Last September, Amazon’s Alexa Fund anted up to participate in a $6.7 million capital raise for startup Rialto, Calif.-based Plant Prefab. The comparatively itsy-bitsy investment fanned flames of speculation in new-home construction circles. If the universe’s dominant retailer and purveyor of IoT home technology takes interest in an off-the-radar off-site factory custom modular home builder, many observers wondered when—not if—Amazon may launch an end-to-end in-house residential design, development, engineering, and construction strategy.
Fact is, tech giants focus disproportionately on a mere niche of U.S. homes—the 627,000 or so households buying newly built houses in new neighborhoods in 2019—versus America’s already-existing 120 million homes. By marketing home living tech solutions from the outside in, they’ve made overnight inroads. A smart home technology beachhead in kitchens, great rooms, and other living areas now networks one out of every three U.S. households, according to Statista, with revenues upwards of $30 billion.
Could it be that Silicon Valley has discovered that the ones who’re making homes smarter from the inside out represent a proverbial treasure map of those new-home buyers? From a high-level view, they’re a proto consumer set, a kind of test or pilot marketplace for technology companies. New construction buyers tend to be 39-years-old or older, more educated, have higher-earnings, fewer younger children, and are ever more technologically sophisticated than resales buyers.
Per Zillow’s 2018 New Construction Consumer Housing Trends Report, “the median age of today’ s new construction buyer is 47 years old — which is somewhat older than existing home buyers (40) — and thus they are also more likely to be repeat buyers, financially secure, living without kids in the home, willing to move farther and are more likely to be retired than existing home buyers.”
As such, they’re super consumers of the next decade or so, as well as the present. From existing homes and traditional bricks-and-mortar and online retail channels, in other words, tech companies learn what smart tech products and services households will buy. Within five years, over half of American households are forecast to turn to IoT solutions for security, privacy, room air comfort, lighting, entertainment, noise-reduction, and health and wellness solutions.
Annual revenue growth, averaging 12% between now and 2023, will make it a nearly $50 billion business. In contrast, from newly built home buyers, tech firms expect to learn far more about how and why people consume, period—what they want, prefer, aspire to, need, and will pay for. That’s worth trillions.