The sun is shining... but is solar?
In previous blogs we've addressed from the cost approach to value why solar doesn't often add value (ie. Cost to install + shortened life of roof (solar panels need to be replaced every 20 years, vs a roof every 25-30) =/= power savings). Today we summarize our analysis of a neighborhood where solar is very common: Fulton Village.
From the aerial shot here its easy to see that there are a lot of homes in the Fulton Village area that have solar panels installed. This makes it a prime opportunity to analyze if these provide contributory value. It is a basic economic principle that people only pay for what they expect. This is why builders don't put elaborate patios on 1000sf ranch homes, there is no profit in it.
So what does the data say? Sadly not much. There are too few sales in this micro market to perform regression analysis. Descriptive statistical analysis showed a correlation between solar and price, however, there are a number of other factors that were also positive correlations in this regard (newer builds, higher appealing designs) that made this inconclusive. Finally a paired sales analysis was attempted. Out of the limited sales available, only two paired sales could be performed. These showed a possible correlation between price and solar, however, it appears to be weak and more in line with the cost analysis above. The most conclusive statement that could be made at this time is that the "possible" contributory value of solar would be under $5,000 for homes where the solar installation is less than 5 years of age. This does not bode well for the contributory value of solar at higher ages, as it would be reasonable that this would in fact invert into a liability to the property.