The sweltering heat waves of summer have swooped in this July. Sleeves get cuffed (or lopped off entirely), fans come out, and AC units go on full blast—shooting your electric bill through the roof. While central air conditioning may be aspirational for some window-unit dwellers, a new study from Zillow shows that most Americans, whether renting or buying, are willing to fork over a little extra money for that sweet, sweet AC: On average, homes with air conditioning sold for 2.5% more than homes with no air conditioning over the past year, balancing out to a premium of about $5,500.
"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," Aaron Terrazas, Zillow's senior economist, said in a statement. "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.
The market with the highest premium comes as no surprise. San Antonio's hot Texan sun costs residents $10,757, or 5.8%, more for central air than those without. Cincinnati, Ohio, was next on the list at 5.7% ($9,092), followed by Detroit, Michigan, at 5.5% ($8,470); Indianapolis, Indiana at 5.4% ($8,180); and Las Vegas, Nevada at 5.2% ($13,620).
"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," Terrazas said.
In some of the nation's hotter markets—temperature wise—such as Las Vegas, Nevada, or Phoenix, Arizona, over 97% of homes have air conditioning. But in places like New York City central air is way less common. Only 22.6% of NYC for-sale homes and 17.2% of rentals in the past year advertised that the building had central air conditioning. Since there are fewer units that offer air conditioning in an already competitive market, those who want it have to pay up: On average, it's a $8,798 premium in purchase price for homebuyers and a $275 premium monthly for renters.
Nationally, 62 percent of buyers surveyed said that air conditioning in their homes ranked as a must-have—partially why 66.1% of homes sold last year had air conditioning as a feature. The study also concluded that renters were open to spending more money for air conditioning, likely because they don't have the ability to install their own HVAC system or make improvements to the heating and cooling of the building.
To find a detailed accounting of the premiums between renting and buying in some of the nation's biggest markets, see the full study on Zillow.