Upgrading Your ‘Cool’ Factor: How Much Value Does Central Air Add to Your Home?

We all like keeping cool (or at least comfortable) when the temperatures rise, but if your home uses only window units or fans, you may wonder if it’s time to upgrade to central air conditioning. How much does installing central air cost — and how much value does that amazing blast of icy air through the vents add to your home at resale?

At least 87% of homes nationwide use air-conditioning, and one 2018 consumer analysis found that homes with air-conditioning sold for 2.5% more nationwide than homes without it. But premiums vary by location, and where you live also plays a huge role in whether buyers expect it.

“Does it add value? Yes. If they don’t have it, and a client asks if they should put it in prior to listing the house, I unequivocally 100% say no. Don’t waste the money,” says Michael Whitney, a top-selling real estate agent serving Portsmouth and Rockingham County, New Hampshire.

“It adds to the salability more than it adds to the value,” adds Bob Sophiea, a top-selling real estate agent in the Lexington, Kentucky, area.

Here’s how to help evaluate whether installing central air-conditioning boosts your “cool factor” enough at resale to warrant the expense.

Trees near a home with central air.
Source: (Corey Agopian / Unsplash)

Most of the Southeast and newer homes keep it cool

Americans love air-conditioning, to the point that some researchers and tourists find this “quite daft,” according to The Washington Post. The United States uses more energy per capita for air-conditioning than any other country in the world — in fact, more than the electricity supply of several countries combined.

But that usage isn’t equal across the board. About 94% of the households in Florida, Louisiana, and parts of Georgia, Alabama, Mississippi, and southeastern Texas use air-conditioning compared to perhaps 50% in the Pacific Northwest, the US Energy Information Association (EIA) notes. Residents in these hot, humid climates spend the most on home air-conditioning costs at 27% while those in the Northeast and Pacific Northwest spend the least at 2% to 5%.

If you live in a home less than 20 years old, you’re likely to have central air-conditioning. About 70% of the homes built in the 1990s and more than 80% of those built since 2000 have central air, according to the 2015 Residential Energy Consumption Survey.

Central AC is common in households where the income is greater than $100,000. About 75% have it, this survey shows. But even among low-income households (those earning below $40,000), roughly 50% have central air.

Two identical houses: One with central AC, one without. Which one is worth more?

One appraisal estimate in Money magazine says that installing a new central air-conditioning system will increase your property value by 10%. Our agents modify this a bit, noting that while they would price a home with central AC higher than one without, the pricing depends on other market conditions.

For instance, Sophiea recently purchased a cabin that does not have central AC along Lake Cumberland, but it has ductwork for air-conditioning, thanks to the sellers installing a heating system. “There are places that don’t have air-conditioning, but I think it’s more of a prerequisite.” He plans to spend about $5,000 to install AC at the cabin, which he equates to a $10,000 upgrade. “When you don’t have a system, you’re looking more for an investor who’s going to add it in, and you’re going to take a discount.”

If a 1,000-square-foot cabin sells for about $100,000 with central air, Sophiea says he’d list a similar-size cabin without AC for about $10,000 less because of the desirability.

By comparison, while multimillion-dollar homes in New Castle, New Hampshire, are expected to have central air, Whitney estimates that 60% of the new construction under $500,000 in New Hampshire and Maine doesn’t have it. He wouldn’t factor in a certain asking price for a home with central air-conditioning without considering other features.

“You don’t know what the buyer wants,” he says. “If I’m a listing agent and you come through and say, ‘My buyer is not going to buy this because it doesn’t have central air,’ I’ll say, ‘Give me a contract, and tell me you want it. We’ll put [the AC] in. … Let’s agree on the price.’”

A house with central air and added value.
Source: (Johnson liu / Unsplash)

How much will installing central air cost you?

The average cost nationwide to install central air-conditioning is about $7,000, according to the renovation price guides Fixr.com and HomeAdvisor.com. However, pricing varies by home size, the system’s energy efficiency, and your climate, among other factors. For example, you could pay from $5,000 to $12,000 to install central AC in a 2,000-square-foot home that has existing air ducts that are more than 15 years old.

Ductwork can be a challenge, depending on the age of your home and the architecture, Sophiea says. The average cost of installing or replacing ductwork alone costs about $1,138, or about $10 to $20 per linear foot. Without ductwork, installing a new central air system can range from $3,800 to $7,500.

Nejad Eqal, owner of Service Express HVAC in Lexington, Kentucky, which holds an “A+” rating from the Better Business Bureau, says a home’s size and age have a significant impact on costs.

“People call all the time: ‘I’m looking at this house, and it needs air-conditioning. I need to know what it’s going to cost,’” says Eqal, who works with Sophiea. “The larger the home, the larger the air conditioner you need, or making it one or two systems.” Older homes that have little or no insulation either need insulation or a more powerful unit.

An installer also needs to know where to place the central cooling unit, such as outside the house, in an attic, or in a crawlspace, Eqal says. An HVAC unit can be mounted on the roof of homes with limited ground space, but the installation labor costs up to $1,000 because of the difficulty.

