DOES A NEW AC UNIT INCREASE HOME VALUE?
March 26th, 2023
A new central AC unit typically costs $5,500 to $15,000 fully installed depending on the size of your home and other factors. So, it’s a major investment that requires careful consideration about the return on investment before jumping in.
Living without AC is not an option for most Florida homeowners because of the heat and humidity here. But whether the upfront cost of a new HVAC unit is worth it will largely depend on the age of your current AC and how it’s performing.
Like many home improvements, a new AC unit can increase home value so even if you’re considering selling your home, upgrading deserves some thought.
Let’s look at the main factors involved in the decision to upgrade your AC system and, ultimately, whether it’s worth installing a new cooling system to increase home value….
Table of Contents
DOES A NEW AC UNIT INCREASE YOUR HOME’S VALUE?
This depends mainly on where you live and the current condition of your cooling system. In warmer climates like Florida, a new AC unit may increase your home’s value in real terms by a few percent because it’s more attractive to potential buyers. This is especially true if you replace an old, inefficient AC unit with a new energy-efficient system because money-saving solutions are generally seen as a major benefit for buyers, who can save on energy bills for the next 10-15 years.
If your current air conditioning is old or not working and you don’t replace it before selling, it will likely damage the value of your Florida home. Buyers generally expect working AC when they move in and don’t want the immediate hassle and expense of AC repairs or a new AC installation to contend with after purchase.
In more temperate climates, where an AC unit is not essential all year round, the quality of the AC may have less effect on a home’s value.
Bear in mind that anyone considering buying a home through a loan must first arrange a home appraisal. This is where an impartial third party assesses the selling price of the home by providing an evaluation. The appraiser wants to know if the agreed price is fair. A new air conditioning system is one of the “big ticket items” that will likely be seen as a plus for the appraiser and will add value to the home accordingly.
STAY COOL ALL YEAR ROUND WITH ONE WAY AIR…
The team at One Way Air installs, services, and repairs all types of air conditioning systems in Southwest Florida. Get in touch with us here for a quote or call 239-233-4356 in emergencies.
What do the “insiders” say about AC and home value?
According to this Florida real estate agent, improving energy efficiency in your home is one of the main five home improvements you can make to increase home value before you sell.
Another real estate insider, Charles Fischer, the CEO of Fischer Group in Florida says this:
"Many buyers are looking at the cosmetic upgrades, but are ultimately leaning towards houses that have the four main systems upgraded including HVAC.”
"People are paying a lot of attention to energy efficiency when they're buying. With interest rates so high, folks are looking at every cost, including utility bills, to make sure they are staying within budget."
In other words, potential buyers are increasingly looking for properties that offer long-term cost savings with high-efficiency household systems. That could be the clincher when it comes to upgrading your AC to boost home value—and there’s also good news from a tax perspective if you decide to upgrade (see the FAQs below).
Let’s take a closer look at whether homeowners in Florida should install a new AC to increase home value….
HOW CAN A NEW HVAC SYSTEM INCREASE HOME VALUE?
A new AC system can increase a Florida home’s value if any of the following apply…
It improves comfort and indoor air quality
If the current AC system is not adequately cooling your home, blowing warm air, making unusual sounds or regularly emitting unpleasant smells, something’s wrong.
The system may need AC maintenance, repairs or replacement. If the latter, a new AC system is essential to maintain comfort levels in the home. Potential buyers will check this and AC that is not cold or poor indoor air quality will likely be a red flag.
It replaces an aging system
If your current AC system is older than 10-12 years, an upgrade can add value as well as comfort to your home.
Being able to demonstrate a new system to potential buyers will bring peace of mind that a new AC unit will not be required for the next 10 years or more.
It adds energy efficiency
Some potential homeowners are concerned about their carbon footprint and demand energy-efficient appliances, as mentioned already.
Adding a new energy-efficient AC system can be a huge plus. The U.S. Department of Energy (DOE) has released new HVAC efficiency guidelines for manufacturers. In 2024, the minimum SEER rating for split AC units in Florida is 13.8-14.3.
The SEER (Seasonal Energy Efficiency Ratio) rating measures how efficiently an AC unit cools the home. The higher the rating, the better the efficiency. In 2015, the minimum rating was 13-14 so, even in one decade, the energy efficiency of AC systems has increased.
It adds aesthetic appeal to the home
Modern central AC systems look more appealing for the home than outdated systems, with more stylish units.
Sometimes, a new system requires some new HVAC ducting, which will add to the cost but can replace unsightly older ducting, again adding to the aesthetic appeal.
It saves money
More energy-efficient AC units contribute to monthly cost-savings on energy bills, helping homeowners to save money—another plus that can add value to the home.
Newer systems are also less likely to require repairs, which adds to the savings. That releases more funds to make other home improvements.
WHAT’S THE ROI ON A NEW AC?
It could be argued that the main “return on investment” of a new AC comes in your family’s increased comfort rather than in monetary terms.
Some homeowners like to put a value on their home improvements when they sell their homes but this can be difficult. What a home sells for depends on many factors, such as:
- Location
- Prevailing market conditions
- Supply and demand
- Sales record of other properties in the neighborhood
- Age and condition of the home
- Economic conditions
- Interest rates
If all else is equal, a new AC can provide an average ROI of 103.5 percent (nationally) according to estimates in JLC’s 2023 Cost vs Value Report. This ranked highest of all the surveyed home improvements, as you can see here:
Other estimates put the ROI on new AC much lower but, either way, if a new AC saves you money every month, improves comfort and indoor air quality, and helps to attract interest in your home if you’re trying to sell, it’s done its job.
Also, energy-efficient AC systems that last 10-15 years continue to provide an ROI in terms of cost savings for the years ahead—and smart buyers will factor this in.
