Homebuilders and Home Automation

Owning a “smart home” used to be just a dream for many homeowners and homebuyers. But we’ve reached a point where it’s not just a dream anymore. Advances in technology, familiarity to it, and simple capitalistic market competition have combined to turn home automation from a luxury of yesterday to an expectation of today.

Homebuilders who are not interested in capitalizing on the opportunities created by this expectation risk leaving money—and profit—on the table. But even more importantly, these homebuilders risk becoming less competitive and less relevant to today’s homebuyer, ultimately leading to them being left behind.

Obviously, there’s more to having a smart home than just having an Internet connected TV. Consumers are already spending billions of dollars to upgrade their homes with everything from simple home automation products, like appcontrolled wireless audio systems, light bulbs or security cameras that you can control from any phone or computer, to full-on home systems that include security, inside and outside lighting, entertainment, and even the home’s heating and air conditioning systems. And it’s not just a small number; according to a recent Consumer Electronics Association (CEA) study, “What Builders Offer vs. What Buyers Want,” nearly one-fourth of all new home buyers regret not purchasing a multi-room audio system, home theater or lighting controls.

This interest in home automation should not come as a surprise. When you consider that Google recently purchased Nest Labs, a maker of “smart” thermostats and smoke alarms for homes for more than $3 billion, and Reuters just reported that Amazon has a 3,000-person development team creating its own home automation solution, you can feel assured that this is a genuine market progression. As Joe Bates,CEA market research director, said after reading their study, “We found that when people see the products in use … they begin to see that an integrated system offers much more than what the buyers can do themselves.” Remember Bates’ key phrase here: “an integrated system.” That’s where homebuilders have a tremendous profit opportunity.

The home automation market is still in its early stages. According to Transparency Market Research, the home automation market should experience strong growth in the coming years, with U.S. sales expected to grow from $3.6 billion in 2012 to $16.4 billion in 2019.

So where is this growth going to come from? Some will come from the aftermarket, where products like security cameras and other wireless control products can be purchased and retrofit into existing homes. Another area of growth will be in the installed sector, where many longestablished companies and products have been offering these technologies for the last decade, which are now even more refined in both features and ease of installation.

These same promotional efforts are also presenting a huge opportunity for builders. They are educating consumers on the category, increasing the perceived value of home automation, and lowering the price resistance. And by doing all this, they open the door for homebuilders to sell the advantages of integrated—there is that word “integrated” again—home automation systems.

Integrated home automation systems comprise multiple individual components that are designed and installed to run seamlessly within a coordinated platform. And installing an integrated home automation package offers buyers more functionality than adding systems at a later date. And it’s accomplished more easily and more affordably during the building process.

Some builders, both of custom and production homes, have already embraced the future and are actively including standard starter packages in their homes. Others are offering optional packages. And still others are doing both. Few builders are handling the installations themselves; most are partnering with local installation professionals. But regardless of how they are doing it, they’ve taken the leap, made the commitment, and are clearly positioning themselves ahead of companies that are resistant to the technology opportunity.

If history tells us anything, it’s that if you are not moving forward, you’ll get left behind. Remember that electrical systems and central heating were once considered optional, too. Home automation technology is the just next step forward in the evolution of homebuilding.

2015-dept7Fritz Werder is Vice President and General Manager for Legrand’s NuVo and On-Q product lines. He may be reached at fritz.werder@legrand.us.

Leave a Reply

Your email address will not be published. Required fields are marked *