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.

This article has 48 comments

  1. 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. 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. 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. 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

    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. 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

    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. 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

    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. …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. I post again, sorry I just reread my last post, feels kind of ‘jack-assy’…sorry about that.

  12. 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

    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. Which make and model of furnace did you buy?
    Are you happy with your purchase?

  15. 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. 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. 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. For all the comments you have had let me tell them all …it is
    minus 17 high and tonight will hit minus twenties the sad thing is we are only now starting to shop around for one …
    It will be another cold freezing night for the family and the Cat……so an advice to all you out there …if your home is more then 15years old change it …don’t find out the hard way like we did ………….

  19. The local big box hardware store has a TRANE $3200 “special” right now…(need to call to see if this includes install) so went to this thread to consider the pro’s and con’s. Good conversation here, folks. I think we’re going to spend the money in hopes ours and the environment’s gain will be nat gas supplier Enmax’s pain…

  20. I have a seven year old Heil Furnace Installed(came with the house). Last year, when the furnace was serviced, I was told the furnace is prone to failure, and to get on the HIP program offered by Enbridge. Again, the furnace was serviced a few days, and the tech mentioned the same problems with Heill furnace, and recommended replacing. Anyone experienced problems with this Furnace?

  21. To Mark who works on furnaces – or says he does because I just found his post to be totally confusing – I live in an older home – built in 79 and it would be a whole lot of work to install a high efficiency CONDENSING furnace. The only reason mid-efficiency furnaces are on the down swing is because the government has said it to be so. I can not install a high efficiency furnace without a lot of pain and turmoil so I prefer the mid-efficiency. With high efficiency they have to be drained out the floor – not to be for me.

  22. Just got a quote for a Trane 98% high eff. furnace, and air conditioner installed for $10,000.00 is that too much to pay – thanks

  23. Superintendent C

    km: It can be a bit of a hassle to install a condensing furnace. It does need it’s own special chimney and if your hot-water tank exhausts in the same flue, then you may need to change that. But almost all new homes being built are using high eff. and it on requires a plastic exhaust and intake out of the side of the house, which may or may not be a huge problem depending on your furnace location. As for the drainage, it does tend to pee a lot, but you can use a 1/2″ pvc line to direct it to the floor drain.

    The biggest issue between high and mid. eff. is the changes in the building code. Because new homes are more air-tight, any furnace without a sealed combustion, high eff., you will need to interlock any exhaust fans. To prevent a back-draft down your chimney of deadly exhaust gases, all exhaust fans (bath, range, etc.) will need to be connected to the furnace so that the fan turns on when the exhaust fan is on to bring in fresh air. Depending on your local building codes, it may be less hassle to go high eff.

  24. Superintendent C

    Debbie: I just finished building my house, 2800 sqft, my entire heating system including AC, furnace, and ducting cost me $12,000. Yes I did know the contractor and got a good price. But unless you have a particularly difficult and you have a massive house, you might be overpaying. I’m also in AB, so it might be a little different where you are.

  25. To Superintendent C – My house is thirty years old so we went with mid – efficiency. I do not have a new house – if I did I would go high efficiency but as it is – it is to complicated to go this way for me. My drain is to far away and a pipe to the drain would be in the way.

  26. Condensation can be pumped from the furnace to an actual drain with a 1/2″ tubing. The tubing can be attached to your floor joists so it is out of the way. An installed condensate pump with a safety switch should run you somewhere around $250.
    To Debbie, $10,000 sounds a bit high if your install is for say an 80,000 btu furnace and a 2 ton a/c. Should be more around the $7500 range.
    There are goverment grants available to replace old HVAC equipment, check out the eco energy website.

  27. All the quotes I getting for a furnace, A/C combination are around $9,000 to $10,000 (install and tax included).

    70,000 btu 95% AFUE furnace and a 2 ton SEER 16.2 A/C.

    About to bite the bullet and cough up 10 G’s

  28. Canadian grants for 70,000 btu 95% AFUE furnace and a 2 ton SEER 16.2 A/C.

    Federal heating (94% or higher AFUE) $790 (money to help us cope with all the federal hot air coming from Ottawa, lol)

    Federal Cooling (SEER 14.5 or higher) $250

    I am not sure, but you may need a home energy audit to get these grants. Audit cost around $200. I got one for $180.

    There may be some provincial goodies available too. Manitoba Hydro is offering $245 for a high efficiency furnaces.

    Lennox is also offering a rebate for a limited time

  29. In Ontario you need an energy audit to be able to qualify for grants. But you can also get money back for windows, insulating etc.

  30. My furnance is 25yrs old cost me $15,000, just ordered a new model 98% efficient, it will cost me another $15,000. So in 25yrs the cost is $30,000 for heat and air, I hope I live another 25 years so I can spend another $15,000.

