Do Solar Panels Increase Home Value?

Solar panels are becoming a popular choice for homeowners nationwide, but a common question is: does solar increase home value? 

In short, yes—adding solar to your home can increase value. In fact, homes with solar panels typically see up to a 6.9% increase in value. This depends on several factors, including local electricity rates and state policies, the age and efficiency of the system, whether it’s owned or leased, and the demand for sustainable homes in your area.

In this Redfin article, we’ll cover the key factors that affect value, the pros and cons, and the typical installation costs. So whether you’re a homeowner in Washington, DC or Chicago, IL, you can make an informed decision about adding solar to your home.

Do solar panels increase home value?

Yes, solar panels increase home value. Studies show that homes with solar panels not only increase in value, but tend to sell for roughly 6.9% more than comparable homes without solar. That said, because the percentage is based on the home’s value, the actual dollar increase will vary—6.9% of a $500,000 home is about $34,500, while the same percentage on a $900,000 home approaches $62,100.

That said, the return on investment (ROI) from solar panels can vary based on a few key factors:

Which factors impact how much value solar panels add to a home?

• Local electricity rates: If you’re unfamiliar with how solar panels work, you might think it’s all about getting plenty of sun. However, state policies and electricity rates play a bigger role, and how much solar pays off really depends on where you live. Here are the 10 best states for home solar, where you’re most likely to get the best return on your investment.
• System age and efficiency: Newer, more efficient solar systems add more value than older or less efficient panels.
• Ownership: Owned systems generally increase home value because buyers take over a fully paid asset, while leased systems or power purchase agreements (PPAs) may complicate sales or reduce the premium since the new owner inherits the contract.
• Market demand: The popularity of sustainable homes in your area can impact how much value solar panels add. 

>> Read: How Do Solar Panels Work? What Homeowners Need to Know

Should you install solar panels?

Whether solar panels are worth the investment depends on your location, budget, local electricity rates, and state policies. Talking to a professional solar installer is a smart first step to explore your options and find the best fit for your home. 

Solar installation pros and cons:

How much does it cost to install panels? 

So, what do solar panels cost in 2025? Let’s be honest: we all know installing solar panels isn’t cheap, but the good news is that prices have dropped a lot over the years. In fact, the cost to install a residential solar system has dropped by nearly $15,000 over the past two decades. In 2025, the average cost to install a home solar system in the U.S. is around $29,360 before any incentives. 

Luckily, most homeowners can qualify for the federal Residential Clean Energy Credit, which knocks 30% off the cost, bringing the average down to around $20,552. There may also be state and local incentives available, which could help reduce the price even more. 

Here are other factors that can affect how much you’ll actually pay for solar panels:

• System size: Larger systems come with a higher price tag, but they also generate more electricity—which can lead to bigger savings over time.
• Panel quality: More efficient panels usually cost more upfront, but they take up less space and can last longer.
• Battery storage: Adding a battery for backup or energy storage can bump up your total by $10,000 or more.
• How you pay: Paying in cash tends to be the most cost-effective option. Financing with a loan spreads out payments, but it can increase your overall cost by as much as 47% in the long run.

How can you finance solar panels?

Paying with cash is the simplest option and offers the highest long-term savings, since there are no interest charges or loan fees. But if that’s not feasible, there are several ways to finance solar panels, depending on your budget and goals:

• Personal loan: A flexible, unsecured option that’s usually quick to obtain, though it may come with higher interest rates.
• Home equity loan or HELOC: Lets you borrow against your home’s value, often with lower interest rates and potential tax benefits.
• FHA 203(k) loan: Allows you to include the cost of solar installation in your mortgage when buying or refinancing a home.
• Contractor financing: Offered by many solar installers for convenience, but terms may be less competitive—be sure to compare options.

Each financing route has its pros and cons, so choose the one that best fits your financial situation and long-term goals.

Are solar panels the right choice for you? 

While the exact return varies based on location, budget, local electricity rates, and state policies, solar panels do increase home value. Some states offer strong incentives, higher electricity costs, and policies that make installing solar panels a smart investment. In other places, the financial benefits and impact on home value might be less significant.

The best move? Reach out to a local solar expert who can help you understand your options and see if solar is a good fit for you.

FAQs: Does solar increase home value?

Do solar panels increase home value?

Yes, homes with solar panels tend to sell for more, especially in states with strong solar incentives and high electricity rates. However, the actual value added depends on factors like system age, efficiency, and local market demand.

How much value can solar panels add to a home?

On average, homes with solar panels can sell for about 4–7% more than similar homes without them. That could mean tens of thousands of dollars, depending on your location and system size.

Are there places where solar doesn’t add much value?

Yes. In states with low electricity rates, fewer incentives, or less demand for solar homes, the increase in home value may be smaller. It’s always best to check with a local solar installer or real estate agent.

>>Discover: Selling a House with Solar Panels: Will it Make or Break the Sale?

Do solar panels make it harder to sell your house?

No, solar panels generally don’t make it harder to sell your home—in fact, they are a selling point for many buyers. Not only do they require minimal maintenance, but they can also reduce—or even eliminate—monthly utility bills, increase your home’s resale value, and make you eligible for valuable tax credits and rebates. 

Will solar panels save you money?

Solar panels typically pay for themselves in about six to ten years, though the timeline can vary based on factors like location, energy usage, and system size. While installation can be pricey—sometimes reaching $40,000 for larger setups—savings on your electricity bill, along with tax credits and incentives, can significantly reduce the overall cost.

To maximize your return, make sure your system is properly sized for your home and keep your panels well-maintained over time.

Do solar homes sell faster?

Yes! In many cases, solar-equipped homes can sell notably faster than homes without solar. Especially when systems are owned (not leased), solar can signal energy efficiency, lower utility costs, and modern infrastructure—qualities that make a home more desirable and market-ready. In fact, the National Renewable Energy Laboratory reports that homes with solar panels sell 20% faster than comparable homes without them.

Is solar for your home a good investment?

It can be—especially if you plan to stay in your home for a while. While the upfront cost of solar can be steep, the long-term savings on energy bills, tax credits, and improved efficiency often make it worth it. Plus, it may even boost your home’s resale value down the line.

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