If you’re wondering whether investing in an energy-efficient upgrade increases your home’s value, wonder no more: a new study confirms it does! Not only that, but it also shows that a home with an energy renovation sells at a higher price than a home without one.
Housing economist Laurie Goodman and co-author Jun Zhu announced their findings in November 2015 after completing their study, PACE Loans – Does Sale Value Reflect Improvements?
As you may know, HERO is a PACE (Property Assessed Clean Energy) program, and the largest one in California. PACE legislation enables residential and commercial property owners to finance energy-efficient, renewable energy, or water conservation upgrades through property tax assessments.
While the company that administers our program, Renovate America, financed the study, Goodman and Zhu maintained complete control of the report, including the methodology, results, and conclusions.
Goodman and Zhu compared the resale value of 773 PACE homes resold between 2012 and 2015 with that of non-PACE homes, using three different methodologies.
So what did they find? They discovered:
- PACE homes sold at $199 to $8,882 more than non-PACE homes.
- PACE homes purchased from foreclosure sold at almost $7,000 more than foreclosed non-PACE homes did.
- PACE homes recouped 100% of the investment of the home renovation project, while homes with kitchen and bath remodels recouped only about 60% of the investment.
London and Thomas Malmstadt found that their HERO HVAC upgrade helped them sell their home. “Just having the brand new unit was huge,” says London, “not only in terms of helping us sell the house but also to ensure we passed all the necessary inspections.”
The study is significant in two ways, Goodman states in an article on the HousingWire blog. “It is the first study to look at the data from actual homes that have deployed PACE, then subsequently sold,” she says. Secondly, she specifies, “it is the first study to determine not just whether energy renovations added value to a home, but whether the value of the home energy renovation exceeds or falls short of its financing cost.”
Another interesting observation from the study is that most homeowners who take advantage of PACE funding do so for needed maintenance or repairs. But the fact is, you don’t need to wait until your roof is falling apart or your air conditioning unit breaks. You can make upgrades before something malfunctions to lower your energy costs and be more comfortable in your home.
Regardless of your motivation, if you are considering an energy-efficient or water conservation upgrade but have been holding off because you might move in a few years, this study brings good news – you don’t have to wait to be more comfortable in your home and begin lowering your utility bills.
Get a head start on your next energy-efficient house design project. Find a contractor in your area.