How to maximize your central AC upgrade

To estimate your possible installation cost, you’ll need to decide on the system type, capacity, energy efficiency, and brand. Here’s an overview of these factors.

Types of AC systems

  • Split system: If your home uses a furnace and ducts, this is an economical way to add air-conditioning. It has a condensing unit that installs outside and an evaporator and fan that sit atop the furnace.
  • Heat pump: This all-in-one heating and AC unit works well in climates with moderate winters. It transfers heat through ducts from the inside of your home to the outdoors in the summer and vice-versa in the winter.
  • Ductless mini split system: If your home doesn’t have ductwork or has plaster walls or original woodwork where you don’t want to install ducts, this is a good possibility. It also works well for open floor plans. A ductless mini split system cools the air using an outdoor compressor and an indoor air handler connected via tubes. You can select more than one for different areas of the house, especially if you want to set different temperature zones. Most houses have four to eight air handlers.
  • HVAC packaged system: For homes that do not already have a furnace or need to replace the furnace, this incorporates all the needed components into one outdoor unit.
  • High-velocity HVAC system: Similar in function to an HVAC packaged system, a high-velocity HVAC circulates air through ductwork that’s about 2 inches in diameter, making it a good option for tight spaces and older or historic homes. Because these systems run faster than others, they are noisier, however.

Capacity

Air-conditioning units measure their cooling capacity in tons. One ton is the amount of energy required to melt one ton of ice over 24 hours. (The term is left over from the days when ice was essential to refrigeration.) You might be more familiar with BTUs, or British Thermal Units, which in AC relates to the cooling output. A one-ton air-conditioner might release 12,000 BTU per hour.

In general, you need about 20 to 60 BTUs per square foot of cooling, but this again varies by climate. A professional installer can help you calculate what capacity your home will need and which systems can best handle this.

Energy efficiency

Air-conditioning systems also have efficiency measures that calculate how many watts the system uses. Residential systems carry a SEER, or Seasonal Energy Efficiency Ratio, specific to particular climates. SEER ranges from 13 to 24; the higher the rating, the lower the energy costs, but you’ll pay more for the initial system purchase. A 16 SEER system might cost about $2,000 more than one with a lower SEER, but it could reduce your cooling costs by about 14% a year. Talk with a professional installer about any incentives such as rebates or tax credits at the state or federal level.

Also, don’t forget to ask about a high-efficiency filter, which reduces pollen and dust within your home and keeps the air-conditioning equipment clean. A filter with a minimum efficiency reporting value, or MERV, rating of 12 adds about $500 to $1,000 in installation costs but reduces maintenance by roughly $500 every two years.

Brand

Brands of air-conditioners also vary in price depending on quality, features, and longevity. Eqal likes Rheem, which Fixr.com says costs about $2,000 to $3,000 for a three-ton unit. “We sell a lot of them. For the quality, the price is wonderful.”

Modernize, a privately owned lead-generation company since 2005 that connects homeowners with contractors, compared units with 14 to 16 SEER ratings and recommends the following for 2020 based on price, energy efficiency, warranty, and customer service:

  • American Standard (about $2,600 to $3,200)
  • Carrier (about $4,800)
  • Goodman (about $3,500)
  • Trane (about $4,800 to $6,800)
  • Rheem (about $3,500)
  • Lennox (about $3,200)
  • York (about $3,200)
  • Ruud (about $3,500 to $3,700)
  • Amana (about $4,100)
  • Heil (about $4,270)
  • Bryant (about $2,600)

Energy Star also compiled a list of its most energy efficient central air-conditioners and heat pumps for 2020, which includes various ratings by capacity, energy use, and lifetime cost to operate.

A vent in a home with central air and added value.
Source: (CapturePB / Shutterstock)

Is it truly an upgrade?

Bear in mind: Whatever you spend to install central AC won’t boost your value or asking price dollar for dollar. The typical life of an AC system is 10 to 15 years, and many buyers look at the age of the system instead of the name brand, Sophiea says.

“People always think that when they add a new system, ‘Oh, I just spent $7,000,’ but that’s not considered an upgrade. That’s considered maintenance,” or “the price of homeownership,” he says.

“It adds no value to the property. It helps with the salability of the property and with any issues that may come up on the inspection.”

If you live in an area that’s not particularly humid, a combination of options might keep your home cool without the expense of installing a central air-conditioning system, HomeAdvisor.com says. This “green air-conditioning” can reduce home energy use by about 20% to 50% and includes choices such as:

Bottom line: How much value does central air add to your home?

When deciding how much value central air adds to your home, our experts advise weighing the enjoyment you’ll get out of the result as well as the expense. If you live in an area where central AC isn’t as prevalent or you don’t want to tinker with an older home, the value may be negligible.

Whitney likens it to installing a swimming pool. “You can always put it in, but you can never take it back. Why would you pay for something when you don’t even know if you need it?” he says. Some buyers won’t care, “so why would you spend the money if it’s not going to make a difference? … I don’t know if you’re going to get your money back.”

Header Image Source: (C5 Media / Shutterstock)