Follow up on the Solar discussion from an Installer

[Spartacus]

DMZ and Spartacus,

The following are links to all properties in Scripps Highland in San Diego that are listed, pending or sold through Sandicor MLS over the time of 2000 through today for you to view the detail data.

For all properties with solar panels (35 sales):

http://tempo5.sandicor.com/Pub/EmailView.asp?r=822623455&s=SND&t=SND

For all properties with out solar panels (303 combination of active listing, pending and sales):

http://tempo5.sandicor.com/Pub/EmailView.asp?r=410438118&s=SND&t=SND

Since you both are statistical whiz-bangs, tell us what you conclude the value added for solar panels.

It is obvious to all here that I don't know my butt from a hot rock when it comes to appraising so my opinion on these listing would most likely be irrelevant. (If you have all this info in an excel spreadsheet I might be able to do something with it).

My biggest observation right up front is .... half of the homes built were built with solar and over the last 10 years ..... only 35 of them have been put up for sale as compared to 303 of the non solar home up for sale? That tells me there is something about a solar home people don't want to part with.

 

[Spartacus]

The major problem continues to be that there are not enough solar systems out there. The last I heard, 90% of the CA population could not afford the average priced home. Now throw some solar panels on the roof and the price goes even higher. Two houses one is $200,000 the other with solar is $220,000. If the buyer can only swing 200K, what will he have to give up (in size, amenities, etc.) to get solar. Will the buyer want solar over size, or view, or a pool, etc.?
.

Does this buyer understand that by financing the extra 20k they will have an extra $100 plus in their pocket each month for the other things they want and need in life? Compared to monthly expenses the homeowner would come out ahead by buying the 220k house and paying no electricity than they would by buying the 200k house and paying for electricity.

Example (Not real numbers)

house without solar at 200k

House payment $1500 per month
Electricity payment $218 per month

Total $1718 per month


House with solar at $220

House Payment $1614 Per month
Electricity payment $0 Per month

Total $1614 per month


and as electricity prices go up, the homeowner would save even more. In this economy does a homeowner want a pool or more money in their pocket?

 

[Spartacus]

If an appraisal comes in $20k short because an appraiser cannot or will not find support for the resale value in the market a borrower is not SOL. If a borrower really thinks they're that much smarter than all the other buyers and sellers in the market who have been closing deals then all they have to do is pony up the difference in cash.

As an appraiser I never kill deals. I only write the obituaries.

Thanks George, Yes, that's true, they could but then they would loose out on many benefits as well. By financing it they are adding to their tax write off and by financing it they are able to see the savings from day one. Instead of having to "wait" to get their money back through savings. Electricity is paid to the electric company on a monthly basis without solar, and it should be with solar as well.

But your point is still relevant.

Love the quote.

 

[Spartacus]

I found this excerpt here:

http://www.solar-energy-connection.com/solar-panels/solar-panels-what-country-uses-the-most-29/

The Winner
But what country uses the most solar panels?
Gloomy-skied Germany seems to hold the record at the time this article was written. Cloudier by far than many other countries, Germany has nevertheless become the global leader in electricity generated through solar panels. It produces about half of the world’s total solar electricity.
Germany adopted a law in 2000 that requires the country’s immense power companies to subsidize new solar companies by buying electricity from them at marked-up rates. In 2002, Germans installed more than 10,000 solar panel systems. In 2003, they installed some 20,000 solar panel systems, almost twice the number installed the previous year. This growth continued in 2004. In 2005, Germany was the fastest growing major solar panel market in the world.
As of May 2007, 15 of the 20 biggest solar panel plants in the world are in Germany, even though Germany has only half as many sunny days as countries such as Portugal. The German government decided to phase out all of its nuclear power plants by 2020.

I'd be curious to hear how appraisers in Germany are valuing this feature.

That would be interesting to know. Nice article, thanks. Europe is way ahead of us in solar so while we are still dependent on other countries for our oil, they are freeing themselves of it and becoming independent.

 

[Randolph Kinney]

It is obvious to all here that I don't know my butt from a hot rock when it comes to appraising so my opinion on these listing would most likely be irrelevant. (If you have all this info in an excel spreadsheet I might be able to do something with it).

My biggest observation right up front is .... half of the homes built were built with solar and over the last 10 years ..... only 35 of them have been put up for sale as compared to 303 of the non solar home up for sale? That tells me there is something about a solar home people don't want to part with.

Spartacus, I will help you out a little.

In 2003, there were 41 homes in the Scripps Highland neighborhood that sold with out solar panels according to Sandicor MLS. The median sold price was $825,000 for homes with no solar panels. There were 6 homes sold with solar panels. The median price sold was $785,000 for homes with solar panels.

