Understanding the Solar Home Price Premium: Electricity Generation and “Green” Social Status

PWP-CCPR-2010-038

Abstract

This study uses a large sample of homes in the San Diego area to provide some of the first capitalization estimates of the resale value of homes with solar panels as compared to comparable homes without solar panels. While the residential solar home market continues to grow, there is surprisingly little direct evidence on the market capitalization effect. We find evidence using both hedonics and a repeat sales index approach that solar panels are capitalized at roughly a 3% premium. This premium is larger in communities with more registered Prius hybrid vehicles and in communities featuring a larger share of college graduates.