Hello, I will asnwer these questions for you.
Tankless water heaters are an investment, You don't see the money up front. Also they maybe hard to install as far as getting the correct size gas line. As far as the technoloy is concerned there up to date. They waist very little water. They do have venting issues with the house and scaling issues. They have condensing water heaters with above 90% effiency, also have some with built in circulating pumps that you can control when they go on and off.
A stand type water heaters are now high tech also. A.O. smith has the better choice of product. With pvc venting high effiency also .

Either one you should be getting rebates from public utility and $1500.00 tax credit from feds.

I recomend calling takagi for tankles ask them to come and give you a quote. They send independant guys that are trained by them. ( I am one of them )When the guy comes tell him to give you a price on an A.O. smith cyclone I think its called.

The units wisehvac is referring to are AO Smith Vertex. Link below. They advertise 90% or 96% thermal efficiency depending upon the unit. However, that's misleading because it has to do only with heat-transfer to the water. They don't talk about heat LOSS from standing hot water in the tank which, I think doubtless, would be substantial. There are two major drawbacks. 1) They are expensive. $1,500 and $2,000 plus installation and 2) They are still tanks. Tanks are cursed with a reputation for failure via fracturing and leaking typically at around 10 years or so. Vertex has six year guarantee....interestingly no longer than other higher-quality tanks. They haven't been around long enough to say whether they are any longer lasting than other tanks. They are designed for easy retro-fit.

Tankless units are typically very long-lasting and, of course, don't have heat loss issues like tanks. They must be sized properly and installation can be relatively easy or a really difficult depending upon location. Considerations of gas-line supply and exhaust configuration can be make/break issues.

IMHO, either alternative should be handled by a professional installer with substantial experience. In the past, everything was just gas-supply plus flu/exhaust and you're done. There are MANY more considerations with units such as these.

Here is a link that might be useful: highest efficiency water heaters

Is your husband willing to spend $3000-$5000 on a new hot water installation? Because, if you have to pay a plumber to retrofit a tankless, that's the price range you'll pay. You do get the tax credit, but 30% of a $5000 installation still makes that a $3500 installation. As was stated above, tankless is an investment with a LONG payoff period.

A couple of issues:

First, I don't believe you specified gas or electric. Gas tankless can recognize about a 35-38% reduction in gas usage compared to a standard gas tank water heater. That doesn't apply to an electric tankless - the savings is only a few percent.

Gas tankless can make sense with the rebates and the 30% federal tax credit if you keep the installed costs low. If not, they don't make a lot of economic sense unless there is some other factor - need for continuous hot water, or you required a powervent heater anyway -- for example.

There are some issues with tankless, so it's best to hire someone who knows what they are doing to design and install it. The largest number of complaints involve bad application, sizing, and installation.

Asolo is correct about comparing government assigned Energy Factor rather than the manufacturers claimed "thermal efficiency". I disagree with him about the heat loss through a tank though. Gas tankless achieve most of their savings by reduced flue temperatures, not eliminating standing losses through the tank - that is why there is very little savings with an electric tankless.

Gas tanklless heaters keep getting better. The first iteration wasn't good. We are now seeing some pretty good units out there.

From the wording, I assumed gas. My bad.

Don't understand comment about "losses through the tank" in reference to tankless heaters. Regular tank-reservoir heaters do have significant heat loss...unless this newest version has an incredible amount of some new type of insulation built in....which they don't seem to comment about.

Otherwise, we're on the same page.

Asolo:

It's getting a little off topic, but the standby losses on a well insulated heater tank - disregarding the flue up the center of a gas heater - isn't very high.

To prove that point, look at the energy factor of an electric tank heater and an electric tankless heater. Since both convert almost 100% of the energy they use, the only real difference is standby losses through the tank. A good 40-50 gal electric tank heater has an EF of .92 -.94 and the tankless electrics have an EF of .94 - .95 -- virtually no difference.

Well, I'm over my head so must capitulate. From your other posts, I know you know what your talking about. But, then, what's the deal with the additional insulating "blankets" the green-folks have been pushing for decades? I've never had an impression other than insulation-losses from tanks were significant.

Beat me up, please. I learn new stuff every day.

An ignorant voice here but I understood that a ways back when the energy efficiency of water heaters was improved it made the external blankets a waste of money.

When I bought my current A.O. Smith WH in 95 I was told no blanket was necessary.

Way back in the day the blankets made a difference but not for a while now. That doesn't mean that the the colored apron crowd at the box store stops recommending them to unsuspecting homeowners... Owens has to sell insulation even if you don't need it.

Lurker,

The answer is "that it depends".

New electric heaters tend to have either 1" or 2" of foam insulation. If they have 2" or more, there isn't a lot to be gained from an external blanket.

Gas water heaters tend to have 1" of foam insulation, although some have 2".

If money is tight, I'd spend less money on the water heater and add a $20 blanket.

I appreciate all the advice and think given our budget the old water heaters will probably go back in. I think it makes sense just to "use them up" and then get whatever is the best we can afford at that time...maybe in 5 or 6 years. If we were going to spend money on anything like that, I would love to have a water conditioner as it makes my hair and skin feel so good!

If you live in a hot climate, heat pump water heaters make a lot of sense.