I recently replaced our 17-year-old furnace with a new mid-efficiency furnace bought from Costco, of all places. The old furnace was a low-efficiency model (it had a pilot light) and was probably on its last legs (the salesman said the average lifespan of a gas furnace is about 20 years).
It is difficult to say if it is financially smart to replace an old furnace with one that is more efficient. The new furnace cost us about $2,600 or $130 per year, assuming an average life span. Also, I am assuming a 5% return on the lost opportunity costs of buying the furnace. We spent about $1,200 heating our home last year, so I figure that if the furnace consumed about 15% less natural gas, we would come out ahead.
The old furnace has an efficiency rating of 65% compared to 80% for the mid-efficiency model, so we should be saving about 18% in the heating portion of our gas bills. As the product brochure claims that the furnace uses a variable-speed motor that uses two-thirds less electricity than a standard motor, I am hoping that the new furnace delivers some savings on our hydro bill as well.
I am still not convinced that replacing the furnace was a financially smart move, as the definite answer depends on so many unknown variables. But I am sure of one thing: I won’t be worrying about the furnace breaking down in the middle of winter for a long time.
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18 responses so far ↓
1 James // Aug 31, 2006 at 7:18 am
I hope you made some energy efficiency improvements in your home prior to installing the furnace. The biggest cost savings come from having properly caulked windows and doors as well as insulation in basement and attic. These are also the easiest and cheapest fixes. I started upgrading our home three years ago. The first year I caulked all the windows and doors and insulated the attic…bingo heating bills dropped by 15-20%. The next year I replaced the furnace, going from a really old 50-60% low efficiency furnace to a 70-80% mid-efficiency furnace and the bills dropped a further 10%. The furnace costs a lot more to install though, caulking is cheap and anyone can do it.
2 RBM // Aug 31, 2006 at 10:58 am
If you haven’t already done so, buy a spare ignitor. It is (usually) easy to change out when the original one finally burns out (in a few years).
3 Mike // Sep 2, 2006 at 1:14 pm
Can’t be sure it’s financially smart, but it is smart period. Wasting fossil fuels is inelegant any way you look at it.
4 James // Sep 2, 2006 at 3:29 pm
an excellent point. Often people only look at the financial aspect of replacing the furnace or insulating the house, when an environmental perspective is often equally important.
5 Canadian Capitalist // Sep 3, 2006 at 12:03 pm
Mike: Good point. I purposely ignored environmental reasons for the purposes of this post. Some people wouldn’t even care about the money saved and the environmental benefits are primary. Of course, they should just upgrade their furnace
6 Gerald // Sep 5, 2006 at 9:14 pm
Which Costco did you buy the furnace from? I went to the Costco in North York, Ontario, but they did not seem to have a furnace available - not even through the executive member services. Could you tell me if it was on display, or did you have to speak to someone special?
7 Canadian Capitalist // Sep 5, 2006 at 10:55 pm
Gerald: Perhaps Costco sold the furnaces only in the Ottawa area. The sales person did mention that he was selling a range of Lennox furnaces in all three Ottawa area stores for a limited time (I think it was something like 3 weeks in each store).
8 Statik // Oct 27, 2006 at 1:17 pm
Just curious Capitalist…so you spend $1,200 a year…so this new furnace will save you $180 a year. So it pays for itself in 7-ish years (assuming 2,600 was that actual purchase price, including taxes and installed). After this time you will save $180.00 I have several issues with this as a ‘cost-saving’ measure:
You now have to hold your house for 7 years to realize this ‘value’
I’m gonna assume with the name ‘Canadian Capitalist’ you did a ‘big-ole-search’ for information, search some places to get the best deal, etc., etc. You probably blew 15-20 hours on this endeavour.
If this was for ‘entertainment’ then it doesn’t matter. I don’t know about you but I don’t get my jollies from listening to the hollow aluminum sound I get from kicking high-efficiency furnaces.
I work 35 hours a week for about 2,500, thats $71/hr…so if I spend 20 hours ‘kickin’ furnaces thats another $1,420 or add on another 8 years to break even.
That same 1,200 in a investment yielding 8 percent…will take you like 15 years to make a profit.
The same 1,200 into a RRSP (if you haven’t got it maxed out) and you’ll be dead before you see a profit.
My conclusion, if you furnance had actually ‘broken’ you call up and say, ‘hey get a me a furnace in here, I’m getting cold’. Otherwise, it’s money/time not well spent (again, unless you have a fetish for forced air).
9 Canadian Capitalist // Oct 27, 2006 at 3:48 pm
I don’t know about you, but I don’t like to wait till the furnace breaks to install a new one. And things tend to break at the most inconvenient time.
