How Does Central Air Effect Property Value?

Home Sold Sign

Central air conditioning is an important feature for many home buyers, particularly those in warmer climates.  When it comes time to sell a house, owners naturally try to make their homes as attractive as possible. All improvements, however, are not equal; only a percentage of the cost of many are recovered in the sale of the property and some return little, if any, of their original cost.  A property appraiser giving you a property appraisal will reiterate this fact.  Abbe Edleman is an expert in this field. Whether air conditioning returns some or none of its investment depends on multiple factors not just a single one.

 

Installing a system may be something sellers should consider. According to surveys conducted by the National Association of Realtors, central air conditioning is rated as “very important” by nearly 75 percent of home buyers, and this number increases to 91 percent of home buyers in Southern states.

Investment Recovery

Adding central air conditioning is an expensive undertaking, particularly in a home that does not have existing ductwork. Installing a new system can cost thousands of dollars, but many Realtors say it can increase a home’s value by 10 to 20 percent.  If other homes in the neighborhood have central air, it may be a necessity to install it in a comparable home, just to keep pace with area home values.

Considerations

Many times, central air units can be mounted outside the home, but if the unit is installed inside, homeowners should consider the amount of space that will have to be given up. For example, if central air is installed at the expense of storage space, there may be a negative impact on a home’s value.

Certain systems are expected to be well-maintained and in working order by house-shoppers. Changes to a heating, ventilation and air conditioning — or HVAC — system cannot be seen and are considered basic equipment unless additions include exceptional improvements such as green technology or heat pumps that introduce potential savings. These features might help market the house. Another consideration when shopping for air conditioning is that the existing duct work, air handler or furnace might need to be reconfigured or even replaced, potentially adding thousands of dollars that would not be recovered when the house is sold.

Cutting Your Energy Bills

Even at full price, adding a well-designed central air system is a no-brainer. Not only does a system cool and dehumidify the air far more effectively than window units, but it filters out allergens and dust and lets you use your whole house, instead of confining you to a couple of rooms. What’s more, central AC instantly increases the value of your house by at least as much as it costs to install, and in warm climates by up to 10 percent more, according to appraiser Alan Hummel, a spokesman for the Appraisal Institute, a national standards-setting organization.

“It’s not just in the South, where air conditioning is expected,” he says, but anywhere summers get hot.

Air-conditioning capacity is measured in tons – the cooling power of a ton of ice over 24 hours. You need just the right tonnage for the system to operate at optimum efficiency. Equipment that’s too powerful will cool your house so quickly that the system shuts down before dehumidifying the air. If the system is too weak, it will run incessantly, producing high utility bills and premature wear and tear.

Bottom Line

In the end, a homeowner might recoup less than half the expense of installing central air. The decision to add air conditioning should depend on whether buyers expect it to be part of the HVAC system rather than any value it might add. If, however, the house is in an area where buyers discount the price for a house that lacks central air conditioning, it might be wise to add the component — if it can be accomplished without major renovation to the HVAC system.