In a move that will increase the price of housing for all Californian’s somewhat in the short term and very much in the long term is now official and the law mandating solar on new housing will commence on January 1, 2020.   I love the concept of solar, but am not in favor or mandates.  Let the market work.   Solar without subsidies has not yet proven itself.  How will this raise the price of housing?

1-  Less new housing will be built because some projects will be deemed not profitable enough.    Lack of supply while demand increases will increase pricing.  Econ 101.

2-  New housing price will be increased by the amount of the cost of the installation of the solar.   (I see payback analysis and how it makes economic sense, but the economics look fishy.  A 30 year payback period is not viable.)

3-  $10,000 cost per house to install.   All existing housing stock will rise in value by close to this amount.  My 20 unit building I own is now worth $200,000 more.  Yippee I guess, but I suspect this will mean less building hence less economic activity hence less value for CA real estate.  

4-  My prediction is this will be modified by 2024.  Four years after implementation.  Remember how California put MTBE into the gasoline because it was going to be wonderful and stop pollution.  Yes, it was wonderful for the air, but it was destroying the ground/drinking water and fast.   You can mandate anything, but watch for unintended consequences.  In this case the unintended consequences are well known.  Higher prices for California Housing.