2009 Mark of Excellence Finalist cyberManor put together this high tech kitchen. Photo courtesy of cyberManor.

Even the most optimistic person can not deny the severe impacts of the down-turned housing market on the entire economy. As builders scramble to diversify options and maintain their foothold in the market until its eventual turnaround, many are relying on tried and true home technology options to help maintain revenue and survive.

The Consumer Electronics Association (CEA) recently released the results of their Seventh Annual State of the Builder Technology Market study, a survey of builders and a supplement to the NAHB Annual Builder Practices Survey tracking key technology trends in new housing. According to the survey, nine in ten builders indicated that their company revenues have either remained the same (71%) or increased (18%).

“This finding indicates builders remain committed to home technology,” said Chris Ely, Senior Research Analyst at CEA. “The percentage of builders who say offering new technologies is important is on par with last year’s results - a testimony to the importance of home technologies even in a down market, helping to preserve profits for the company.”

According to the survey findings, builders recognize the value of home technology options and are proactively including information about these technologies when marketing new homes.

In order to sell a product, the consumer must be aware it exists. Enter marketing. According to the survey, more builders recognize the need to educate their customers about available home technology options and have stepped up their marketing efforts in response.

“The increase in builders who actively market home technologies shows a marked improvement over years past, a statistic that positively impacts sales revenue,” said Steve Koenig, Director of Industry Analysis, CEA. “It indicates that builders understand the value of maintaining revenue through the use of home technologies.”

“Given that builders are seeing a direct link between increasing and preserving revenue and the use of home technologies,” said Ely, “they benefit from dedicated, proactive marketing efforts to help stimulate demand and increase sales. This is the number one key finding in this year’s study.”

Marketing these options is a joint effort. Builders don’t have to worry about understanding and promoting home technologies alone. In fact, two out of three builders work directly with installation contractors (custom installers or electronic systems contractors) to market and sell technologies directly to home buyers on their behalf, offsetting both the cost of marketing and bridging the education gap.

“By partnering directly with a qualified custom installer, systems integrator or electronic systems contractor, builders benefit from their expertise via further discussions directly with the home buyer about a plethora of additional home technology upgrades resulting in increased revenue,” said Ely.

Proactively marketing technologies to your potential home buyers may result in more consumers choosing home technology over other design features to help increase margins.

Behavior Changes

Consumer behavior changes in reaction to many outside stimuli. In light of the economic crisis, more Americans are determined to stay closer to home. They are foregoing vacations, movies, dinners out and other “larger ticket” entertainment items and actually reallocating that money to home entertainment.

“This ‘cocooning effect’ has driven the interest for home theater requests,” mentioned Ely. “As more Americans stay at home to save money, they become more interested in home entertainment items such as home theater systems.”

Seventy-four percent of the builders surveyed said they offered a home theater option upgrade to their buyers with an 8 percent jump in the number of builders who install it themselves. From simply pre-wiring a room and adding speakers to creating a fully-dedicated media room, this upgrade option is popular amongst home buyers, especially in slow economic times such as these.

While home theater upgrades have become increasingly popular options being offered by builders, there has been a marked decrease in both home automation and energy management. Home Automation has dropped 7 percentage points to 43%; energy management by 4 percentage points to 49%.

“With limited dollars to spend, consumers must make conscious decisions about which technologies to purchase,” explained Ely. “For example, they must choose between high end insulation and climate controls versus a home theater system that will entertain the whole family.”

With more Americans choosing to remain at home rather than go out, home technology options such as home theater, whole home audio or multi-room audio/video are becoming increasingly popular.

Moving Forward

Low profit potential is a strong reason for many builders not to offer key home technologies to consumers, even from many builders who offered the same technologies last year. With the housing market forcing prices down and the perceived lack of demand, it is no wonder the options are being cut; however, it is a short-sighted solution.

“The down market can lay to industry advantage as builders become more open to new solutions to sell homes,” said Ely. “It could behoove a builder to start offering home technologies now as standard options as it could help in the long run to preserve revenues.”

The study revealed the profit potential in home technologies has not completely fallen. In fact, the majority of builders who offer monitored security, automated lighting controls, home automation, energy management and intercom systems indicated the profit potential was consistent with last year.

The main thing to remember is that the potential for profit exists with home technology offerings. As in years past, builders should remember that it is incredibly important to start technology talks early and often with new home buyers. Offer the widest array of options available to reflect the lifestyle demands of each individual consumer.

Builders should take advantage of the declining prices and offer more home technologies now to help create long-term revenue streams.

7^th State of the Builder Quick Results

• 9 out of 10 builders indicated that company revenues either stayed the same (71%) or increased (18%) due to home technology options
• 2 out of 3 builders have partnered with installers to market home technologies
• Increase in proactive marketing to consumers can result in increased revenue
• Current economy leading to increase in demand for home technologies, especially entertainment technologies
• Now is the time to adopt home technology options to ensure long term revenue streams

Lesley Boyd is a freelance writer, writing on behalf of the Consumer Electronics Association (CEA). CEA’s TechHome Division members represent the entire channel for home control and networking products including integrators, distributors and manufacturers. Lesley offers an objective and unique perspective on up-and-coming technology, applications and integration in the CE arena. For more information, email Boyd.

  [ return to top ]