its a big assumption that all hvac companies raised their prices to jack the consumer. believe me..they are NOT that organized.
cost may have gone up from 07/08, but doubt that it has increased $1,500. as cost of living increases so do costs of living, doing business etc.
who benefits from federal tax credit?
uhhh..the consumer
it is an INCENTIVE program, if you don't feel it is for you
others will happily participate. you know... the ones who
take the time to understand the guidelines and requirements.
its not for everyone, you have to be willing to purchase more costly equipment than the industry minimum. the credit is to offset the upcharge. payback is efficiency and tax credit.

I too was worried about this. Let me cite an example. In 2006 I had 3 quotes to replace an old trane heat pump with a new Trane 14i 2.5T unit. All 3 quotes included a 10 year parts and labor warranty and all rebates at the time. My prices averaged about $6500.

Jump ahead to the 'year of stimulus'. I just had a trane 15i 3T unit (we decided go bigger for to qualify for the rebate(s), add some air/heat to the basement and because the 2.5T unit was right on the cusp of what was required anyway). 2 months ago I got a quote for about $7000. I had the guy back out to review a few things and the price was now about $6100. It appears there is a $400 Trane instant rebate and my dealer belongs to some Phila consortium that got me another $500 instant rebate. On top of that, PA has a keystone rebate of $500 for qualifying systems with approved contractors...my system again meets that crieteria and my dealer is an approved contractor. I expect to get my PA rebate within a few weeks bringing my cost to: $5650. Not bad but wait...

My system also qualifies for the Federal $1500 tax credit. There seems to be a lot of conjecture on what that really means. Its either a saving in tax on $1500 (ie if you are in the 20% tax bracket you will save: .20 * 1500 = $300 in taxes *OR* it might mean $1500 cash in hand. I have heard arguments going either way. I am of course hoping to see another $1500 brining my cost to around $4K.

All this stuff is happening fast mind you. I am not sure the dealers figured out how to price their product yet. The guy I originally was going to have do the install lost my business because he was not an 'approved' PA dealer and took too much time to get signed up. It turns out that same dealer was not part of the Phila consortium either so I'd have lost another $500. Its all crazy, but here in PA, if you do some research, I think the time to buy or upgrade is now!

**Of course all this savings does not nearly wipe out all the $$$ lost in the stock market, 401Ks, educational accounts etc...still we needed a new heat pump....

Check these if in PA:
www.keystonehelp.com
http://www.eap.org/rebate.html

The $1500 is a cummulative tax credit maximum, not a deduction. It is equal to the lesser of $1500 or 30% of the purchase price (e.g., a $5000, 95% furnace qualifies for the maximum credit). I have not heard whether the price is for equipment only or the installed price. If you don't eat up the whole $1500 with a furnace, AC or HP, you can also install windows, doors, insulation, etc. It doesn't matter what tax bracket you are in since it's a credit, not a deduction.

My understanding is that it will decrease your overall tax liability (30% of $5k maximum of the material & install work, hence the $1500 limit). Meaning for example that if your tax bill for 2009 would normally be $10k, after the $1500 tax rebate it would be $8,500. It's just like money in your pocket..but.. with a year wait to be in your pocket.

Works for me!!

Too competitive out there to jack the prices up $1500. We give our best price, customers usually beat us down further and then they pocket the $1500 next year. And whatever other rebates they can get on high SEER equipment. Our margins are lower than ever as homeowners demand low prices. Of course judging from the junk manufacturers are putting out as a result, they aren't winning!

So, here is what is going on from my end. I just recently got a quote from an installer who put in a friend's unit 2 years ago. We both received 3 quotes and for the system that matched the most (the thermostat being the only difference) the price quote for me (in 2009) was $2600 more than the quote from 2007.

Actually, all of the quotes from 2007 were less for similar or better systems (around $1500).

So, I am having a hard time figuring out why there is such a big price discrepancy other than the obvious.

That is the reason I posted the question originally. I was hoping that someone could make some sense of it.

Thanks.

Tom in Seattle is indeed correct about the Tax Credit.

The homeowner should be asking "What can I get in HVAC system efficiency improvements for my $1500 credit?"

A 2-stage 16 SEER condenser for the price of a 13 SEER single stage?

A 95% efficient gas furnace for the price of an 80%?

That would be great.

Any reputable dealer has not "jacked" the price up $1500 or we'd never get the job. It's a bonus to the home owner. I personally want us all to win. The consumer wins with the tax credit, the dealer wins by selling higher end equipment, and the country wins by using less energy. To answer price increases, naturally prices have gone up in the past two years, especially last summer when metal prices, and gas prices were skyrocketing. Adversely, we as dealers had to lower our margins to stay competitive with the "whores" of the hvac world who are hanging by a thread and practically begging for work. Also, increases in minimum SEER rating for air conditioning units raised prices quite a bit, and the new R410a refrigerant (mandatory in all units made after this year) also typically cost a bit more. All in all, units are getting more efficient, companies have tightened their pockets, and consumers have gotten more price driven. The market has changed in a short time, but now is definitely the time to buy as all these factors have created an edge for the consumer. As I always say, make sure you use a reputable company for the installation, and stick with a quality system. There is a lot of junk out there...equipment and installers.

Jacked price up since 2007....GET MORE QUOTES!

i think that this rebate is a joke. a person has to spend
much more money on equipment than is necessary to qualify for this tax credit. this money will never be recouped in energy savings in the lifetime of the equipment.

It is not a rebate, it is a Federal Tax Credit. The credit is 30% of the amount spent on qualifying equipment up to a maximum of $1500.

You are correct you have to buy equipment which has higher efficiency ratings and it more expensive. If the higher efficiency equipment is less than 30% more in price, then it won't cost you anything. In addition you will save money on the reduced operating cost.

It becomes a good deal when you combine the tax credit and a rebate. Carrier offers a $1000 rebate on Infinity furncace and condenser. The combination of the two is $2500 off the price. It not a bad deal if you are shopping for a system replacement.

My neighbor bought a Carrier Ininifyt furnace/condenser
system in August 2008. They got nothing from the Federal government. Had they waited 5 months they would be $1500 richer.

Yup... Mike is right about the rebates + the tax credit. It's such a good deal that i'm even going to replace my unit at my home. York has as much as $1,700.00 rebates on certain Affinity equipment & lesser rebates for other equipment. That along with the tax incentive is something like $3,200.00

Don't think that manufacturer rebates are just a gift from the manufacturer. The dealer usually has to pay for a significant portion of the rebate, therefore that cost is worked into the price. People tend to see rebates as warm and fuzzy because they're getting something back. Not all dealers participate in rebate programs for just that reason. Some would rather just give you the best price at the end of the day. Example: Contractor A price = $8500 with $1500 tax credit and $1000 manufacturer rebate. Overall cost = $6000. Contractor B price = $7500 with a $1500 tax credit and does not participate in the rebate program = $6000. It's the exact same without having to dish out the extra $1000 and wait for it in the mail. Just a word to the wise.

Donnie,

You are correct. Carrier dealers fund half the cost of the rebate. Therefore they could mark up the price by half the rebate amount in order to make the same profit.

The rebate is an incentive for the dealer to sell higher priced equipment. The high end equipment results in a bigger profit margin for the dealer. You will also notice the rebates run in the spring and fall. These are traditionally the slower sales periods.

Shopper should get three quotes for similiar equipment and make a comparison of the costs.