Are Tankless Water Heaters Better?

Hot Water

Investing in a suitable water heater, especially one that will stand the test of time, can be an expensive business. If you look at what’s available these days, it can also be a little confusing. In the past, most all homes had storage tank water heaters. The choice usually came down to electric or gas, and then how many gallons. In recent years, tankless water heaters have emerged as a strong competitor to storage tank models, and have been gaining in popularity rapidly. So much so that of all the custom homes I build every year, roughly 50% are going with a tankless system for their hot water.   

In this article, we’re going to take a look at the differences between tankless and storage tank heaters, as well as looking at the pros and cons of each. By the end, you should have a clearer idea of which kind of water heater would suit your family, property and living situation best.


A Tankless Water Heater, What Actually is it?

Sometimes referred to by the name on-demand water heaters, tankless heaters use powerful burners to quickly warm the water up as it passes through a special heat exchanger as it is delivered directly into your faucets and/or shower. They are normally powered by gas or electricity. In tests conducted by the group Consumer Reports, it was found that tankless systems are on average 22% more efficient than traditional storage tank heaters powered by gas.


How are they Different from Storage Tank Heaters?

Storage tank heaters are the models that most will be familiar with and usually consist of a tank that’s insulated and that can hold between 30 to 60-gallons of water. The water is warmed in the tank and kept there until you use it.

Generally, like the alternative, they are powered by electricity or natural gas. Natural gas varieties are the better option as they can use up to 50% less fuel than electrically-power heaters and the recovery time is significantly faster. They tend to be pricier than electric models.


Pros and Cons of Tankless and Storage Tank Heaters

Now we understand the difference between the two, which is better? To figure that out we need to look at the pros and cons of each. Let’s start with the tankless variety.


Tankless Water Heaters


  • Hot water available on demand – They can deliver an unlimited supply of hot water within a range of 2 to 6-gallons every minute.
  • Does not take up much space – Waterless tank heaters are smaller and can be installed in very tight areas. Some can even be installed on the exterior if you have an especially small property.
  • Longer lifespan – Water heaters that don’t have a tank can last as long as 20 to 30 years, which is almost double the lifespan of a traditional storage tank heater.
  • Money-saving in the long run – Tankless water heaters produce hot water only when you need it, dramatically reducing energy costs. According to findings by the US Department of Energy, tankless on-demand water heaters are approximately 34% more energy-efficient than normal heaters. Gas-fired on-demand heaters could potentially save $100 every year that they are in good working condition, while electric models could save $33 a year.        


  • Output is less than storage tank heaters – Particularly if you are using more than one water source in your home, a tankless water heater may struggle to deliver enough to keep up with the demand.
  • More Expensive – The installation of a tankless heater will take longer and will cost more. Especially if you must retrofit a tankless system in your property when you once had a storage tank heater.


Storage Tank Water Heaters


  • Less Expensive Initially – The main advantage that storage tank water heaters have over tankless models is that they cost a lot less initially, especially when it comes to purchasing one and having it installed. Rather than spending anywhere between $2,000 and $4,500, it could cost you fraction of that, at between $500 to $800 for purchasing and hiring a professional to install your storage tank heater.


  • They have a much shorter lifespan – Storage tank heaters have a shorter lifespan than on-demand tankless versions, of around 10 to 15 years, which means you will have to replace yours much sooner and will have pay out for a new system in a shorter amount of time.
  • Not great if you’re the last person to take the daily shower – As they store water and heat that water, once that stored water runs out, you need to wait again for the next tank full to be warmed. Not ideal for the person who takes the last shower.
  • Needs more space – Storage heaters are not ideal if space is a premium, because you need a lot of space to install them. There is also the downside that you can’t have it installed outside your home.
  • Slightly higher bills – Your utility bills will be higher with storage tank heaters, because they heat water and then keep the water at that temperature 24 hours a day, regardless of whether you use it or not.


Are Tankless Water Heaters Better?

By reading this article, you’ve already taken the best step forward, rather than just rushing out and buying one or the other on a whim.

Knowledge is always power, especially when it comes to buying large appliances like water heaters for your home. Now that we’ve discussed what the difference between each is, as well as the pros and cons of each, you should have a better idea which is right for your home and situation. I would suggest, if you have the available budget, that a tankless water heater is a far better investment in the long run.


Steve Wright

Steve Wright is a general contractor who over the last 30 plus years has built hundreds of new homes, ranging from first time affordable homes to multi-million dollar custom homes and everything in between.

This Post Has One Comment

  1. Andra

    I loved this article! My husband and I are planning to build in the next few years and I for sure want a tankless water heater. Your post just made me love them even more! I have also heard that they are great when you have a large tub.

Comments are closed.