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How much does it cost to replace a water heater?

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by Danni White ConsumerAffairs Research Team
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Replacing a water heater in your home typically costs between $800 and $1,600, although the type of water heater you purchase can increase your costs significantly. Tankless water heaters can cost up to $3,000, while a tank-based system averages only around $1,000. Labor and installation costs are included in these prices, representing anywhere from $150 to $800 of the total cost.

Signs you need a new water heater

Most water heaters will last between 8 and 12 years, though newer tankless systems can last over 20 years. They can gradually lose performance or suddenly stop working and need immediate replacement. However, there are a few key symptoms to watch out for ahead of time that indicate your current water heater is on its last leg. Most of these issues will require a licensed plumbing company to inspect your unit and offer a quote for repair or replacement — though some you may be able to fix yourself.

  • Rusty or metallic water: If you notice a rust color to your water or a metallic taste, this is often an indication of corrosion. This could mean you need a new water heater or that you need to replace the anode rod.
  • Leakage: Leaks are an almost sure sign your water heater needs to be replaced, as these often occur internally and are very difficult (or cost-prohibitive) to repair.
  • Water not getting hot enough: If your water isn’t getting hot enough (or not getting hot at all), you should first check that the pilot light is still lit or that you haven’t tripped a breaker. If you’ve ruled these possibilities out, you should have the heater inspected by a professional, as there’s likely an issue with the internal heating mechanism.
  • Pops and cracking sounds: This is usually an indication that the heating element isn’t working properly and should be inspected and potentially replaced by a licensed technician.
  • An older model: If your water heater is over 10 years old, you should start budgeting for a new one to buy within the next year or two. You may also consider buying a new one even if your old one is running fine, considering a water heater this old is more likely to suddenly stop working without notice.

How much does it cost to replace a water heater?

Water heaters are less expensive to replace than some other systems, like HVAC systems, but still represent the second-highest source of energy use in the home. You should expect to spend at least $1,000 for a basic water heater, while opting for a tankless system costs up to $3,000.

For a standard tank-storage water heater, the cost for the unit alone averages $400 to $1,600, and installation costs between $150 and $800. Tankless units cost between $250 and $2,500, with installation costs between $400 and $1,500. There are also high-efficiency and solar options that run significantly more — upward of $3,000.

The cost to replace a water heater averages $800 to $1,600.

Those with a home warranty can drastically reduce the costs of replacing a water heater. Home warranties are contracts for homeowners to protect against the cost of repairing or replacing major home appliances and systems. If your water heater breaks and is covered, your warranty provider sends a licensed repair company to assess any system failure. You pay a service call fee (between $60 and $125), and any repair or replacement is done at no further cost to you. A home warranty usually costs from $300 to $600 per year.

How much does it cost to replace an electric water heater?

Electric water heaters cost between $400 and $1,600. You can expect to pay $100 to $200 more for gas water heaters. Replacing an existing unit will generally cost less than installing a system from scratch since many of the electric and gas hookups will already be set. However, if you’re converting from one power source to another, there will be additional costs, such as adding electrical wiring ($550 to $2,300), installing gas lines ($275 to $825) or installing a water line ($350 to $1,900). If the water heater needs to be moved, there may also be costs to repair and install drywall ($1,000 to $2,900) or build new framing ($200 to $400). You may also need to pay for permitting ($100 to $1,500) depending on the extent of the work and the state you live in.

How much does it cost to replace a tankless water heater?

The cost to install a tankless water heater is higher than the cost for a tank-based system. This is due to the base price of the unit itself ($250 to $3,000) and because of higher labor costs. Licensed plumbers will charge anything from $50 to $150 an hour for labor, but not all plumbers will be able to install a tankless system, as it can involve putting in new gas and water lines. On average it takes eight to 10 hours to install a tankless system, compared with the two to three hours it takes to install a tank-based system.

Factors involved in water heater replacement costs

When budgeting to replace your water heater, keep the following factors in mind:

Tankless water heaters are more expensive than tank-based ones, but they have lower operating costs.
  • Type: The biggest factor in your water heater replacement costs will be whether you choose a tankless or tank-based system. Tankless systems heat water on demand and can last twice as long as tank systems, but they cost two to three times as much. A tank system is easier to install and holds hot water in a tank (anywhere from 30 to 80 gallons). The downside of tank-based heaters is they take one to two hours to replenish when the hot water runs out.
  • Efficiency rating: High-efficiency models come in both tank and tankless models and can offer energy savings of 100% to 300%. However, they cost on average $1,000 to $3,000 more than a standard-efficiency model.
  • Size: The larger the water heater, the more expensive it is. For tank-based water heaters, you’ll need to determine how many gallons your household needs. If only one or two people live in your home, a 30-gallon tank will most likely be enough. However, for households of four to five, you’ll want a 40- to 50-gallon tank. If your household uses less than 40 gallons a day, one tankless system should work, but if you use more you may need two systems.
  • Gas vs. electric: While a gas system will cost $100 to $200 more than an electric model upfront, most people end up saving more over the life of the unit on their utility bills because natural gas costs less than electricity, on average.

Types of water heaters

The two main types of water heaters are tank and tankless, and they both can run on electric power, gas, oil or propane. Tank-based water heaters can also run on solar power.

  • Gas: Gas water heaters are less energy-efficient than electric but have a faster recovery rate. They cost a bit more than electric systems but will save the user more on energy costs over the life of the unit.
  • Electric: Electric water heaters are around 95% energy-efficient but cost more over their life spans due to higher energy costs. However, those living in smaller houses or apartments may find them preferable.
  • Propane: A propane water heater is more expensive than gas or electric options, but it may be the only choice available to those living in rural areas or off-the-grid homes.
  • Oil: Like propane, oil-powered water heaters are more expensive than other energy types, but they are commonly found in older homes, especially in the Northeastern U.S.
  • Solar: A solar water heater costs, on average, $1,000 to $6,000, with installation costs of $2,000 to $4,000, though some houses may see a total price tag of $13,000 or more.
  • Hybrid heat pump: A hybrid system runs between $1,200 and $3,500. These systems usually give the homeowner the option of switching from a traditional water heater to an electric heat pump that extracts heat either from the air or geothermally. Because of the large amount of space needed for these units to perform, they’re generally only an option for bigger houses.

How much does a water heater installation cost?

Installation costs alone for a water heater range from $150 to $800. The best way to determine installation costs is to have a licensed plumber come to your house to evaluate your space and options. Expenses depend on the type of water heater you are installing, whether you’re switching to another energy type and what extra labor charges might be involved (e.g., drywalling, wiring). Total costs for tank-based systems average about $1,000, while tankless systems are usually $1,000 to $3,000. You save more money in upfront costs by installing a tank-based water heater, but a tankless system saves you more in the long run.

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    Bottom line

    When your water heater goes out, you’ll likely be in a hurry to get it repaired or replaced so your family can carry on with daily tasks like bathing, cooking, cleaning dishes and washing clothing. By watching for signs like your water not heating fully or leaking — and noting the age of your water heater — you can better plan for replacing your unit before it stops working completely.

    To be prepared for your future water heater costs, take the time now to research your options, including tank-based vs. tankless units, power sources, capacity, brands, warranties, costs and reviews.

    If you want to protect yourself against paying out of pocket for a water heater, consider a home warranty.

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    Profile picture of Danni White
    by Danni White ConsumerAffairs Research Team

    As a member of the ConsumerAffairs research team, Danni White is committed to providing valuable resources designed to help consumers make informed purchase decisions. Danni specializes in content strategy and development, with over a decade of professional writing and research experience.