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Central Air Commands $5,500 Price Premium in U.S. Homes

Central Air Commands $5,500 Price Premium in U.S. Homes


Zillow is reporting this week that U.S. home buyers are willing to spend more for the comforts of a cooler home. A new Zillow analysis finds that homes with air conditioning sold for 2.5 percent more than homes without it, which is a premium of nearly $5,500 for the typical U.S. home.

The premium for air conditioning is highest in San Antonio, where homes with air conditioning sold for a 5.8 percent premium. Cincinnati is close behind, with a 5.7 percent premium for homes with air conditioning. Homes with air conditioning also sold for a five percent premium in Detroit, Indianapolis and Las Vegas.

Buyers put a higher value on air conditioning than outdoor home features like a patio or deck. Air conditioning was listed as a required feature by 62 percent of buyers, while a private outdoor space was deemed essential by 48 percent of buyers, according to the 2017 Zillow Group Consumer Housing Trends Reportii.

Unusually hot summer days have become more common over the past few decades, according to the Environmental Protection Agencyiii, which may help explain why air conditioning is becoming more of a necessity in many markets. Across the country, 66.1 percent of homes that sold in the past year have air conditioning. In markets with some of the hottest climates, air conditioning was in nearly every single home that sold in the past year. It was in 99.1 percent of homes sold in Las Vegas, and 97.9 percent of homes sold in Phoenix.

"With summer temperatures hitting record highs across the country, today's home buyer places a premium on the once-upon-a-time luxury amenity of air conditioning," said Zillow Senior Economist Aaron Terrazas. "Individual design preferences or decorating styles might deter buyers from certain homes, but there is a strong consensus in favor of air conditioning, although in the nation's fastest-moving markets, AC may weigh relatively low for buyers eager to find any home they can. In historically more temperate climates, some homes - especially older ones - aren't as likely to have air conditioning. But in places where temperatures regularly reach triple digits, it's hard to find a home without air conditioning."

Renters put a slightly higher premium on air conditioning. The typical U.S. rental on Zillow in the last year with central air conditioning rented for 2.8 percent more than rentals in the same market that don't have air conditioning, or about $40 per month.

This may be because renters are more limited than homeowners when it comes to adding air conditioning. They likely can't install a central air or HVAC system for example, and window units may not be as effective at cooling an entire home.

The New York, Las Vegas and Phoenix metros - all markets with sweltering summers - had the highest rent premiums for air conditioning. While central air conditioning is prevalent throughout Las Vegas and Phoenix, it is fairly rare in the New York metro, which includes northern New Jersey and Long Island. Just 17.2 percent of New York metro rental listings advertise air conditioning, compared with 54.7 percent of on-market rentals overall.
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