Smart-Home Technology: 5 Things to Know

  • Categories:

    Industry Trends

  • Date:

    August 12, 2021

Smart-Home Technology: 5 Things to Know

Industry Trends

Smart is in: The global smart-home market size is projected to eclipse $622 billion by 2026. And with limited housing inventory and higher home prices creating a perfect storm for more remodeling activity, smart-home technology brands have a rare opportunity to build and capitalize on a business that’s already booming.

I recently talked to Grant Farnsworth, president of The Farnsworth Group and managing partner of the Home Improvement Research Institute, about his outlook on the smart-home market.

“It will be interesting to monitor this evolving category and watch how brands accommodate multiple audiences that are engaging with smart-home technology,” he said.

I hope you’ll find that these ideas augment your work within one of the most exciting spaces in the home and building category.

1. Smart-home tech is being leveraged in the second-home market.

The demand for second homes and Airbnb properties grew in 2020. In fact, according to national online broker Redfin, mortgage rate locks on second homes skyrocketed to 128% in 2021. The yearly spike in demand for second homes is four times the 34% year-over-year increase for primary homes.

“We saw a huge boom in the second-home market during the pandemic,” Farnsworth said. “Oftentimes, those second homes are great cases for remote monitoring, remote garage openers, remote sensors, and remote doors and locks. These features allow the homeowner, whether they’re renting it out or not, to have eyes on the property.

“I think we have and will continue to experience owners of second homes needing some smart technologies to be able to monitor those homes from a distance.”

2. Smart-home tech is the conduit between health and wellness.

The Connected Home, a recent study produced by HIRI and Trend Hunter, indicates that wellness considerations influence smart-home product design now more than ever. People are spending more time at home, and they’re turning to technology that helps them make wellness a priority.

“We’ve certainly been hearing from contractors that they’ve gained traction throughout the COVID-19 pandemic for projects that are health- and wellness-related,” Farnsworth said. “Now, we’re starting to see a growing interest in indoor air quality and HVAC-related products, specifically regarding how these products can communicate a response to indoor conditions as they change.”

3. Retail is the dominant route to market for smart-home products.

According to HIRI’s new State of the Smart Home study, retail serves as the primary outlet for smart-home devices in the United States. In a landscape where homeowners are leaning more heavily toward DIY, changes in certain product categories have made it simpler for consumers to do the work in a category that has traditionally been more sophisticated.

“There’s a lot of sophistication around smart-home products, especially wired and Control 4-type systems that are more pro-install-oriented,” Farnsworth said. “But we’re also seeing more products and categories that are designed for the DIYer to install — even alarm systems like Ring and Simple Safe.

“Fifteen years ago, we never would have thought about that. And this increasing focus on DIY orientation yields really strong retail sales.”

However, integrators are still an extremely important audience for manufacturers and are required in many new-build projects: According to CEDIA research, more than half of integrators’ revenue comes from single-family residential and multifamily construction.

4. Smart apartments are on the rise.

Much like single-family homes, the pandemic drove changes in multifamily construction and remodeling. Multifamily builders and architects are exploring new building technologies to reap the enhanced property value benefit of smart retrofits. HIRI also reports that the United States is expected to represent 44% of the global smart-apartment building stock by 2025.

“From new construction to retrofits, we’ve seen an explosion within the multifamily industry in the last few years,” Farnsworth said. “And with those new builds come the possibility for new technologies.

“Multifamily is absolutely an important area as property owners look to update,” he said. “But they also look to compete and attract. Folks have been leaving metro areas over the last 12–18 months, so property owners are considering ways to maintain renters.”

5. The potential of smart-home tech is boundless.

By its very nature, the smart-home tech industry has a propensity for innovation. And that propensity is growing quickly. From monitoring appliances and smart speakers to home security systems, HVAC, lighting and more, consumers have come to expect unprecedented access to technology that will make their homes smarter and their lives easier. The brands that best understand their customers’ challenges and provide solutions to those challenges (such as Moen, which began offering water management products including water usage and leak detection) will harness the sheer potential of the smart-home market today and for years to come.

“Smart-home tech is getting to a point where there’s simplicity for the average consumer that is allowing them to feel comfortable and confident bringing it into their home,” Farnsworth said. “Now that it is easier to use, easier to understand and easier to apply, we’re seeing the adoption rates are really starting to increase beyond just smart speakers.

“It’s a really exciting time. There’s a lot of opportunity in the home improvement space for brands to take products to the next level, offering solutions that not only monitor the environment but also actually respond.”

Interested in how Wray Ward can help your brand benefit from this perfect storm moment for smart-home technology? Email me with questions or if you’d like to connect at September’s CEDIA Expo.

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