The Short Answer: Tanks all day.
We needed to replace our aging hot water tank in 2020, so I discussed the tankless option with several plumbing professionals and homeowners. Over the last few years, I have experienced the transition from tank to tankless at my in-laws home. We confidently decided the tank was better.
Functional
Tankless solves a problem we don’t have (unlimited hot water) and creates two new problems:
1) Slightly longer delay in getting hot water at the taps, esp. remote taps. This is annoying, but further it’s a waste of clean water. On some small scale it increases your water cost because you’re just running it down the drain while you wait for warmer water.
2) More prone to hot water “dips”. If you’re in the shower and someone uses water elsewhere in the house, hot water disappears for a few seconds. This is due to some sort of pressure regulation issue I suppose. This behavior was part of life when I lived in dorms and cheap apartments, but I have no patience for it now. According to plumbing pros this can be mitigated with additional tech but now you’re just spending more $$ to solve a previously nonexistent problem.
Financial
If the costs were comparable I might devote more energy to considering tankless, but a replacing a tank with tankless system will 2x or 3x your project cost around here.
Most of the people I talked to who had installed tankless were happy with it, but nobody could provide a solid financial argument. The “cost savings over time” argument originates with tankless manufacturers and plumbing companies.
After purchase, the operating costs of a tankless system are a bit less per year. In my view, these savings are nominal and it would take 15+ years to make up the difference in the purchase price, assuming no additional maintenance is needed. How long do you think a tankless system will last, without fiddling?
Everyone who was happy with their tankess system either repeated the “pays for itself” line without any kind of cost-per-year numbers, or admitted that they didn’t really worry about the costs involved. Some people like the idea of a tankless system, or enjoy having new and innovative technology in their homes. This is fine, too.
Our reputable brand 50-gallon tank was installed by a trustworthy company for $1,173. As of this writing, we have 8 months of pandemic-at-home heavy use by our family of four. No problems, and no regrets.