Home Technology Solidifies Builder Revenue in Volatile Market
By Lesley Boyd

For the sixth straight year, the Consumer Electronics Association (CEA) has released the Annual State of the Builder Technology Market Study. Derived from 307 responses from the NAHB online panel,  the responses were used to continue tracking key technology in building trends in new housing.

Challenging markets such as this create unique opportunities for builders to modify their upgrade options to include state-of-the-art home technology to both draw attention from buyers and simultaneously increase the bottom line.

Economics 101

There is fierce competition in the new home residential market due to the abrupt decline in the economy, the mortgage crisis and more supply of homes than the demand requires. Many builders have been forced to abandon housing developments until the market recovers, while others are cutting prices and taking losses just unload properties. A third group was uncovered through this study: technology adopters who are still able to compete and flourish in this market.

“Amongst the most interesting results of this study is the fact that builders are committed to home technologies even in a challenging housing market,” says Chris Ely, Senior Research Analyst at CEA. “In fact, nine in ten builders say that adding home technologies has either increased or maintained their revenues. Builders are starting to recognize the importance of home technologies to their bottom lines.”

The adaptation and evolution of thought processes regarding how many and which technology options to offer is imperative in this market. Builders who are adopting new technology and in turn offering options to potential buyers are able to stay afloat as well as solidify home sales and increase revenue in the process.

“Our research shows that more builders are paying attention to market opportunities and consumer demand,” says Steve Koenig, Director of Industry Analysis for CEA. “Builders must offer home technology options to compete in the market.”

The Market Study further indicates that 35% of builders feel they must minimally offer structured wiring, security systems to survive and thrive in this market.

Builder vs. Consumer

At no other point in time than during a down-turned housing market is it more important for builders and consumers to be on the same page in order for builders to close deals and solidify high customer satisfaction. However, according to this research, there is currently a chasm between builders and consumers.

“Consumers are not always aware of the technology options available,” says Ely. “Home technology products are not usually top of mind for home buyers. They are more concerned with other tangible new home elements such as cabinets, countertops and flooring.”

Home technology is almost viewed as an abstract concept because it is a lifestyle choice, not a typical solution to a common building question. Education from the builder is needed at the consumer level to teach the consumers about what options are available and how these options can enhance the buyer’s lifestyle.

“Builders need to change their sales spiel to link upgrades such as granite countertops with home technology options like lighting control,” agrees Koenig. “Ask questions about the buyers’ lifestyles and family to make strong suggestions regarding home technology upgrades.”

Technology Trends

Based on the Market Survey results, CEA acknowledges growing trends in three separate and distinct areas: Home Theater, Multi-Room Audio/Video (MRAV) and Energy Management.

Home Theater technology is a steadily growing request with 73% of all builders surveyed offering this option to buyers. From simply pre-wiring a room, adding speakers and satellites to a creating a fully-dedicated media room, changes in consumer electronics such as HDTV’s and DVR’s have made this a highly demanded upgrade. Appreciated by consumers, this is an upgrade that requires minimal intrusion and does not result in a huge cost increase to the buyer.

Secondly, requests for MRAV technology has also increased according to the Market Study with 57% of builders indicating a boost in profit potential when this option is offered.

“We see the percentage of homes that have MRAV technology installed has grown since 2002, suggesting an increase in buyer awareness and interest,” comments Ely. “It is probable that greater numbers of consumers are interested in moving content throughout the home. Systems such as a media smart adaptor or Apple TV integrate the PC, Internet and home theater to help distribute content through the home.”

Due to the rising costs of electricity and gas, not to mention the growing trend toward “green living”, consumers are turning more toward Energy Management upgrades in their new homes, hence the third trend.

“It is easy to start a conversation with a new home buyer about Energy Management, as it is a concern shared by most buyers,” says Koenig. “When discussing an obvious option such as a programmable thermostat, builders should use that as a launch pad to discuss other energy saving options such as lighting control and smart HVAC and other value-adds such as home automation.”

No matter where the conversation starts about home technology upgrades, it is important for the builder to launch into the widest array of options available to enhance each particular consumer’s lifestyle and increase the potential for additional revenue.

Conclusions

Home technologies give builders solid footing in this volatile market and help them compete for and attract new home buyers. Many realize the importance of marketing these technologies to new home buyers.

 “Almost nine in 10 builders (89%) say home technologies are important for marketing,” says Ely. “In fact, the number of builders who say home technologies are ‘not at all important’ is 11% - the lowest since we first conducted the survey.”

Judging from the numbers in the Market Study, technology trends pave the way toward increased profits for builders, regardless of the state of the housing market itself.

“Simply stated, installing home technologies helps builders’ bottom line,” states Koenig.  “Not asking questions and not promoting home technologies is tantamount to leaving money on the table.”

Lesley Boyd is a freelance writer out of Orlando. She offers an objective and unique perspective on up-and-coming technology, applications and integration in the CE arena. She can be reached at LesleyABoyd@gmail.com.

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