Here’s How “Green” Home Upgrades Affect Your Home’s Resale Value, According to Experts

published Nov 15, 2022
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suburban house with solar panels on roof
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If you’re considering “green” home improvements like solar panels, energy-efficient appliances, or a heat pump, now might be the time to install them.

“As utility costs are rising, demand from homebuyers for homes with energy efficient and smart features, as well as renewable energy, is naturally rising as well,” says Kari Klaus, founder of Realty Sage.

Buyers love to see that homes are efficient. For instance, homes with double-pane windows, electric vehicle charging stations, and drought-resistant landscaping sell six to nine days faster than homes without those features, according to research from Zillow.

Energy efficiency-rated homes sell for 2.7 percent more than unrated homes, according to research by Freddie Mac. So being able to brag about efficiency in your home listing should translate to a higher sale price.

Here’s a look at what environmentally friendly home upgrades might do for your home’s value.

Solar Panels

A Zillow study found that homes with solar panels sold for 4.1 percent more than comparable homes. Solar panels might be particularly enticing in regions prone to power outages. Plus, who wouldn’t want their new home to come with the promise of no electricity bill?

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Heat Pumps

Homeowners with heat pumps can expect a 4.3 to 7.1 percent increase in their home’s value. Heat pumps are especially attractive to middle class households living in mild climates, according to a 2020 study in Nature Energy.

Energy-Efficient Appliances

“Quality appliances, especially energy-efficient ones, are the best kitchen upgrade that significantly increases home value,” says Stephen Keighery, CEO and founder of Home Buyer Louisiana.

For about $2,000 each, you can buy energy-efficient dishwashers and ovens that don’t sacrifice quality. The additional value to the come comes in the form of expected energy savings. According to Freddie Mac, the typical household spends $2,200 per year on energy bills. 

“Choose energy-efficient appliances so that one of the selling points of the property you’ll sell is a lower utility bill,” Keighery says.

Windows

More than 80 percent of buyers said they wanted energy-efficient windows in their new house. According to a Zillow study, homeowners can expect to recoup about a 70 percent return on their window investment when they sell.

Credit: Kathryn Roach/Shutterstock.com

Drought-Tolerant Landscaping

Xeriscaping is using plants native to a region, which reduces need for expensive maintenance and water to help the plants thrive. About 30 percent of residential water is used outside, according to the Environmental Protection Agency. Reducing the need can save water. According to the Zillow study, drought-tolerant landscaping does help sell homes nine days quicker, but it doesn’t necessarily increase the sale price.

Electric Vehicle Charging

By 2030, more than half of cars sold are predicted to be electric, so expect homebuyers to look for convenient home chargers. Chargers cost about $2,000 to install. The Zillow study shows that they don’t noticeably change the home’s value today, but homes with EV chargers do sell nine and a half days quicker than comparable homes without.

Other Upgrades to Consider

Taking the time to make your home more energy efficient could pay off. Buyers also like smart features like automated lighting, appliances, thermostats, and irrigation systems that monitor and water only when needed.

“Smart and automated features are also very desirable, and can help to improve a home’s efficiency by reducing electricity usage,” Klaus says. “Smart homes also make a home more comfortable by regulating the temperatures more evenly and maintenance is easy.”

The Up-Front Costs

The Residential Clean Energy Credit entitles taxpayers who have clean energy equipment like solar panels or a heat pump installed to a 30 percent tax credit. Additionally, your state or municipality might have additional incentives like a property tax exemption on the value of the clean energy upgrade. Some utility companies will even buy any excess energy your solar panels generate.

But the up-front price of new appliances, solar panels, heat pumps, and windows can still be steep. The average cost of a residential solar electric system before incentives is between $15,000 and $30,000. A geothermal heat pump can cost $10,000, but if your home needs new vents installed to support the system, the project could jump over $30,000.

Of course, “green” updates have value far beyond the savings on heating and cooling bills and the home value. Lower consumption and cleaner energy benefits all of us.