My dilemma is this: Costco is selling a furnace for a limited time at a nice discount (I know because it took me one phone call to find out, not 20 hours). Our furnace may last some unknown number of years. Should I replace it now? I figured other people might face the same dilemma and hence the post.
10 Statik // Oct 27, 2006 at 4:49 pm
…then I would buy it.
If the question is more one of piece of mind, then it’s a easy call. On a personal level, if something like this bothered me everytime I heard my furnace rumbling on at night, I would do it without hesitation.
My house is only 3 years old, so I haven’t given it much thought, however I know my parents built their house in 1973 (when I was born)…and they are still using the original furnace (I’m sure the efficiency is not good).
Also you asked in your reply:
“Should I replace it now? I figured other people might face the same dilemma and hence the post”
But your origianl post your seemed to have already made the deal and were wondering about the financial merits and thats what I responded to–>
“I recently replaced our 17-year-old furnace…I am still not convinced that replacing the furnace was a financially smart move, as the definite answer depends on so many unknown variables”
11 Statik // Oct 27, 2006 at 4:54 pm
I post again, sorry I just reread my last post, feels kind of ‘jack-assy’…sorry about that.
12 Statik // Oct 27, 2006 at 4:55 pm
Hrm, trouble posting in forum twice in a row, I just reread by last post, sounded kind of ‘jack-ass-y’ sorry about that
13 Canadian Capitalist // Oct 27, 2006 at 5:10 pm
Your comments got caught in the spam filter… and it assumed that all your earlier comments were spam as well. You should be ok now.
14 Ried // Feb 9, 2007 at 12:35 am
Which make and model of furnace did you buy?
Are you happy with your purchase?
15 Mark J // Feb 13, 2007 at 10:01 pm
I work on furnaces for a living , not selling them just service and repair. I’m partial to the Lennox, Bryant(Carrier)brands although the company I work for is a Lennox dealer.The rule of thumb that I share with customers is that if your furnace has a pilot light and/or a belt drive blower than the furnace NEEDS to be replaced! Economics plays a big part however polution is a concern as well.Everyone should have high efficiency furnaces with variable high eff. electric blower motors electronically dc converted. The motor on my old furnace was a PSC type my new one variable DC saving me $23.00 month alone , my blower runs continuously.I also replaced my old 58% eff. gas hot water heater with an electric 80 us gal. The tank will last longer and reduce green house gases.
My gas budget when I purchased the home four years ago was $148 per month 11 months+ or -
now its $97.00 per month. The two savings together offer $74.00 per. month less $12.00 for Hot water electricity , returns a net of $62.00 multiply this buy 10 years total is $7400.00 {assuming gas and hydro don’t go up}. The total cost for this system including taxes , 10 year parts and labour , 3 year maint plan ,peace of mind , reaching my one tonne challange ,ect… $6500.00.
Assuming the average Canadian stays in a house for 10 years , why would I want to buy the next owner the new furnace. I see and condem furnaces daily that are 20 years or less in age, if I had left my old furnace in place I would be changing it before I sold my home again benefitting the new owner only. Medium eff. furnaces are soon to be extinct people just haven’t recognized this fact yet.
Look after our planet , ourselves and the future of our children , DO NOT waste what we’ve been given.
16 DDB // Sep 17, 2007 at 2:34 am
I am facing an immediate decision. My Trane central air system has a freon leak that defies locating by professionals. So I will replace it. But contractor wants to also replace my 11 year old Lennox furnace (electronic start, “Whisperheat” model) that has performed flawlessly. Furnace replacement seems much more a convenience for the contractor than a real need. While envirnomental considerations are real, I will only save about $75/year max with the new 90% unit (I’m not convinced it is an ecomonically wise decision to go to a 95% unit). Anyone else seeing Lennox 80% units being replaced at 11 years for no operational reason?
17 p dot // Nov 22, 2007 at 2:16 am
Great posts! My old furnace has slowly all-but crapped out and I don’t want to sink another dime into it. Having a new furnace installed tomorrow. I hope my Trane XVR 96.7% AFUE w/2 stage burners and variable speed blower (copying from brochure) will be comparable to a high-end Lennox and will far exceed my 35 year old “Furnaceman Green Monster”. I’m kind a newbie with furnace brands and specs can anyone tell me how a top of the line Trane stacks up with brands such as Carrier, Lennox etc.? Price of new furnace installed (with fresh return air duct, drain pump and taxes)$ 4400.00 ca.
18 DE // May 23, 2008 at 4:04 pm
FURNACE
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