How Real Estate Will Drive Smart Home Adoption

The Consumer Electronic Show of 2020 (CES) was another amazing display featuring over 170,000 guests crammed into Las Vegas to explore what’s next in the decade ahead.

When it comes to smart homes, there was almost no category unturned. Appliances, toilets, mirrors, garage openers, door locks, shower heads and security systems were all once again on display. All were connected, many could be voice activated, and it’s getting easier to see a future where fully integrated smart homes connect devices that work together to create a seamless and truly helpful holistic user experience.

One of the welcome trends at CES 2020 was a discussion about security and privacy. In a session titled, “2020 Trends to Watch Into the Digital Age,” Steve Koenig, vice president of research at CTA, suggested the Internet of Things (IoT) needed a rebrand to the “Intelligence of Things” for the decade ahead.  

Koenig explained consumers have been able to connect devices to the internet for years. The issue now becomes how to smartly integrate all these devices in a secure way that makes consumers comfortable sharing the data required to make smart homes truly smart.

The concept of the “nudge” is getting consumers comfortable with the technology they engage with because the benefits they receive by feeding it personal data. The beneficial nudge may come in unique ways from real estate industries outside of the technology space.

Builders, real estate agents key proponents

Builders are front and center in smart home technology conversations. Last year at the International Builder Show, the National Association of Home Builders (NAHB) released data showing that while consumers expect new homes to feature the best in suitability and efficiency, they don’t want to pay extra for it.

From solar panels to energy efficient appliances, builders must find the balance on what’s included and what they’ll pass on to the consumer. This varies wildly depending on the price point. But, no doubt, they will be on the forefront of what consumers want and, in many cases, what is possible with smart technology in the home. Instead of a hodgepodge system that a family creates in piecemeal after buying a home, new homes will start with an integrated ecosystem in mind for a better buyer experience.

Jacob Atalla, vice president of Innovation & Sustainability at KB Homes, also points out the nexus between smart homes and sustainability. Devices like smart thermostats and lighting controls save energy and the consumer money. If green is important to buyers, maybe they’ll be willing to shell out a little more cash on new homes knowing they are going to save money over their lifetime of ownership.

This is where the appraisal industry will come into play in the years ahead. Ken Chitester, director of Communications for the Appraisal Institute, shared the Residential Green and Energy Efficient Addendum created by the Appraisal Institute. The form attempts to document the energy efficient measures taken on a home and assists a consumer in understanding the money that might be saved. Documenting the return on investment on efficiency will likely help consumers start thinking less about just the purchase price of a home and more about long-term costs of homeownership.

Realtors will also be a great partner in spreading the word on smart technology. One of the most interesting partnerships in 2019 was TurnKey between Amazon and Realogy. The Realogy Franchise Group has over 16,000 offices and approximately 300,000 independent sales associates. The TurnKey program gives a buyer up to $5,000 of professionally installed Amazon smart technology which should go a long way to assist in adoption and better consumer experience. It will be interesting to review the program later this year to see if both brands got the results they expected.

Smart tech in rental housing

Smart technology would be wise to not leave out renters. Millennials have stayed renters far longer than previous generations and opportunity abounds for technology companies to use landlords and property managers as a gateway for smart home technology.

The try-before-you-buy approach can be managed much more efficiently at scale in apartment buildings so tenants get a chance to see curated smart tech that everyone is also using around them. Smart locks, appliances, temperature controls, lights switches and smoke detectors are natural fits.

Outside of apartment owners, Main Street and Wall Street single-family investors alike might also embrace a smart home if it helps save money during their ownership or makes their properties stand out to potential tenants. 

Builders and property managers will likely focus on infrastructure smart technology — the stuff behind the scenes that doesn’t get them in the ecosystem wars deciding for the consumer if it’s an Amazon or Google home.

Incentives will be key

Smart devices can be costly and the insurance and utility industries will help by offering incentives, rebates and cost savings through the lens of safety, sustainability and efficiency.

Leak control devices are an excellent example of newer technology in the smart home space offered by brands like Alarm.com, Moen and Belkin. The devices sit at the water main and can detect leaks. It can then shut off water and alert the owner to the leak and where it resides.

Belkin’s Phyn brand and Alarm.com also have enterprise level platforms built for landlords to control leak detection throughout a project or portfolio. Property managers of all sizes will tell you it’s not just the repairs that are costly but also the time and the energy involved in fixing leak issues. Stopping it before it starts is a huge improvement.

That’s why the insurance world will step in to save owners when they own leak detection devices. Knowing that water issues can be stopped before they start is one of the reasons they may be willing to offer some sizeable discounts on premiums.

Mariel Devesa, global head of business development for Phyn, says she’s seen some insurance companies give 5-10% discounts on premiums for leak-detection technology. Expect those to become more prevalent as these systems prove to be viable and valuable.

If insurance is willing to provide a discount, expect water utility companies to step up and offer rebates. A leaking pipe can waste thousands of gallons of water daily and a consumer may not even know until a bill comes a month later. Smart home devices able to prove their water and power savings ability should see more rebates in the coming years, especially in states struggling with droughts.

Watching Progress in 2020

The late 2019 announcement that Google, Apple and Amazon are now working with the Zigbee Alliance to help create standards for an easier and safer Internet of Things may be the assurance the real estate sector needs to go all-in on smart home technology.

This post first appeared on Forbes.com. To see the original, click here.