How To Choose a New Water Heater

When I was new to the trades, water heaters were the first mechanical system I became comfortable with. They’re relatively easy to understand (if you’ve ever boiled a pot of water on a stove, you understand the basic idea), and they’re replaced often enough that I soon had well over a dozen change-outs in the bag.

I contacted master plumber Beau Means of Benjamin Franklin Plumbing to get the latest information on water heater options. We’ll walk you through the pros and cons of different water heaters – tanked, tankless, gas, electric and hybrid heat pumps.

About the Expert

Beau Means is a master plumber with nearly 35 years of experience. Formerly the chief plumbing inspector for Wichita/Sedgwick County, Means is the general manager of Benjamin Franklin Plumbing in Wichita, Kansas and chairman of the local plumbing board.

Types of Water Heaters

Gas Tank Water Heaters

Often considered the “default” water heater, conventional gas water heaters have evolved over the last decade. They’re much more energy efficient but their initial cost has remained relatively low.

If you need an immediate replacement, don’t plan to stay in your home for years or just don’t use a lot of hot water, a conventional unit may be your most cost-effective option.

Cost: $550 to $1,200 (not including labor)

Pros and cons:

• Pro: Lower upfront cost
• Pro: No fans or pumps to burn out – proven reliable over decades of use.
• Con: Less efficient than most other options

Electric Tank Water Heaters

Electric tank water heaters are the second most common type. They use heating coils to keep the tank of water at the right temperature. They function very similarly to an electric stovetop.

Cost: $500 to $1,200 (not including labor)

Pros and cons:

• Pro: Readily available and proven technology
• Pro: Low initial installation cost
• Con: If the cost of electricity is high in your area, it will be expensive to operate.

Tankless (Gas or Electric) Water Heaters

A gas or electric tankless unit heats water as needed. Means notes they have two major advantages over tank-style heaters: “You only heat water when you need it, and you have unlimited hot water.”

“One downside to gas tankless is that they require a lot of gas when they are heating the water, so you will need to be sure your gas line is adequately sized,” says Means. “We’ve found [electric tankless] to not be as efficient as the gas tankless and often require an upgrade of the electric service to the home as they require a lot of power.”

Other tankless options include point-of-use gas or electric heaters that are designed only to serve one fixture, such as a sink. Camp showers that run off liquid propane also fall into this category.

Cost:

• $1,000 to $1,500 for whole-house water heaters (not including labor)
• $300 to $500 for point-of-use models (not including labor)

Pros and cons:

• Pro: You’ll never have to worry about running out of hot water.
• Pro: Small and hangs on the wall, freeing up floor space
• Con: Installation can be a major project.

Condensing Gas Tank Water Heaters

Both tanked and tankless gas heaters send hot exhaust gases out of the flue, which wastes energy. A high-efficiency condensing gas water heater redirects the exhaust heat to the water. Condensing gas water heaters are extremely efficient, though the initial purchase price is higher than a standard efficiency model.

If you’re familiar with high-efficiency furnaces, you’ll recognize the technology, as well as the use of PVC pipe for venting.

Cost: $1,200 to $3,600 (not including labor)

Pros and cons:

• Pro: Extremely energy efficient
• Pro: May qualify for tax rebates
• Con: High initial cost
• Con: Requires gas line and venting reconfiguration.

Heat Pumps or Hybrids

These water heaters function very much like a whole-house heat pump or hybrid HVAC system. Instead of generating heat with open flames or resistor coils, heat pumps transfer heat energy out of the surrounding air to the water being heated.

“They work best in warmer climates,” Beau Means says. “The efficiency drops if you must heat the air around the water heater to keep it from freezing.” In addition, areas with colder groundwater demand more energy from the water heater, and a heat pump may struggle to keep up.

In those climates, a hybrid model is a better choice. Hybrids come with a conventional heating coil installed as a backup, which will kick in only when needed to meet your home’s demand.

Cost: $2,000 to $4,000 (not including labor)

Pros and cons:

• Pro: Lowest operating cost of any water heater, especially in warm climates
• Pro: May qualify for rebates and tax incentives
• Con: Higher initial installation cost
• Con: Often larger than traditional electric heaters

Water Heater Features to Consider

Here are a few features to consider when selecting a water heater.

Cost vs. Efficiency

You’ll want to balance purchase price and operating costs. Remember that, when replacing an older heater, almost any new model will lower your utility bills. “The Department of Energy continues to raise the efficiency standards for water heaters,” says Means.

Space

A larger tank takes up more space, while a tankless gas heater requires a vent line. Heat pumps can be bulky and require open space in their immediate surroundings. A tankless electric model takes up the least space of all. Remember to look at your existing space, even if doing a like-for-like replacement. For example, Beau Means points this out: “if your old heater is in a tight space, the newer heater may be an inch or two larger in diameter and may not fit.”

What Size Water Heater Do I Need?

Most households will want to choose between a 40- or 50-gallon tank. Means suggests considering your family’s hot water usage to determine the best choice for you. “How many people are in the house,” he says, “and do they typically bathe in the same time frame? Do you have a large tub such as a jacuzzi tub that takes a lot of water? Do you use hot water to launder your clothes?”

If that sounds complicated, he also has a good rule of thumb. “The cost and efficiency differences between a 40-gallon and a 50-gallon water heater are usually minimal,” he says, “So I suggest if you have the room, go bigger. I have never heard any complaints about having too much hot water.”

Frequently Asked Questions

How much does it cost to install a new water heater?

Depending on the type, expect to pay $800 to $6,400 for a new water heater, including installation labor. That wide price range reflects the differences in style and complexity in the water heater options.

Can I install a water heater myself?

Probably, but check with your building department. “I have found that most jurisdictions will allow homeowners to install a water heater in their own home if the authority having jurisdiction can inspect it,” says Means. “Any time you’re dealing with gas or electricity, you should have a professional look over your work.”

How long do water heaters last?

“6-10 years,” says Means. “Annual flushing of the heater to remove the built-up sediment will prolong the life of the heater and increase its efficiency. Also, be sure to replace your anode rod to get the most out of the heater.”

What are the signs your water heater is going out?

“If it is leaking,” says Means, “it needs to be replaced.” This is especially true if it leaks from the bottom, often indicating a rust issue. But Means says that if you’re concerned because you suddenly are not getting hot water or not as much hot water, there may be a simpler, more affordable fix such as a gas valve, element, or dip tube. Consult a professional to get a clearer idea of what’s wrong with your heater.