Home prices are falling. Again.  That’s not good news for those watching their home’s equity shrink or even disappear.

So what projects are the real appraisal boosters?  Granite countertops?  New floors? Both nice to brag about - but, as a general rule their costs outweigh the added value to the home.  Remodeling Magazine’s 2009-2010 Cost vs. Value Report shows that homeowners are getting back only 64% of the average project’s cost. In short, you lose money.

In growing numbers, smart homeowners are greening their homes as a way to increase equity . . . especially in older homes that often have little or even zero insulation. Energy efficiency projects are value-adding investments that will continue to give returns for the life of the home.

Insulation, geothermal and solar may not be as sexy as a new kitchen. But, they will make your home more comfortable, more healthy and will lower the cost to run your home. In return, your house becomes easier to sell in a competitive buyer’s market and commands a higher price even in a lousy economy.

A 4kW solar array can add over $25,000 to home's value, but cost only $10,000 after rebates and incentives. Photo by Matt Grocoff

A 4kW solar can add $22,000 to home value

Bright Spot for Solar

A recent study by the U.S. Department of Energy’s Lawrence Berkeley National Laboratory shows that solar electric increases home value by an average of $5.50 per installed watt.

By example, here’s the math for our 8.1kW solar array on our net zero historic home in Ann Arbor:

8,100 watts x $5.50 = $44,550 increased home value.
Cost of our system after credits & incentives = $19,500

Did you catch that? Granted - I suck at math, but I’m pretty sure that’s nearly a 250% return on the project costs.

$1k/yr energy savings = $20k added home value

$1k/yr energy savings = $20k added home value

When Energy Bills Go Down, Values Go Up

For those who aren’t ready to go solar you can relax. According the Appraisal Journal, simple and low-cost energy efficiency measures can pay back big. For every $1 reduction in your annual energy bills you should see a $20 increase in your appraisal value.

Again, here’s the stupid math: energy efficiency measures that lower your energy bills by $83 per month ($1,000 per year) can increase your home value by $20,000.

And here’s the icing on the cake - to encourage energy efficiency many cities and states will not increase your property taxes based on added value for renewable energy or energy efficiency upgrades. If your real value goes from $200,000 to $240,000, you will still be taxed only on the $200,000.

Green Means Go: Efficient Homes Sell Faster & For More

According to the Daily Journal of Commerce, “deeper green” homes in Seattle, sold for 23.5 percent more per square foot in 10 percent less time.

Another study be the Earth Advantage Institute showed that green-certified homes in Portland, OR sold for 12% more.

As lean times cause homebuyers in a tight market pay greater attention to the full cost of home ownership, cost-effective energy efficiency improvements are proving to be very smart investments.

Have you made any energy efficient investments in your home or looked for them when buying a home? If so, share your experience with me on Facebook

Photos by Matthew Grocoff: The Solar Specialist installing Matt Grocoff’s 8.1kW solar array; Meadowlark Energy spraying foam insulation in the attic of Matt Grocoff’s net-zero energy home.
Matt Grocoff, Esq. LEED is host of Greenovation.TV, a contributor to The Environment Report on Public Radio, the green renovation expert for Old House Web, a net zero consultant and a sought after lecturer. His home is America’s oldest net-zero energy home and was called “Sustainable Perfection” by The Atlantic, honored as one of USA Today’s “Seven Best Green Homes of 2010″ and Preservation Project of the Year.  He has been featured in hundreds of publications and news shows including Washington Post, Detroit Free Press, Preservation Magazine, Solar Today, Fox Business News, Huffington Post and more.  Join him on Twitter and Facebook