Search the Site

The "Solar Panel" Effect on Home Sales

Our recent podcast on “conspicuous conservation” looked at the “Prius Effect” — that is, how valuable it is for green-leaning consumers to signal their devotion to the environment by driving an obviously-hybrid Toyota Prius. (BTW, you can also fake it with an “instant hybrid conversion kit.”) The episode was based on an interesting paper by Alison and Steve Sexton called “Conspicuous Conservation: The Prius Effect and Willingness to Pay for Environmental Bona Fides.” It included some talk about solar panels as well, and how some people mount them on the street-facing side of their homes even though the sun shines more strongly on the rear.
Now there’s a new related paper called “Understanding the Solar Home Price Premium: Electricity Generation and ‘Green’ Social Status,” by Samuel Dastrup, Joshua S. Graff Zivin, Dora L. Costa, and Matthew E. Kahn. PDF is here; from the abstract:

This study uses a large sample of homes in the San Diego area and Sacramento, California area to provide some of the first capitalization estimates of the sales value of homes with solar panels relative to comparable homes without solar panels.   Although the residential solar home market continues to grow, there is little direct evidence on the market capitalization effect.  Using both hedonics and a repeat sales index approach we find that solar panels are capitalized at roughly a 3.5% premium.  This premium is larger in communities with a greater share of college graduates and of registered Prius hybrid vehicles.

One point that’s made in the podcast is that some very green communities (the Bay Area in Calif., e.g.), where solar panels are in high demand, aren’t very good locales for solar energy — whereas a less-green community like Bakersfield is super-sunny. We have a proposed solar-panel-swapping solution to that…


Comments