However, the median price per square foot GLA for no solar was $253 while the median price per square foot GLA for solar was $274.

The price per square foot GLA for solar sold for 8.3% more than no solar. However, when one is talking prices of around $800,000, the claim of selling for 17% more having solar and attributing that to the solar panels is just bogus on its face.

Do you believe that having solar panels produce an increase in market value of $136,000?

 

[Spartacus]

Spartacus...I appreciate your dedication....I recently did an appraisal in a retirement community in Lincoln CA....the subject property was beautiful and the borrower supposedly had spent 23k after tax credits on the solar system...I found 2 sales and 1 listing in the community, spoke to agents involved in all the transactions..the conclusion was the solar home was considered more desired / marketable although it did not translate to a single dime of increased price.......I didn't conclude quicker either although more desired should make that home sell quicker in theory when compared to its competition...the long and short of it was sure, a buyer if given the solar option would take it, but not willing to pay additional....so knowing that, I / we as appraisers could conclude it provides incentives to purchase but, it doesn't conclude a guaranteed adjustment.....the best comment I read on this thread was that people aren't sure they will live in their home long enough to make it pencil out... especially in a retirement community....the home may out live the owner.

Just so I understand ... you said, "it didn't translate to a single dime of increased price" Does that mean your appraisal didn't come out higher or that it didn't in reality sell for more.

I don't know if you all know this or not .... I'm guessing you do .....

But you are to voice of God when it comes to buying and selling a home.

Both the buyer and seller sit on pins and needles waiting for the appraisal to come back. It does not matter what the buyer wants or not if they appraisal does not come back favorably they have to go find another. The appraisal plays a HUGE part in a buyers decision to buy a specific house.

 

[Spartacus]

To an appraiser virtually any "fact" is disputable until they analyze and extract the data for themselves. One of the reasons is that many have had exposure to statistics and thus have a good idea what numbers can mean.

As for starting an argument ... well, let's just say that yelling "Fish for sale" could get a reaction. :icon_mrgreen:

(reference to the movie "Meet John Doe")

:icon_mrgreen:

 

[Spartacus]

Personally, I can't wait to install my very own Mr. Fusion reactor on my DeLorean.

:icon_mrgreen:

 

[Elliott]

Spartacus,
For a moment, put yourself in the buyer's shoes. So I'm looking at two houses on
the market, one is 2600 SF and and they are asking $350,000 and it has 4 bedrooms,
2-1/2 baths, granite countertops, hardwood floors and is close to schools and
shopping.

The other house I'm thinking of buying has 2600 SF, with 4 bedrooms, 2-1/2 baths,
granite countertops, hardwood floors, close to schools and shopping, and it has
solar panels on the roof, and the agent says it will save me $100 per month on
my electric bill. They are asking $360,000.

In the long run, my monthly payments with the energy savings will be the same,
but my mortgage will also be $10,000 higher, which requires I have a higher income
to qualify for the mortgage. Also, what if the system requires repair? The other
house doesn't have the potential expense of maintenance because it doesn't have
solar panels.

So I as a buyer have a decision to make. I'm rational, and if I'm going with the
more expensive house with solar panels, I'll probably decide to discount the feature
because it is an additional expense. So I'll probably only be willing to pay $4,000
or $5,000 for the feature, even though it might have cost $20,000. Also, I have
to figure that my taxes, insurance, closing costs will all be higher because I'm
buying the more expensive house (there was a time when the classical advice
was buy the bigger, more expensive house, but not in the current real estate
market because no one knows what is going to happen next to real estate).

I'm just being a rational consumer, making a reasonable decision on how to handle
a 'upgrade' feature that may have some cost savings, but not necessarily improves
my consumption of housing amenities, that comes with additional initial expense with
potential expenses in the future.

When times are tough, people buy a Ford Focus with the hope of 30 mpg. They can't
justify buying the BMW that costs twice as much which gets the same mileage or
the Prius that gets 50 mpg, but costs twice as much. At the end of the day, they'll
probably buy the Dodge Charger because it looks good, fun to drive, even though
it gets 20 mpg.

 

[Spartacus]

George .. apparently those solar panels currently constructed in China are among the poorest performing there are. They will have to increase quality a great deal ... and frankly among the "solar set" there seems to be some preference for American constructed panels at the current time .. their social conscience, as best I can tell, also extends to buying American.

Thanks again for the post and good luck with your DeLorean ... :new_smile-l:

This is absolutely true. China puts out a ton of panels and they are for a cheap price, but the quality and efficiency of the panels are far below the panels made in USA. The panels here will put out more electricity and in the long run save the homeowner more money .... but to some it's only about the sticker price.