked some of our McEnearney Associates to tell us about their experience with solar panels in the Virginia, Maryland and DC markets.

Christine Robinson works in Virginia and said consumer education will go a long way to having homeowners experiment with solar technology. When her clients finally found a home that fit their needs, it came with solar panels and also with a lien against the property for the solar panels. The buyers didn’t want to assume the loan for the panels so the sellers had to pay it off before closing. And the listing agent wasn’t knowledgeable about how the solar panels worked so it was up to the buyers to educate themselves about the pros & cons.

Several years ago, even Robinson’s client who is a LEED professional with a background in green technology found it difficult to get clarity on how to get solar installed with new construction, and even harder to get information about solar installations in existing homes. 

“I feel strongly that consumers want this type of product but it’s more involved than just dropping panels onto the home,” Robinson adds, running through a list of considerations to keep in mind. 

“What upgrades may I have to consider for my home installation? What are the rules in my state? How will it affect my insurance? What safety precautions regarding energy storage, battery back-up, fire suppression, and local utilities do I have to consider?” 

Sometimes there are issues with solar panels that have nothing to do with energy supply. Jillian Keck Hogan works in all three jurisdictions and said most owners are indifferent as to whether the panels added value to their home, they installed them for personal reasons. However, the results aren’t always positive.

“We just listed a house for sale/rent in DC that had solar panels and during the listing process we discovered that the installation had caused damage to the roof and led to water damage during rain storms,” Hogan shared. “The company was good at coming out for repairs but it still doesn’t feel like it was contributing to the home in a positive way besides the advantage of a low electric bill and a potential positive environmental impact.”

And for some buyers, it’s simply a no-go. Bob Shaffer, an agent who works in DC and Maryland, has had buyer clients who were definitely “turned off” by solar panels (no pun intended!) “My clients do not take a liking to solar panels and avoid homes with them, even if there were other elements in a home that they liked,” he said. 

Some other tips from agents:

– Pay for the upgrades on solar panel roof installation. Just like any home improvement project, there are upsells that will add extra costs but are worth it in the long run. For example, spring for the barriers that will prevent animals from nesting under or damaging solar connections.

– Be sure to check for tax incentives regarding solar or green technology, including those in your local jurisdiction

– Check out this recent segment on WAMU’s 1A radio program that discussed the Inflation Reduction Act and solar energy incentives.

Take a look at our website for all of our listings available throughout Washington, D.C., Maryland, and Virginia.

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This week we would like to share some insight from our partners at Luxury Portfolio.

Women account for 54 percent of luxury homeowners under 35, indicating a significant female presence in the purchasing of luxury real estate.

Per a new study from Luxury Portfolio International, more women are climbing the corporate ladder and achieving financial success on their own, with an equal percentage of men and women in corporate leadership – 48 percent – reporting that they hold executive leadership positions. This is reflected in the changing demographics of luxury homeowners.

“Affluent young women are on trajectory to level the playing field, wielding purchasing power, wealth accumulation, education and corporate positions to make serious real estate decisions earlier in their life,” said Mickey Alam Khan, New York-based president of Luxury Portfolio. “This has major ramifications for brands and retailers targeting homeowners and the luxury property sector.”

A Family Affair

Luxury Portfolio’s research has unveiled some interesting changes and value differences amongst Gen Z and younger millennial luxury consumers.

While men continue to dominate luxury homeownership in older age groups (59 percent of those 35-64), women make up 54 percent of luxury property owners under 35. Forty-eight percent of younger women also report holding executive positions at work.

Family dynamics are changing, as well, with more consumers under 35 remaining single (18 percent) and only 77 percent reporting that they are married. Only 6 percent of the older age groups say they are single and 88 percent are married.

Despite this difference, the younger age group seems to hold higher “family values” than their older counterparts.

While 68 percent of both groups want to ensure generational wealth, 92 percent of those under 35 said they prioritized family financial security versus 87 percent of older homeowners, and 65 percent of those under 35 wanted to provide ongoing financial security for their family versus 56 percent of those 35 and up.

The younger age group also owns more extended-family properties – 52 percent of them do, in fact, compared to just 38 percent of older homeowners.

Priority Shifts

When it comes to sustainability, all age groups take small steps, such as using reusable bags and water bottles.

But younger generations are more willing to take big leaps at home: 74 percent said sustainability is a major factor in their home search criteria and 52 percent will pay more for sustainability features, compared to 62 and 47 percent, respectively, for the older generations.

Most luxury homeowners surveyed (91 percent) are considering making more real estate investments.

Multi-family apartment buildings are a popular choice with all age groups.

Interestingly, younger buyers also invest more in office properties (45 percent vs. 37 percent) and properties in college towns (22 percent vs. nine percent). Those under 35 are also looking for vacation homes at a much higher rate.

Unsurprisingly, younger consumers are much more interested in owning digital or metaverse property – 25 percent do so, while only 19 percent of older consumers do.

Agent Advice

For real estate agents looking to tap into the market of younger homeowners, they should look no further than these consumers’ favorite luxury brands for inspiration.

While both age groups expect name recognition from their brands of choice, younger generations put high importance on originality, exclusivity, reputation and social responsibility.

When it comes to the skills their agent possesses, all age groups reported similar interest in a real estate professional who has access to exclusive services, attention to detail, a digital marketing strategy and knowledge of the local market.

However, younger homeowners showed a significant preference for the brokerage’s brand affiliation (38 percent vs. 28 percent) and their agent’s ability to use high-tech tools (32 percent vs. 19 percent).

Younger consumers also look to social media for property content such as photos and videos of homes and a behind-the-scenes peek into the luxury market.

However, the digital sphere will not replace in-person visits or the importance of agents any time soon. Forty-three percent of those under 35 also said they prefer a real estate professional as a resource.

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