As technology infiltrates every aspect of our lives it always seems to follow the same basic pattern.
At first, it’s intriguing, but expensive, so adoption is slow. Then, as the innovation adapts, it becomes more mainstream. Before we know it, the technology is everywhere, and you can’t live without it. This pattern happened with television, cell phones, and now it’s happening with smart-home technology.
IoT market research firm Berg Insight recently dug into the smart-home technology industry and found that as many as 63 million American homes will be considered “smart” in the next three years. That’s nearly half the housing market by today’s standards, and has huge implications for home builders. To stay ahead of the curve, here are three ways builders should approach smart home technology.
Don’t think of it as a luxury
For years, smart-home technology was a playground for high-end audio-visual installers and customers who could spend tens of thousands of dollars on custom features. Then came a particular smart thermostat, which brought much greater visibility to smart home tech and its potential to add comfort and convenience to everyday life.
Today, the smart home market is being driven by the basic human need to protect our family’s well-being and property, even when we can’t be home to do so ourselves. Security and home monitoring devices will make up nearly 23% of the smart-home market by 2023, according to research firm IDC. Compare that to smart speakers and lighting equipment, which are poised to make up 15% and 12% of the market, respectively.
People of all demographics take pride in their homes. Builders know that better than anyone. By investing in smart-home innovation, you’ll be offering your customers more than a house. You’ll be giving them a way to protect the most important asset many of them will ever have.
Think of it as a sales tool
In 2018, the home ownership rate in the U.S. stood at nearly 65%. That’s a significant decline from its peak of 70%, which occurred during the height of subprime lending in 2005. Whether it’s because Millennials are waiting longer to invest in their first home or because would-be buyers are still scarred by the housing crisis just a decade ago, the result is a more competitive environment for home builders — which means you need to stand out from the crowd.
The best way to do that is to give your customers a way to protect their home while saving money in the long-term. The average household spends at least $1,000 annually on homeowner’s insurance. They spend an additional 1 to 2% of the value of the home every year on maintenance. Over time, smart-home technology can absorb some of this cost, and the more builders can tap into it, the better off they’ll be.
That doesn’t mean you have to fully equip the home. While luxury buyers may want a complete smart-home package, even a narrow focus on prevention can solve essential problems for prospective buyers. Smart water valves and leak sensors to prevent water damage, along with humidity sensors in the basement to prevent mold, are a great starting point. Preventive measures like that can lead to discounts on insurance premiums — a bonus for anyone considering a home purchase. At the same time, you build a reputation as a builder who cares about your customers’ future, not just their present.
Use it to drive revenue growth
Let’s talk numbers.
Spending on smart-home technology is projected by advisory firm ABI Research to surpass $120 billion by 2021. At the same time, the National Association of Home Builders and the Consumer Electronics Association found that installing smart-home technology can increase the final closing price of a home by 3 to 5%.
So, what are you waiting for?
Smart-home technology has huge potential for home builders in every market — as a brand builder, a differentiator and a revenue generator. Many of the biggest builders have already embraced this technology, so now is the time to evolve, or risk getting left behind.