National Housing Market Outlook

Three Categories of Smart Home Clarity for Home Builders

Mikaela Arroyo photo
Maegan Sherlock photo

Mikaela Arroyo

Maegan Sherlock

July 28, 2023

Smart home technology is often discussed as a unified concept; it turns out it should be broken into three:

  1. Must-have: A strong wireless backbone and hardwiring are the minimum consumer expectations.

  2. Better-have: A video doorbell and smart thermostat should be standard. Other safety and utility cost-reducing features will likely join them soon.

  3. Nice-to-have: The menu of “best choices” for options and upgrades will need to be tailored to the customer on a case-by-case basis.

In May, the New Home Trends Institute hosted a webinar to answer the question: “Is smart tech (A) table stakes, (B) a differentiator, or (C) not something consumers are willing to invest in?” Confusing as it may seem, the answer is all three, depending on the category. Here is the recipe for success:

    1. The “must-have” starting point: Homes need a strong wireless backbone, but don’t rely on it solely and forget about hardwiring.

      Whether they’re working from home or streaming a movie, a strong wireless connection can be a dealbreaker for home buyers. With more devices than ever requiring connectivity and the quick-changing pace of technology, it’s important to plan for the future.

      Pulte’s standard smart home base is cable wiring that allows for 10 gigabits of speed—ten times more than the usual one gig found in most homes—demonstrating a level of forward thinking and design so as not to become obsolete in a short period of time. Given how much bandwidth video streaming utilizes, consumers want ethernet outlets in their home office and entertainment areas to help devices and electronics operate fast and efficiently.

      An effective pre-wired home network starts with designing the floor plan:

      • Plot out the optimal wireless access points in the home and communicate this to the buyer. Offer optional mesh network choices if they want wireless elsewhere.
      • Wi-Fi Alliance® will help review your floorplans, or you can do signal mapping in model homes to detect spottiness.
      • Wi-Fi 6 and mesh networking are standard for homes over 2,000 square feet.

    2. The “better-have” necessities: A video doorbell and smart thermostat are essential, as many consumers now expect them (and, more often, have had them in their previous homes).

      Our survey insights show that a video doorbell and smart thermostat are what most consumers would pay to have included.The smart garage door will likely join this rank, too, as the desire for one is rising. With an increase in online shopping, one benefit of smart garage doors is that they can help keep packages safe from porch pirates when paired with a delivery service, such as Amazon Key In-Garage Delivery.

      When thinking ahead about what might become a necessity down the line, according to Pulte, consumers are looking for smart tech to provide real, tangible benefits, like energy savings and safety. Our survey insights show that increased home security is the most well-understood asset of smart home technology and the area consumers say is most worth paying more for.2 Above the $600,000 price point is where convenience smart tech starts to come into play.

    3. The “nice-to-have” smart home tech menu: Beyond the smart doorbell and thermostat, most consumers want to make their own decisions. Sales teams should be prepared to guide home buyers to smart selections that will best suit their needs and lifestyle. Questions to ask include:

      • Does anyone in the household have respiratory issues, such as asthma? Demonstrate the value of smart home air purification with properly tailored messaging to sell the benefits of a healthy home. Our survey insights reveal that education is necessary to take health from a consideration to a driver of choices. In order to convert consumers, the “healthy choice” must be clearly delineated: 51% of homeowners and single-family renters say they make healthy choices when options are laid out for them and clearly defined.3 
      • Will the home buyer be a part-time resident, unable to keep a constant eye on things? Highlight aspects of smart home tech that do something a homeowner can’t easily do themselves, like remotely monitor or detect leaks. For vacation home shoppers, this can be a big sell. Our survey insights reveal that a water monitor sensor is the top smart home product with the greatest adoption potential.4 

Educate your sales team and design center professionals on the smart home tech you offer. This way, they know how to use it, can answer buyers’ questions, and can fully demonstrate the tech’s benefits.We often work with clients to create consumer personas, but we advise being cautious so as not to fall into stereotypical traps:

  • Entry-level buyers might be less receptive to smart tech than you may think, given data privacy concerns and skepticism. Media coverage of hacking and stories of devices listening in on consumers have created mistrust, a significant roadblock that smart tech will need to overcome.
  • The 55+ cohort might be more tech savvy than you think, particularly in more affluent communities, where homeowners have been using sophisticated tech for years.

At the end of the day, safety and security are what matter most, but keep in mind that privacy matters too. Ask what (if anything) consumers currently have in their homes to get a sense of what their needs are.

We started the New Home Trends Institute (NHTI) to help architects, builders, developers, and building product manufacturers learn from each other and to allow us to split the cost of meaningful industry research across multiple clients. For more information on consumer smart home tech priorities, or to join NHTI, please fill out this form.

1 New Home Trends Institute by John Burns Research & Consulting, LLC March 2021 survey of 1,230 homeowners who own at least one smart home product.
2 Ibid.
3 New Home Trends Institute by John Burns Research & Consulting, LLC November 2022 survey of 1,263 homeowners and single-family renters age 18+ with household income of $50,000+.
4 New Home Trends Institute by John Burns Research & Consulting, LLC March 2021 survey of 1,230 homeowners who own at least one smart home product.

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About The Author

Mikaela Arroyo photo
Mikaela Arroyo
Vice President, NHTI | Chief of Staff
Mikaela leads trend research for the New Home Trends Institute, conducting monthly surveys of consumers and industry professionals to better understand housing pain points and desires. As Chief of Staff to the CEO, Mikaela strategizes and supports the daily operations of the company, focusing on business initiatives.
Maegan Sherlock photo
Maegan Sherlock
Senior Research Analyst, Consumer Insights
Maegan writes and programs surveys, analyzes survey data, and helps create the New Home Trends Institute’s monthly survey insights reports. She also researches consumer and design trends within the housing industry.

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