BENEFITS OF A NEW AC SYSTEM
The main benefits of installing a new AC system vary depending on what system you have now. Generally speaking, however, you can expect the following:
- Enhanced comfort levels from better cooling performance in your home
- Better indoor air quality (particularly if the old system was moldy or encouraged bacteria growth)
- Many new AC systems have programmable thermostats and smart controls, which are more convenient for homeowners
- A new system may offer better-zoned cooling for customizing conditions in different parts of the home
- Long-term cost savings on your AC’s electricity bills from a more energy-efficient system
- Increased appeal and property appraisal home value if you decide to sell
- Enhanced buyer perceptions of having the latest high-efficiency cooling technology and not having to upgrade for many years
- The eco-friendliness of the latest AC system may be a positive factor for some homeowners and buyers
HOW DO YOU KNOW WHEN YOU NEED A NEW AC SYSTEM?
Understanding when you need a new AC system can save considerable amounts on energy and emergency AC repair bills while preventing frustration at poor cooling performance in the home.
If your AC system is already 20-30 years old (yes, some can last that long), there’s probably not too much debate: upgrading will increase efficiency and result in all of the benefits described above—including increased home value.
If your AC unit is only 10 years old, however, what should you do? Whether you need a new AC or not will depend on multiple factors. Here are some tell-tale signs that the old AC could be on the way out and you may be ready to reap the rewards of a new cooling system:
- Unexplained higher energy bills (your HVAC system is likely the biggest energy guzzler in your home)
- Strange noises or smells regularly being emitted from the unit(s)
- Uneven cooling through the home
- Any evidence of refrigerant leaks
- Evidence of worn-out parts that are expensive to replace (e.g., the compressor)
- Evidence of rust, corrosion or cracks
- High humidity levels
- An AC unit that freezes up regularly
- Regular high repair bills
Some of these problems may be fixable with an AC tune-up or repairs but the older your unit is, the more likely it is that consistent repairs are flushing money down the drain. If you’re troubleshooting the same AC issues repeatedly, it’s a sure sign that something’s wrong besides an air filter that needs changing.
If you regularly maintain your AC and still experience problems consistently, it should be a no-brainer to upgrade to a new system.
SO, IS A NEW AC WORTH IT?
A new AC system is a sizable investment, no doubt. But fully functional AC is a non-negotiable in Florida with our heat and humidity.
In summary, a new AC may be worth serious consideration if any of the following applies:
- Your AC is 15 years old or more
- Your current AC is in poor condition (or hasn’t been well-maintained over many years)
- Repair bills are high
- Monthly electricity bills are climbing for no apparent reason
- You want to reduce your carbon footprint
- The existing ductwork is old or damaged and needs replacing
- You want a smart climate control system for your home
A new AC unit equipped with smart features may align with the expectations of some tech-savvy buyers—but many potential buyers may not even notice a shiny new AC system.
However, they’re sure to be deterred by an outdated or worn system that doesn’t cool the home properly as they’re looking around—because it will represent an added expense after they buy.
Listing a home in need of an AC replacement could, therefore, be a mistake that negatively affects its value.
5 TIPS FOR SELECTING AN AC SYSTEM THAT INCREASES HOME VALUE
So, you’ve decided on a new AC. With so many options, what should you be looking for?
Much will depend on your budget but, ideally, follow these five tips for a new AC system that boosts home value:
1. Research your options:
Because of the number of different brands, AC sizes, energy efficiencies, and types of air conditioners available, some initial research is essential to understand what’s available.
2. Get your AC sized properly:
Some homeowners make the expensive mistake of installing a new AC that’s too big or too small for the space they’re cooling. A professional AC company like One Way Air will assess your home’s cooling needs accurately.
3. Select a unit with a high SEER rating:
New AC systems sold in Florida must be rated at a minimum of 13.8 to 14.3 but a rating of 16 to 18 is even better for lowering energy bills.
4. Choose a reliable local installation team:
Check reviews and testimonials for a reliable local team to install your new unit—they will be familiar with the conditions and the challenges faced by homeowners in SWFL.
5. Ensure your home is well-insulated:
Good insulation prevents cool air from escaping and warm, humid air from invading your home.
If you’re still unsure about upgrading your AC, we’d be happy to talk through your options. It’s a big decision that you want to get right. Our team has been helping homeowners in SW Florida get that decision right for many years. Contact us here.
FAQS
Is retrofitting an old AC a good option?
Retrofitting an AC unit involves a licensed technician installing new parts in an existing unit to improve its longevity, cost-effectiveness, and energy efficiency. This may be an option depending on the condition of your existing system but, in the majority of cases, it’s best to opt for a completely new AC system for higher efficiency, better cooling, and a strong warranty.
Some homeowners use the “$5000 rule” to decide whether to retrofit: this is where you multiply the age of your unit by the repair cost; if the number is $5,000 or more, a replacement is the best option.
Are there tax benefits with a new AC system in Florida?
Floridians can earn tax credits by installing a new energy-efficient AC system. The Inflation Reduction Act is an initiative managed by the U.S. Department of The Treasury. It covers completely new central air conditioners, including both indoor and outdoor units, with a 16 SEER or 15.2 SEER2 rating or above. As well as the AC increasing home value, the tax rebate will ease the burden on your pocket.
How long does it take to install a new AC system?
A new home air conditioning installation usually takes between four and eight hours—potentially longer if you’re upgrading the entire HVAC system. The precise amount of time it takes will vary depending on the size of the unit, installation location, and the professionals you hire for the job.
NEW AC INSTALLATIONS IN SWFL
If you’re in SWFL and are considering upgrading your cooling system, contact One Way Air to arrange a quote.
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Still have questions about your next air conditioner? Let us help you choose an air conditioner you’ll be excited for.
