Residential HVAC

Part
01
of three
Part
01

Finding HVAC services

To answer your question about how people in the US find heating, ventilation, and air conditioning services I analyzed multiple market trend websites. This research is based on the US only and on residential consumers of HVAC systems and services. I found through my research that the majority of HVAC services are found by customers online through Google searches and reviews, Yelp, and Home Advisor and Angie's list.

ONLINE SOURCES
According to this source, 85% of consumers now use online resources to find local HVAC companies. It also references email marketing as a way to connect with potential clients. On average, over 5,000 searches for HVAC installation are made on Google and 135,000 searches are made regarding additional information on HVAC repair services every month. Home Advisor/Angie's List receive 11,000 searches on suggestions and advice for home services. While I was unable to find the exact number of searches for HVAC installation on Homeadvisor, it is worth paying attention to the high volume of requests for suggestions that the website receives. Yelp provides a list of the top 10 HVAC installation services anywhere that a consumer searches. Each installer that is suggested receives multiple reviewers of their services. For example, multiple HVAC installation companies in New York have received well over 90 reviews from potential consumers of HVAC installation services.

COMPARED TO "WORD-OF-MOUTH" DISCOVERIES
Many people who are looking for HVAC installation services take to websites such as Facebook to ask friends and family members for suggestions on HVAC services. Wikihow suggests using friends as a starting point and from there researching online based on suggested HVAC services. The WikiHow page for "How to Choose a HVAC Contractor" has over 14,000 views. While it recommends that people use friends as resources, the fact that the page has so many searches shows that people tend to Google search as a way to find HVAC contractors. This source reports that when companies improve their "online Google presence" their return on ad spend improves as much as 1,214%. This finding is supported by multiple case studies and proves that with an online presence supported through Google "adwords", there is a high probability that the money a company spends on the online Google ad is worth it, because consumers' searches lead them to these ads and ultimately are more likely to chose these businesses.

CONCLUSION
In short, while consumers of HVAC services still rely on suggestions from friends to an extent, there is an increasing trend in online suggestions and searches for HVAC installation and general services.


Part
02
of three
Part
02

Residential HVAC priorities

Consumers look for reliability, quality, affordability, energy efficiency, energy star ratings, and thorough maintenance options when choosing residential HVAC. People also consider factors like customer service, brand reputation, and pricing options for repair and replacement needs. Although some information specifically related to installation services was available, details on what residential consumers look for when purchasing HVAC systems or repairs were more readily available. While precise statistics on consumer priorities were mostly unavailable, it can be estimated that the HVAC aspects that popular brands advertise and focus on are the same factors that consumers seek out when making their HVAC purchase decisions. Industry sites with HVAC resources and tips also provided insight on consumer priorities.

MARKET OVERVIEW

Low unemployment rates, gas prices and "high consumer confidence" have contributed to accelerating HVAC replacement rates. It was estimated that the HVAC market in the United States would grow by 11% in 2016 and then 5% in 2017. Prices are also estimated to remain solid as the industry continues to gradually recover from the recession. According to Modernize, a home improvement site with a Better Business Bureau rating of A+, some top HVAC brands are American Standard/Trane, Carrier, Goodman, Rheem, Lennox, York, Ruud, Amana, and Heil.

POPULAR BRANDS

While precise statistics on consumer priorities were unavailable, popular HVAC brands can provide insight on what factors are important to consumers. The specifications and offerings that these brands advertise shed light on the elements of their services that customers are drawn to and seek out.

American Standard, provides HVAC products that are affordable, suited to the needs of each home, and that manage "home energy consumption" in order to reduce utility costs. This brand also manages air quality and provides users with the ability to control the climate of their home. American Standard also claims to remove "99.98% of allergens in the air." In 2017, Consumer Reports conducted a study that assessed the reliability of HVAC brands. Although no brand stood out as the most reliable, two-thirds of American Standard owners were "likely to be completely satisfied with the performance of their A/C system by year five." Those who owned Goodman systems were the least satisfied.

Aristair advertises its new HVAC technology, VRF (Variable Refrigerant Flow) that offers quiet operation, energy efficiency, decreased downtime and breakdowns. They also offer flexible installation for small spaces. Tempo Cooling and Heating is another popular brand that offers 24/7 customer service which allows for easy repairs and energy efficient products. Ellington is a reputable HVAC brand with high-quality products that offer a warranty, preventative and regular maintenance. Fredrick Air is another brand that provides quality products, maintenance options, customer service, and a SEER rating.

While each brand offers something different to the consumer, factors like energy efficiency, customer service, and maintenance are repeatedly emphasized. This indicates that these features are likely to be attractive to potential buyers.

WHAT CUSTOMERS ARE LOOKING FOR

An outline of what customers are looking for when searching for HVAC installation, systems, and repairs is provided below.

BRAND REPUTATION + RELIABILITY

Customers seek out brands with positive reputations that are known for their reliability. These positive opinions are sourced from referrals, customer reviews, references, certifications, and experience. Referrals and reviews can come from word of mouth, social media or other avenues like the Better Business Bureau. Credible reviews can also be found on Google which is better than other review platforms like Yelp that filters their reviews. Certifications allow consumers to measure a business's level of experience and can also provide insight into the company's strengths. HVAC companies that hire technicians with a North American Technician Excellence (NATE) certification have workers that are "efficient, knowledgeable and professional." The majority of states require that "HVAC contractors obtain a certification or license to practice."

QUALITY OF INSTALLATION SERVICE

When searching for an HVAC provider, those who offer written over oral estimates are preferred. Installation should happen after an onsite visit has occurred where the HVAC provider can assess the needs of the home, measure equipment, and survey the property. It's also worth noting that customers look for HVAC companies that are up to date with the latest technology and know how to properly install it. Customers are wary of contractors who attempt to unload old inventory or who continue to use outdated practices. Consumers also look for HVAC providers that can offer annual cooling and heating estimates for the equipment they install.

