Anyone who owns a furnace will eventually face the reality of the system needing repairs. However, with the cost of every repair adding up, the inevitable question is whether it’s better to continue repairing your heating system or to replace it. This guide explores the costs of repairs versus the costs of replacement along with how to evaluate when it’s time to invest in a replacement.
How Much Do Furnace Repairs Cost?
Repair costs can vary from system to system because of the availability of parts, the difficulty of the repair and the urgency of the repair. What’s consistently true is that most furnaces tend to break down when it’s cold and you depend on its heat for comfort and safety. You’ll pay a premium after-hours rate if your heat goes out in the middle of the night, and you need an emergency repair.
From a wide range, some minor repairs may cost you less than $100 if the problem is solved without replacing parts. More complex repairs can take a lot of time, and the parts can be expensive, driving the cost to over $5,000.
How Much Is a Furnace Replacement?
Like repairs, the cost to replace a furnace may vary widely. Around central California, that range is usually between about $1,500 for a basic furnace in a small house to over $7,000.
One of the biggest factors affecting the cost of a furnace is the system’s size, which is its heating capacity. Assuming you know the appropriate size for your home, the following factors will also affect how much a furnace will cost.
Furnace Type
Aside from size, the kind of furnace you install will also greatly affect the cost. Typical options include natural gas, propane, oil and electric. Of these, electric furnaces are typically the least expensive to install but are among the most expensive to run. Standard natural gas furnaces generally run less than oil furnaces, but both can cost over $7,000, depending on the specific model.
As we get closer to the natural gas phaseout in California, gas furnaces are likely to climb in price. 2029 is the last year you’ll be able to install a new natural gas furnace.
Furnace Efficiency
Once you identify the kind of furnace you want, you’ll want to evaluate the difference in efficiency, measured using the Annual Fuel Utilization Efficiency ratio. Any furnace that burns fuel will lose some of the heat with the exhaust. Standard-efficiency models are the least costly, which start with an efficiency rating of around 80%. High-efficiency models can offer up to 98% AFUE with the inclusion of a modulating burner, variable speed circulating fan and dual heat exchangers.
Electric furnaces do not produce exhaust, so 100% of the heat generated goes into heating your home. The challenge is that among electric heating options, electric resistance uses the most power and, therefore, costs the most.
When You Install the Unit
The law of supply and demand is alive and active with furnaces, with many manufacturers offering incentives during low-demand times. If you wait until the middle of the winter, you’re left with whatever units may be available and paying full price for them. However, plan to replace your furnace in the off-season, like at the end of the summer or early fall, and you can capitalize on lower prices.
Available Rebates and Tax Incentives
The sticker price for a new furnace may not reflect the net cost you’ll have thanks to various tax incentives and rebates. The Inflation Reduction Act of 2022 offered several incentives for installing a higher-efficiency heating system. You can save by upgrading from a furnace to a heat pump. There are additional incentives for installing a higher efficiency system than you currently have. Check with your HVAC installer and tax professional to explore which incentives you may qualify for with this upgrade.
Evaluating Repairing Versus Replacement
Replacing a furnace too soon can mean you’re missing valuable life from your current system. However, waiting too long means you may end up paying for repairs that could go toward paying for a new system, not to mention higher heating bills. The following factors can help you determine when the right time is to replace your system.
Furnace Age
Most furnaces have an expected service life of 15 to 20 years. After this, their efficiency tends to drop, and you’ll experience more frequent and more expensive repairs. Rather than waiting for substantial repairs or a catastrophic failure, you can plan to replace your system when it’s nearing the end of its lifespan. Beyond age, there are two specific cost evaluations to help you determine when it makes sense to replace your system rather than continue repairing it.
50% Rule
The 50% rule looks at the cost of a single repair or set of repairs if more than one is needed at a time. Generally, when one repair costs 50% or more of the cost of a replacement system, it may be time to consider a replacement.
Cost and Age Equation
Even small repairs can add up over time, so keep track of them closely. Add up the repair costs over the last two years. Multiply that sum by the age of your system. If this equation exceeds the price of a new system, replacing your furnace may help you save money rather than sinking more in an outdated system.
When You Plan to Sell
How quickly you plan to sell your home can accelerate when you may want to consider replacing your furnace. Part of what most potential buyers evaluate is the status of major household expenses, such as the roof, furnace and air conditioner. If an inspector finds that your furnace is old or appears to be neglected, the buyer may pass for another property or offer a lower bid. Beyond having a newer furnace, upgrading to a higher-efficiency system can make your home more attractive, especially to younger buyers.
Becoming Fossil Fuel Compliant
As the years continue ticking by, we get closer to the fossil fuel phaseout throughout the state. Like any other phaseout, the cost to maintain the system only continues to climb for the targeted systems. The availability of parts will decrease with the reduced demand from fewer systems in service. The increasing cost of parts can significantly shift the cost and age equation discussed above.
If your system is nearing the expected end of its service life, you may consider upgrading now to get ahead of the phaseout. As you consider new heating options, you may want to consider the benefits of an air-source heat pump or geothermal system.
In 2009, Modesto, CA welcomed Loves Air to provide award-winning heating service for years to come. Our team proudly offers air conditioning and heating repair, maintenance and installation, water heater services, solar installation and window replacement. Call us today to schedule a new heater consultation or furnace repair with one of our NATE-certified technicians.