    I hate buying shit.


  32. We just got a quote of 6500 for 80,000 btu, minor mods to metalwork at furnace end, and drainage, for a trane hi eff. unit, and all disposals (incl hrv), for a 1800+ sqft side split. how do you think the estimate is? 15yr transferable warranty.

  33. I am looking into installing an mid efficiency furnace to replace the relic that is in my 1950’s bungalow. Wondering if there are grants for mid-efficiency or just high-e furnaces.

  34. Sounds like there are a few sales people posing as consumers. Anyways, here are my opinions:

    To bp – about Heil – this make is manufactured by ICP, a subsidiary owned by Carrier. ICP makes many private label brands including Kenmore for Sears, Tempstar, etc. and it is a decent furnace.

    To KM – Yes, the only reason mid-e’s are on the way out is legislation. As of Jan. 1, 2010, mid-e’s can no longer be brought into Canada. However, if they are already here in inventory, you can still install them if you can find one. We ordered in over 110 units and are already done to our last 21. Find one fast if you need it! Also, pipe your condensate pump into your house drain if it is too far to the outside, and for any long run install check valves to prevent back flow. If you don’t, your pump will cycle alot more than it should.

    To Superintendent C – no need to replace the vent for the hot water tank if removing the furnace. You just need to drop a flex liner down the existing one and install a rain cap. Preferablyalso install B-vent instead of C-vent where you can.

    To p dot – ” 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.? ” We sell Carrier, Lennox, Amana and York and to ask which one is best is like asking which car company is best – it really depends on the specific model, to be honest. We prefer Lennox furnaces in general, but some of their models aren’t as great as others. That’s why you won’t see every available model listed on our site.

    To DDB – ” My Trane central air system has a freon leak that defies locating by professionals. So I will replace it.” Hold on. Some leaks are near impossible to find. However, if you have your contractor evacuate the system, close the service valves and charge only one side of the system with dry nitrogen to 300psi or so, while leaving the other side vacuumed down, you’ll soon fine which side of the system has the leak. Also tell them to replace your Schrader valves first.

    To Canadian Capitalist – Lennox warranties state that labour is 1 year, though parts can be as high as 20 years. Have you factored in that Costco customers will not get the ‘gratis’ warranty calls often offered by regular HVAC delears after the first year?

    Also, having a pilot does not indicate a low or mid-e furnace, but a standing pilot does – as compared to intermittent pilot be it HSI or spark, which is the type of pilot that your new furnace also has. Ask your salesman.

  35. Our 1100 sq. ft home was built in late 60’s. Original furnace except the heat exchanger was replaced about 15 yrs ago. We’re on the budget for only $45.00 mth. August is start of new budget year. We have 0 dollars to pay on our heating! Actual gas used with this furnace and budget amount were identical, we might even be ahead a few dollars! I have a good furnace guy coming in mid Sept. to put in a new furance (a Ruud), did my homework, the guy at the Costco store was going to charge me $7000.00, and the Rudd will be $3500.00, for everything (taxes, venting, etc). The Costco guy (Trane), said I had a crack in weld and didn’t want to scare us, but I think it was a sales ploy they plant a seed in your mind. So this old furnace we have right now has served us well and heat costs with it are low, so should I go ahead and get the new one or what? Plan on staying here for probably a few more years, and it is a good selling feature in a home. And I’ve gone on-line and the Ruuds seem to have good reviews? Feedback please…thanks!

  36. Ruud / Rheem, same company. Very well known and respected for making gas fired hot water tanks. They’ve had a few weak spots in their furnace designs, but they are very good at honouring their warranty. Not the quietest furnace out there. Ask your furnace installer to perform a temperature rise measurement. A proper reading will add many years of life to your heat exchanger and save you a few dollars as well – for free.

    How do you know that the weld is cracked in you current heat exchanger? It had to either be visually detected or detected via CO emmissions. If visually, then a CO test must be done. If CO (carbon monoxide) is detected, then they must have given you a ppm reading or red tagged the equipment and shut off the gas supply.

    If not, you got a sales pitch from a non-licenced person. Fear sells more furnaces than the fancy brochures do.

