Green Homes, Green Returns: How Sustainable Upgrades Boost Property Values

As we enter the Spring season, this is a time when home buying and selling activity traditionally ramps up in most areas of the country. There are a number of factors that have traditionally influenced housing activity and property values. These typically include the state of the economy, the level of interest rates and the supply of homes for sale in your area.

Another variable that has come into play in recent years is the area of green homes and sustainability. We are increasingly seeing the value of many of these types of upgrades and improvements offering increased home values to homeowners.

Solar Panels

Solar panels are not cheap and can cost upwards of $20,000 to install. This needs to be balanced against the average homeowner who spends $100 or more each month for electricity. According to one estimate, the value of the average home will increase by $20 for every $1 in reductions to the home's annual utility bills.

For homeowners who plan to stay in their homes, they can likely recoup the cost of the solar panels over time when it comes time to sell. In the meantime, they will reap the benefits of lower utility costs while living in the home. In addition, they may be eligible for the federal solar tax credit as well as a credit offered by some states.

Modern Appliances

Upgrading to modern appliances can add value to your home in the eyes of potential buyers. Older appliances use more energy, more water and are generally more expensive to operate.

In many cases, a home with upgraded, modern appliances can influence whether or not a buyer decides on your home or another home with a more modern kitchen and appliances if they feel the two homes are close in their minds.

Many homeowners like fancy, stainless steel appliances. The fanciness, combined with the energy efficiency can, in some cases, be the item that swayed a potential buyer in favor of your home versus another option they may be considering.

New Windows

Installing new windows can make your home look more attractive to potential buyers and to passersby in general. Today's better windows provide a better view to the outside; they provide natural light inside of the home; and they provide better insulation than most previous window versions.

Today's double or triple-paned windows hold up better against bad weather which seems to be more and more prevalent in some areas of the country. They let in sunlight, which, along with improved insulation, can help reduce overall energy costs. By some estimates, energy efficient windows can save up to $700 annually in energy costs and can offer a return on investment as high as 70% due to the resulting increase in the home's value they can provide.

Home Insulation

The installation of improved, up-to-date home insulation can also improve the value of your home. Better insulation will generally cost the homeowner between $3,000 and $10,000. Good insulation can increase a home's value by up to 6% according to some estimates.

The higher the R-value of the insulation, the better job it can do regulating the inside temperature and reducing noise from the outside. Good insulation can reduce the heating costs in the winter and cooling costs in the summer.

Low-Cost Upgrades

There are some low-cost sustainable upgrades that homeowners can consider.

• Installing energy-efficient lighting will generally cost $250 or less and can provide potential annual savings of $200 on energy costs.
• A smart thermostat will generally cost $250 or less and can provide annual energy savings of around $100.
• Installing an EV charger will generally cost $2,500 or less. The potential savings can run around $1,000 annually, including an available tax credit. Additionally, the EV charger will appeal to eco conscious home buyers who might own an EV themselves.

The Payoff

There are two main payoffs in green, sustainability-oriented home upgrades. The first is for you as the homeowner while you are living in the home. You will realize energy savings and can benefit from any increase in the home's value provided by these upgrades.

The second is when you go to sell the home. A recent survey showed that about one-third of the realtors surveyed were promoting sustainable home features as a selling point for their listings where applicable, believing this to be a plus in the sales process. A survey also showed that the realtors surveyed saw increases ranging from 1% to 10% in the value of offers versus comparable homes without sustainable improvements.

Looking to sell your home or to get a handle on where your home fits within your overall net worth? Reach out to your Wedbush financial advisor. They can help and will refer you to experts they work with as needed.

Disclosure

Securities and Investment Advisory services offered through Wedbush Securities, Inc. Member NYSE / FINRA / SIPC.

Wedbush Securities does not provide tax or legal advice. Please consult your tax or legal advisor.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable - we cannot assure the accuracy or completeness of these materials. The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. The information presented here is not specific to any individual's personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. The information in these materials may change at any time and without notice.

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