Beginning February 1, 2020, all newly constructed homes in California will be required to have solar panels. That solar mandate will add an estimated $8,000 – $10,000, or an additional average monthly mortgage payment cost of $40, to the purchase price of that newly constructed home, according to California’s Energy Commission (CEC).

The good news, if any? This solar mandate will save California homeowners an average of $80/month on heating, cooling and lighting costs.

Without a solar mandate, the California Association of REALTORS tells us via its Traditional Housing Affordability Index that only 28% of its residents could afford a median priced, existing single-family home in Q4 2018. Knowing that the price of a newly constructed home is most likely more than the price of a comparable existing home, what, if any, are the possible affects of California’s solar mandate.

Danielle Hale, chief economist with, told to CNBC’s “On the Money” that California’s new solar requirement could “…undermine the new construction niche in the real estate market that is struggling to add new homes relative to demand…It’s already difficult for builders to build and I think this (solar mandate) is just going to exacerbate the problem.”

And what about those only 28% of California residents who could afford a median priced home in Q4 2018? Will this solar mandate tip the scales on Californians who are considering leaving the state for the chief reason that housing costs are too high?

Right now, according to the most recent poll done by Edelman Intelligence, 53% of all California residents are considering leaving the state within 10 years, up from 49% last year. Highest among that broad 53% considering leaving are 63% of MIllennials. 47% of California residents are considering leaving the state in 5 years; 55% of Millennials are considering leaving the state within 5 years and 57% of people with children under 18 years old are considering leaving the state in 5 years.

“California is a great place if you’re young and ambitious and daddy’s paying the rent,” said Joel Kotkin, presidential fellow in Urban Futures at Chapman University in Orange, CA. When asking his students if they think they’ll be living in the state in 20 years, the majority says no.

Aaron Terrazas, senior economist with Zillow, said, “There is no doubt that California’s economy, for all its strengths when it comes to innovation and creating industries that people want to be a part of, is struggling with high costs. Housing costs have gotten way ahead of incomes in California and that’s making a lot of people think about whether it’s worth the hurdles…Millennials are tired of renting but buying a home (in the state) often is out of reach.”

It’s likely too soon to forecast any consequences this new solar mandate and its additional costs to housing may have on Californians deciding whether to stay or go but we do know via that 8 in 10 cities with the highest percentage of home solar panels are already in California. Only Arizona’s Phoenix and Prescott are the two cities outside of California among the top ten solar cities.

Another question to ask is…will the states where Californians are relocating (Texas, Arizona, Oregon and Nevada, according to California’s Legislative Analyst’s Office) eventually follow California’s lead and mandate solar panels, thus driving up housing costs in those states as well?














Claim Your FREE Real Estate Treasure Map!