The Real Cost of Solar

We all understand the inevitability of utility price increases but it seems that here in the Phoenix Valley, these costs have jumped a surprising amount in recent months. Rising utility rates affect us all including homeowners and renters, as well as business owners which then impacts the cost for… well, everything. I believe that both solar and wind power have enormous potential, but in their current state, on a personal level, they both seem to be somewhat impractical. Solar companies are notoriously unreliable and wind doesn’t make any kind of sense for the average homeowner.

The article below from RIS Media, champions the installation of solar power to lower utility bills and increase the value of your home, and it may be worth considering. However, and this is a big HOWEVER, from experience, I would caution you to carefully calculate the total cost over the life of solar panels, which is estimated at 20 or so years. The figures in the RIS Media article below are misleading and I’ll explain why.

When you are selling a home with solar installed, there is a significant difference between a system that you have purchased and one that is leased.

If you purchase a solar system outright, the home will be easier to sell than if you have leased your system, and may even realize a higher sales price than surrounding homes. But in this case, have you really recovered the cost of your solar system in utility savings? In most cases the answer will be no because you will not have owned the system long enough to recoup your expanse. Similar to installing a swimming pool, it is highly unlikely that you can recover the entire cost of a solar system.

If you are leasing your solar panels it is possible that you have recovered the monthly cost of your system in utility savings. But here’s where the caveat comes in. When you sell a home with a leased solar system installed, your Buyers must qualify to take over that lease. For example, if the price of your home is $400,000 and you have potential home buyers who quality for the downpayment and mortgage amount, they must then also qualify through their lender, to take on the additional monthly payments for the leased solar system. They may have qualified for a $400,000 home but now with the additional expense they are no longer qualified and must move on. What often happens in this case is that Buyers will avoid even looking at a home with solar panels because taking on the additional cost of the lease will reduce the mortgage amount that they are qualified for, and they will need to be looking at homes in a lower price range.

One additional note of caution. I feel like this should not be the case, but uility companies have been adding new fees in some cases, if you are using solar power. It’s worth checking with your utility company before going ahead.

The Real Cost of Utilities

Have you ever stopped to think about how your utility bills are affecting your wallet? According to a report from ATTOM Data Solutions and UtilityScore, utilities – electricity, natural gas, water and sewer – add 25 percent to homeownership costs and 21 percent to renter housing costs on average nationwide.

When you factor in the high cost of many markets across the country, utility costs tip the scales and make these markets unaffordable for many. Monthly utility costs require 7.0 percent of average wages on average across 931 U.S. counties analyzed for the report. When utility costs are included, buying a median-priced home requires more than the 43 percent of income recommended by the Consumer Financial Protection Bureau (CFBP) in 323 of the 931 U.S. counties.

Here’s where solar power comes into play. The report takes a look at solar installation in California as an example. Between 2010 and 2017, home sellers who had a solar system installed between the original purchase of their home and the subsequent sale of their home saw average profits that were more than double those of home sellers without a solar installation.

So when buying or selling your home, be sure to take utilities into consideration. Make sure your budget can handle the costs, and consider making smart investments, like solar, that will reduce utility costs when it comes time to sell.