ENERGY EFFICIENCY + STAR RATINGS

Products with an energy star rating are considered to be high-quality. These products "meet strict energy efficiency guidelines set by the U.S. Environmental Protection Agency and offer significant long-term energy savings." According to the Department of Energy, People who use energy efficient air conditioners can save 20-40% on costs. When deciding what SEER rating to look out for, a unit with a rating of at least 15 is considered best. According to an assessment by Modernize, Lennox had the highest energy efficiency rating with a 9 out of 10. This was followed by Carrier, Trane, Mitsubishi Electric, Rheem, and Panasonic that were rated at a value of 8. Carrier, Lennox, and York had the highest overall ratings for the other categories of warranty, price range, customer service, and special financing. Lennox, in particular, has a 26 SEER rating for its XC25 product. This product has the ability to "cut energy costs by as much 60 percent." Carrier's Infinity 21 24ANB1 is reported to have a SEER rating of 21 and Trane's XV20i has a SEER rating of 22.

REPAIR SERVICES

In the 2017 Consumer Reports study, most readers indicated that they pay out-of-pocket for repairs. This indicates that repairs are expected but it is likely that brands with lower, infrequent repair costs are preferred. Carrier customers paid the least amount "at $200, followed by Goodman at $204 and Trane at $219." Those who owned Rheem HVAC systems paid the most at $252 followed by Lennox at $236. It was also reported that 17% of Lennox owners required repairs within the first five years. In 2014, another study by Consumer Reports noted that the most reliable HVAC companies with the least repairs were American Standard / Trane, and Carrier / Bryant. American Standard's offerings, in particular, required the least number of repairs for both Central A/C and Natural Gas Furnaces. In terms of furnaces, in 2017, 14% of American Standard products required repairs and 13% of Trane products required them. 15% of both Carrier and Bryant furnaces required repairs.

CONCLUSION

In conclusion, residential customers seek out HVAC services from brands and contractors who are considered to be reliable, affordable, with quality products that are energy efficient. Customers also look for service providers with good customer service, comprehensive maintenance, and a positive reputation. While precise statistics were not available for consumer priorities, useful insights can be gleaned from the features that are consistently advertised by brands. It can be assumed that it is likely that the same features that are emphasized are also the features that consumers search for when purchasing HVAC services.
Part
03
of three
Part
03

Residential HVAC and Affluence

There are no exact figures on whether higher–income households spend more on HVAC services and installation annually, however; general data on installation costs according to house size, and average house size according to income allows us to draw some approximate conclusions.

According to our calculations, the average HVAC installation expenditure for a high-income household would be USD$23,714, while this figure falls to USD$14,200 for lower-income household. Meanwhile, high-income earners appear more like to use, and thus install, HVAC systems.

Calculations

To reach this conclusion, we calculated the average size in square meters of a typical low-income household based on data provided by the US Energy Information Administration, and then proceeded to calculate how much it would cost to install a HVAC system on average according to estimates given by Service Champions. We then carried out the same process for higher-income houses using data from the same sources.

These calculations showed that HVAC installation expenditure for an average high-income household would be USD$23,714, and USD$14,200 for your average lower-income household. This means that should high-income households choose to install a HVAC system, they would almost certainly spend more on the installation process.

Higher income households were classified as those earning more than USD$140,000 annually, given that this was the figure used by the US Energy Information Administration.

Are high-income earners less likely to install HVAC?

By looking at HVAC usage data, we can conclude that higher-income houses are also more likely to use HVAC systems, and consequentially, are more likely to pay for installment.

Figures from the US Energy Information Administration based on its 2015 Residential Energy Consumption Survey show that households with an annual income of more than USD$140,000 are more likely to use air conditioning, with 92.85% of high-income houses using air conditioning, as against 85.54% of households with an income between USD$20,000–USD$79,999 per year.

Nonetheless, there are 71.6 million low-income households which use air conditioning in contrast to just 10.4 million high-income households across the country, showing that low-income households are the greatest net users of air con as a market.

The results are similar if we look at the use of heating systems according to household income. For instance 95.7%of low income households use heating systems, in comparison to 96.42% of high-income households. Meanwhile, 10.8 million high-income households use heating, in contrast to 80.1 million low-income across the country.

These trends seem to suggest that high-income households are more likely to install HVAC systems than low income households. This is compounded by the fact that this demographic tends to be home-owners as opposed to renters.

Nonetheless, there is some indication that a percentage of high-income home-buyers are less likely to pay for HVAC installation and services than more median-income households.

For instance, 15 percent of the country's highest earning generation, aged between 37-51 and known as generation X, opt to buy new-houses as opposed to preexisting builds, precisely in order to avoid renovations and other installations. In fact, according to the National Association of Home Builders, buyers of existing-houses outspend their new-build buying counterparts on HVAC.

Conclusion

To summarize, our analysis suggests that high-income earners are more likely to spend more money on HVAC installation due to the fact they possess larger than average houses. Likewise, a higher proportion of high-income households use air conditioning and heating systems than lower income households, suggesting a greater tendency to spend money on installing these systems.

Nonetheless, there does appear to be a trend amongst some high-income house buyers to purchase new builds, in order to save on the hassle and cost of renovations and installations. Likewise, figures suggest that low-income households spend more money collectively on HVAC services than their high-income counterparts, given the fact that they occupy a much greater share of the housing market. In addition, the fact that less low-to-median income households already have HVAC systems installed makes them a greater potential market than higher-income households.
Sources
Sources