How Much Value Does Central Air Add To My Home?

I am planning on installing central air in my house in Denver this summer. It is a small all-brick house built in the 1940's. Some of the homes in the neighborhood have central air and others do not. The approximate value is $260,000. What kind of return on my investment can I get by adding air conditioning? i.e. when I sell the house, what percentage of the cost of installing the air will I recover?

I am a real estate appraiser in Michigan and I get many questions like this.

This is a vary debatable topic and one without an easy answer. Without giving you a lesson on real estate values (one that could go on forever), I'll sum it up. If you lived in the South, where the temperatures are high, and air conditioning has become a must, the return would be negligible, as your house, without air conditioning, would likely sit on the market for years and years. Since you live in a "4 season" climate, the return is simply what someone is willing to pay for it...an impossible thing to guess.

Another thing to think about is how valuable it is to you and how long you would be able to use it. If, for instance, you were going to live in the home for a while, you would be able to take advantage of your investment for the remainder of your ownership.

The shorter answer....

A real estate appraisal consists of comparing houses of similar location, size, acreage, etc. against the subject home of the appraisal. In our area, when we compare a home with air conditioning against a house without air conditioning we give a value of $1500 to the home with air conditiong....also known as a value adjustment.

Please don't take this as a definate answer as appraising a home is not an exact science and there is no real way to tell the exact rate of return you would get on your investment.

What I would suggest...

If you're going to live in the home for a while and air conditioning is important to you...go for it. The value, you yourself would get out of the home is far larger than the value you would get out of selling it. On the other hand, if you're planning on selling your home in the next couple of months, I would not install the system. There are very few home buyers who would pay more for air conditioning than they could pay to have it installed themselves....very, very few. In essence, it would be a waste of money.

Keep reading if you want more info....

The best analogy we give to customers who ask this question is to think about when they buy a car. If a car has worn tires, it may detract from the value of the car by $50 or so. The car still runs fine, just not as nicely as it does with brand new BFG's...just like your home without air conditioning. Now, if the engine is shot, like if your furnace was busted, the value that would be detracted from the car...or home, far outways the cost.

It will cost you about $4500, but will add $8000 to $9000 value to the house, and yes you will recover 100% of the cost.

I am not familiar with your houseing market, but I would not count on getting the full return on your investment. The upside is that it will make your home more attractive to a potential buyer.

Your homes market value is whatever the market says it is. If similiar houses in the area are selling for $5, it doesn't matter if you have installed a $10 AC system. The market is only going to support selling your house for $5.

Once again, this is dependent on your area. In Texas, you would be insane not to buy a house without A/C. The summers get so hot you wouldn't want to endure it. A $260,000 home without AC wouldn't sell.

I hope this has helped. I would suggest speaking to a REALTOR in your area and have them tell you what the "Market Value" of your house is.

The best way to recover cost is to use it and enjoy it for a few years before you sell. Only put it in if you want it yourself, that way you will never be sorry.

As an appraiser here is my advice. First, it depends on what area you are located in. If you find out homes without central air are selling for say 250k and with are 260k and it costs 5,000 to install then it would be worth it. Anyone that tells you that it will increase your value much more than what you paid is not accurate. Think of it this way if two houses exactly alike and one had central air would you pay 20k more knowing that you could get it installed for 5k? There are very few improvements that return more than their investment; one big thing is paint (it may cost you $200 to paint your house but someone would pay more than 200 to move into a place with freshly painted walls. I would say with central air you should recoup close to your money back maybe 90%.