  37. It still amazes me that this industry never cleans up. I have been in business for over 30 years and the real problem with this industry is too much government involvement. When they get involved things go bad because they don’t understand the industry. I have never had so many resumes in all my career.Rookies from every so called 2nd chance make believe tv guide college that says here are your new professionals. It is just scary! They have no skill because it takes time to develope it. It can’t be done in 6 months. Bad companies are hiring these people and letting the general public finish paying for their education! These grants were a shame. People paid more than they had too and I refused to particpate in it. The crooks made money as always and guys like me did some new construction and service work until it blew over.But her’s the forcast people. Our industry is in turmoil , guys are closing the doors because the quick buck is over.Their will be very little to do for the next few years so if your going to by a new unit of any kind stick with a main brand and stick with people who are going to remember your name and be there for you when it does break down. I don’t care what you buy today,they all break so you better get along with your dealer because repairs are costly on this new equipment. Take the 10 years on parts and labor and see where it takes you.Most of all like the last gentleman said “Fear sells more furnaces than fancy brochures do” and thats not right! Like anything spend the time,don’t be afraid to ask for a Refrigeration A/C Licence for that new unit.If you need extensive Ductwork,ask for that Sheet Metal Licence.Because no matter what the government thinks you need more than a gas fitter ticket which is equal or less than a driver’s licence and that’s why we have an Apprenticeship program by our government. But most important for the homeowner make sure they have insurance and worker’s compensation and a proper Hst #. If they don’t, that cheap price you got could cost you when the guy no only hurts himself or God forbid burns your house down! Lastly like Mike Homes always says Get all the permits necessary for the job! P.S. I always do a heat loss/Gain so you do get the right sized furnace and I do all the proper start up’s. If they can’t do any of what I listed call someone who can and don’t be afraid to say it because that’s what will clean up this industry is the consumer!

  38. How wonderful it would be to have choices. I would love to protect my environment as much as possible but I need the cheapest furnace as I am poor and had to re educate myself as a single parent. I am doing the very best I can to get out and make money, but I despertely need the cheapest furnace to heat a home that is 1500 square feet. Does anyone know the best furnace in my budget?

  39. I am just in the process of buying a complete TRANE heat and air system down here in San Diego, CA (USA). I agree with J.p. above, from my week of research thus far.
    I am looking at the local TRANE HVAC Contractor, in business since 1996, financing of 3 years with 0% interest of 36 equal monthly payments. TRANE gives a 10 year parts and labor warranty, with a 20 year evaporator coil warranty. I figure that even if in a few years this local Contractor goes away, that I can still have another locally “endorsed” TRANE Contractor come in to warranty the repairs. I still have to ask and check up on this Contractor’s “work” references though. BAD INSTALLERS will do BAD INSTALLATIONS no matter what BRAND you do choose.
    In fact out of the 3 bids I took, a minimum that you should do, TRANE was the cheapest and LENNOX was the most expensive with a RHEEM “clone” (Coleman) in the middle. Look at any tax or energy company rebates that you might also get.

  40. It’s not just a matter of economics and the environment, but also your health. An old furnace with a pilot light is likely using draft induced ventilation. If you make your house tighter with caulking and air sealing, that old furnace could spill deadly carbon monoxide into your house simply by you running your clothes dryer and using a ventilation fan. Not to mention the fact that an old furnace likely has an old heat exchanger; the old furnaces I’ve seen have rust on this heat exchanger and look like they could go at any minute. You would never know; you could go to sleep one night and never wake up again. I would replace an old pilot light furnace due to the greater carbon monoxide poisoning risk alone.

  41. The savings you will get from a variable speed DC motor really depends on how you use it. It could be $150+ plus per year if you run it consistently at a low level, but less than $50 per year if you use it only for heating. BC Hydro published a FAQ sheet on this years ago.

    Also, a 17 year old furnace should probably be replaced to avoid future repair costs (you hinted at this). The real issue is should have gotten a new high efficiency or mid efficiency model. But now high efficiency is required anyways, so it’s really just a question of DC vs AC blower motors.

  42. I was wondering if this quote was reasonable for furnace replacement. This is from Direct Energy. This is from small townhouse , current furnace is 17 years old and running fine and regularly maintained. The reason for replacement was to take advantage of the buy back and ECO Energy rebates. I was also curious how much longer can my current furnace run safely.

    TRANE furnace
    It is a 60,000 BTU 2 stage heating furnace with variable speed DC fan motor.
    It includes 15 yr parts and labour warranty **
    Quote includes return air intake for basement.

    $6620 ( includes the energy rebate and direct energy rebate)

  43. Jazzy,

    Try calling Costco or Sears. I think these prices will beat Direct Energy’s. Costco pricing is about $5,500 and you also get $500 back in Costco gift cards.

  44. just bought tope of the line goodman furance and top of the line ac unit .Ten years parts and labour warranty for 7600,00 installs. Did I get ripped off?

  45. Prices are crazy high. High eff 98% keep rite 55000btu $2500 installed

  46. will a mid -efficiency furnace hook up easy where a 50s low-boy,flash-flame furnace once was ? a high efficiency requires too much new piping for a 50s house.

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