When making major changes to one’s home, a common primary consideration for homeowners is the potential impact on property value. The added value of any installation is a key indicator of its desirability in the market. A recent study from the University of Maryland estimated that residences with an air-source heat pump experience a 4.3-7.1% ($10,400-17,000) increase in sales price. The premium was estimated from observations from 23 states across the US, while accounting for extraneous factors such as changes in nearby property values, date of home construction and the impact of recent renovations, to name a few. The results of the study also showed that as heat pumps become increasingly popular, the demonstrated price premium is expected to fall as illustrated below. This indicates that early adopters of heat pumps who subsequently sell their homes are likely to experience greater benefits than others.
We reached out to one of the leading authors of the research, Dr. Yueming ‘Lucy’ Qiu, who was kind enough to provide some more insight into this research. According to Dr. Qiu, most of the price premium is attributed to the value of the heat pump system. Any difference between the system cost and the price premium is generally attributable to the opportunity cost of replacing the previous HVAC system. When asked about the impact of heat pump incentive programs on the price premium, Dr. Qiu stated that while they will certainly help increase heat pump adoption, the results of the study show that price premiums can be expected to fall as market penetration increases. Ultimately, the study affirms that air-source heat pumps are valuable additions to any home.