The Power of the Sun
You’ve thought about adding a Solar Power System to your home but something stops you from actually doing it. Well this was us anyway - but we finally made the decision to do it and I wanted to share the story as it may help you or someone you know make the decision to move forward.
But first the market update…
We always see a bit of a slow down over the summer months and this year was no exception. There were 20 total sales between May 16th and August 12. Of those, 19 were single family homes and one was a 2-unit building. That’s down about 20% from last quarter. The average sale price for single family homes was $1,606,700. That is an average of $960 per square foot - many buyers look at price per square foot. Just as a comparison, the average price per square foot for the entire city during the same period was $865. The overbidding continues with homes selling 16% over the list price on average. During this period, the median list price here in Glen Park was $1,296.500 with the median sale price being $1,532,500. The average days on market was shorter than it has been all year with homes staying on the market just 17 days on average.
Inventory remains at very low levels all over the city. This continues to keep prices escalating. The question on most people’s mind is “will it slow down?” Of course it will. The Real Estate market is cyclical in 5-7 year cycles on average. As one pundit put it, we are one year closer to the end of a cycle. The main thing that I think will cool off the market is an increase in interest rates. At their recent meeting the Fed indicated that they will raise rates before the end of the year. I’m sure it will not be by much but it will be a signal. I don’t think that will do anything about our inventory problem but it might cool off the rapid increase in sale prices. Truthfully no one knows what will happen so it’s just a wait and see.
We had been contemplating getting solar panels installed for the past few years. Even had a couple different companies come out and take a look and give us estimates. It just seemed like a big undertaking and expensive.
I recently had a relative contact me and say he was working with a solar company and doing installations in San Francisco. I told him we were interested and he asked me to send him a few PGE bills. He immediately told me he could save us money and do the whole job without it costing us upfront money. I had heard about these offers before and it was some sort of leasing option which didn’t make a lot of sense. Well, it turns out it is a new program which allowed us to finance it super reasonably and get the system installed and operational within 2 months. It was really a minimum of paperwork and I think if you have the right person to take you through the process and make you feel comfortable with it all it makes it that much easier.
One of the amazing things about adding solar systems to your home is the tax credits that are available. First off there is a San Francisco city credit. This is actually a cash rebate - yes, you get a check sent to you. It worked out to be about 5% of the cost of the system. Then, there is the federal tax credit. Now, they make it sound like you get this money and it lowers the cost of the system. Which is and isn’t true. Yes, you do get the tax credit and it’s pretty significant. It worked out to be about 25% of the cost of the system. The trick is to take that tax credit and put it back into the cost of the system. So once you get your tax return and your refund you should pay down the loan on the system. You also need to make sure that you have enough taxable income so that you actually get the tax credit. You may want to talk to your CPA about it all first. I also looked at the difference in the interest rate between taking out a home equity loan and what the solar company was offering. It was negligible and was much easier to go with the solar company offering. So between the city credit and the federal income tax credit it brought down the cost of the system by about 30%.
Now they try and tell you that your electricity bill from PGE will be nothing or close to nothing if you have the same usage as you did before the installation of the solar panels. That may be true and I’ll let you know in the next issue of the paper. But the reality is that you are still paying for the electricity - it’s just that you are not paying PGE and it will definitely save you money over the long haul - if my calculations are correct. The average PGE rate increase is about 6% per year. By adding solar you are locking in the cost of your electricity. In the short term it will not seem like you are saving money but just shifting it from one place to another.
One of my other main concerns was maintenance of the system. They seem to have that covered too with a 25 year maintenance plan that guarantees performance of the system and covers most repairs. It seems very comprehensive and took away my concern.
What about the added value to your home? Now you’re talking! Recent surveys have shown that the current home buyers place a very high value on homes that have eco friendly technology - solar being one of the biggest. The surveys also show that buyers are willing to pay more for a home that has a solar power system installed compared with one that does not. So if you think that you might sell in the next few years and it won’t be worth it to install a solar system, you should rethink that. It will be worth it and it looks like you would likely get every penny of your investment back from the sale. In fact, since you get the tax credit for installing the system, it may even make sense to do the installation as little as a year before you think about selling your home.
In any case, the main reason that you should think about adding solar power to your home is to decrease your carbon footprint, our reliance on fossil fuels and do something great for our planet. Solar panels can decrease your household’s carbon footprint by an average of 35,180 pounds of carbon dioxide per year. You’d have to plant 88 trees every year to offset that amount of carbon dioxide! Whatever other benefits come from it are a gift.