PACE Loans: Does Sale Value Reflect Improvements?

Abstract

This article determines how the resale value of homes with PACE (Property-Assessed Clean Energy) improvements and financing compare with similarly situated homes that have no PACE involvement. The authors use a number of different methodologies to show that the net impact of PACE on resale value of a home, after taking into account the cost of improvements, ranges from $199 to $8,882. Moreover, the premium for PACE homes purchased out of foreclosure was closer to the higher end of the range. They conclude that a home with a subordinate PACE loan will provide collateral for FHA and GSE recoveries in a foreclosure sale that is at least as high as comparable properties without PACE improvements.