Reuben's Home Inspection Blog

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Are High Efficiency Furnaces Worth It?

In my blog about window replacements, I made it clear that you'll never get a return on your investment by replacing windows.   So what about furnaces?  If you're replacing your furnace, is it worth installing a high efficiency furnace?  We'll see.

 

Reuben's Old Furnace
Reuben's Old Furnace

 

I've already compiled the data from my gas bills going back to 2004 on my Minneapolis home, so this should be pretty simple to figure out.

  • I use an average of 520 therms per year to heat my house.
  • The average cost of gas in my area has been $0.90 / therm, making my average annual heating cost $468.
  • The average life expectancy of a furnace is about 15 - 20 years.
  • My current furnace is 80% efficient, meaning that 80% of the fuel that gets burned is turned in to heat.  The other 20% disappears up the vent.
  • For this example, I'll use a 95% efficient furnace, which also qualifies for a tax rebate.  This should give me a 15% savings per year, as compared to an 80% efficient furnace.

Saving 15% per year on my heating costs equals out to $70/year.  If the furnace only lasted 15 years, I would end up saving $1,050 over the life of the furnace.  Because I would qualify for the tax credit, I'd also get 30% back from Uncle Sam.

I'll assume that the 95% efficient furnace costs about $4000, including installation, but I'll get 30% back, making the total investment $2800.  The 80% efficient furnace would cost about $2000.   This means I would end up paying about $800 more for the high efficiency furnace, but I would easily recoup those costs over the life of the furnace.

That seals the deal - my next furnace will be a high efficiency furnace.   If my next furnace lasts longer than 15 years or if gas prices go up in the future, I'll save even more money.  The more you spend per year on heating costs, the faster the payback period.  Besides saving money, using a high efficiency furnace is a green thing to do.

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Reuben Saltzman, Structure Tech Home Inspections

        

Comment balloon 16 commentsReuben Saltzman • January 12 2010 06:23AM

Comments

The midwest delivers cold blasts to enery budgets and we encourage folks to do all they can to save...good analysis and one we would encourage people to use....if the furnace needs replacing anyway....efficient is the standard we encourage.

Posted by Sally K. & David L. Hanson, WI Realtors - Luxury - Divorce (EXP Realty 414-525-0563) almost 9 years ago

Reuben....I'm considering getting a Weil Mclain.....it will cost me almost $5k....now I'm reading reviews that are directing me to another brand of high efficiency burner rather than the Weil McLain....

Posted by Barbara Todaro, "Franklin MA Homes" (RE/MAX Executive Realty ) almost 9 years ago

Reuben, I don't know about in your area but I am seeing some of these high efficiency units lasting longer than some of the Mid-efficiency units.  I know that initially there was a lot of concern that because they are "more complicated" that there would be more problems and shorter life----I don't see that playing out, do you?

Posted by Charles Buell, Seattle Home Inspector (Charles Buell Inspections Inc.) almost 9 years ago

Sally & David - yes, if the furnace needs replacing.  If not, don't do it.

Barbara - A Weil Mclain furnace?  I thought they only made boilers.

Charles - You're seeing them last longer?  Wow.  Not in my area - I think the life expectancy has been about the same.  Same types of problems too.

Posted by Reuben Saltzman, Delivering the Unbiased Truth. (Structure Tech Home Inspections) almost 9 years ago

Your gas prices are much lower than in CT. The price per therm here is about $2.

Most often higher efficiency gas heating systems will pay for themselves and then some, not always the case with oil burning systems. The best energy investment is almost without exception sealing air leaks and insulation.

Posted by James Quarello, Connecticut Home Inspector (JRV Home Inspection Services, LLC) almost 9 years ago

Wow, I'm lucky!  You guys still use oil systems?  Not here - I probably see about one a year.  You're completely right about insulation and air leaks.

Posted by Reuben Saltzman, Delivering the Unbiased Truth. (Structure Tech Home Inspections) almost 9 years ago

Looking for furnace posts and I keep running into posts from Reuben...  I guess you Minnesota people have to be serious about keeping warm.

Posted by Maureen McCabe, Columbus Ohio Real Estate (HER Realtors) about 8 years ago

Reuben~

Thanks for the clear notes on why I need to get a furnace that works so well!

Posted by . 4Terra Land Brokers .. 828-776-0779 Asheville NC, What's Most Important to YOU? Call(828)-776-0779 ( REAL ESTATE RESOURCES & NETWORK ) about 8 years ago

Maureen - I'm glad my posts are getting found :)  Yes, we're serious about keeping warm up here.  I wish we had a choice.

Asheville NC Real Estate (if that is your real name...) - thanks for reading.

Posted by Reuben Saltzman, Delivering the Unbiased Truth. (Structure Tech Home Inspections) about 8 years ago

Reuben I am writing a furnace post because it is Furnace Filter Friday... In Ohio anyway.  Can I use the photo here with attribution?  I am linking to two of your furnace posts. 

Posted by Maureen McCabe, Columbus Ohio Real Estate (HER Realtors) about 8 years ago

Maureen - yes, and thanks for the links.

Posted by Reuben Saltzman, Delivering the Unbiased Truth. (Structure Tech Home Inspections) about 8 years ago

I found you via Maureen's link Reuben. I'm amazed at the low cost of your annual heat bill, I've just moved from GA & have have no idea of cost therms in my area yet.

Posted by Cynthia Bartch, Redesigned Spaces; All Round Nice Gal (Home Stager/Property Stylist & more! Granville, Ohio) about 8 years ago

Hi Cynthia - the good news is that no matter how expensive the cost of therms in your area is, you won't have to pay anywhere close to what I pay for heat :)

Posted by Reuben Saltzman, Delivering the Unbiased Truth. (Structure Tech Home Inspections) about 8 years ago

Cynthia did you buy an old house in Granville? 

Posted by Maureen McCabe, Columbus Ohio Real Estate (HER Realtors) about 8 years ago

Hi Reuben, I hope it's cheaper here than it was in GA, there it was expensive! I'll be following your blog for sure.

@ Maureen, the home built in 04 is right on the line between Granville & Newark so I have the pleasure of the downtown life in Granville but not their taxes! At first I thought it was in Granville...I had only a few days to find a home and my head was spinning.

Posted by Cynthia Bartch, Redesigned Spaces; All Round Nice Gal (Home Stager/Property Stylist & more! Granville, Ohio) about 8 years ago

I can really appreciate your analysis on this, as it logically looks at the cost savings and how it plays out over a long period of time.

Posted by Morgan Evans, LICENSED REAL ESTATE SALESPERSON (Douglas Elliman Real Estate) over 4 years ago

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