How Smart Home Systems Impact Home Values
The futuristic world of the Jetsons first beamed into American homes on September 23, 1962. Flying cars, automated home systems and Rosie the robotic maid were all part of the cartoon landscape imagined by Jetson creators William Hanna and Joseph Barbera. Fast-forward 54 years – and home automation is no longer comic science fiction.
Just two years ago, according to a 2015 market report by Transparency Market Research, the global home automation market was valued at $4.4 billion. The report also estimated that by 2020, the industry would be worth more than $21 billion. This is, in part, thanks to a wide range of technology designed to make it easier to live in and care for your home. The big question: Is the investment worth it when you're ready to sell?
The Price of Smart Tech
There are hundreds of smart home amenities on the market, including smart bulbs (lighting to help you sleep better), high-end security, personalized locking systems, espresso brewing with the swipe of a smartphone, temperature-control systems, water systems for an outdoor garden, garage-door controls and home entertainment systems. Imagine turning on your convection oven from a smartphone while adjusting the lights in your living room. (See also 5 'Internet of Things' Products for Your Home and Sears House Brands Are Tackling the Smart Home.)
Costs vary, depending on product and vendor, but installing home automated systems doesn’t come cheap, averaging between $5,000 and $15,000 and varying by region and ZIP code. The most commonly purchased products are thermostats, lighting, home security and safety systems and, of course, home entertainment. Luxury items include a $35,000 Prima Cinema system that allows viewers access to films on their theater release dates, or digital backsplashes (smart walls) in a kitchen.
Wireless locking mechanisms are popular too, reports David Witkowski, executive director of Joint Venture Silicon Valley's Wireless Communications Initiative. "Internet-connected deadbolts are very useful, especially in cases where you can set a different passcode for each family member ("Is my kid home from school yet?") and also remotely check to see if a door is locked," he says. "Integrated systems – which tie together Internet-enabled doorbell cameras with deadbolt actuators – are useful for remotely allowing a delivery driver to enter your home, drop off a package, confirm that he's left the house and then re-lock the door."
Lindsey Turrentine, editor-in-chief of CNET, predicts that the next step in smart home tech will be an increase in the use of hub platforms. Smart home hubs can control communication among multiple devices with voice activation.
Who’s Buying It?
The demographic that is buying up smart home tech is consumers ages 30 to 44, says Michael Wolf, founder of NextMarket Insights, for two reasons: Gen X'ers are tech-savvy and, as a group, they are in their highest earning years.
Although Gen X’ers are hitting the home automation market, home sellers should keep an eye on the younger generation, too. A 2015 survey by Better Homes and Gardens reported that 68% of Millennials surveyed think that smart home technology is a good investment for their homes, and a recent study of buyers’ trends by the National Association of Realtors found this demographic represents the largest share of potential homebuyers.
Homeowners are naturally worried about hackers gaining control over home automation systems, and those fears are not unfounded. Jerry Irvine, a member of the National Cyber Security Task Force, told U.S. News & World Report that smart home hacking is a problem that he predicts will get worse.
smart home owners should speak directly with their technology-service providers about their concerns and learn how products are safeguarded. Hire a professional to wire your home, make sure to update your passwords and software on a regular basis, and be aware of which systems are running in your home.
Does Smart Tech Help Home Sales?
In luxury housing markets, smart home amenities are expected, but even in the residential mid-range market they are gaining ground, according to Danny Hertzberg, sales associate at Coldwell Banker in Miami.
A recent Smart Home Marketplace survey by Coldwell Banker revealed that 45% of all Americans either own smart home technology or plan to invest in it in 2016. More than half of the homeowners surveyed also said they would install smart home products if they believed it would sell their home faster. But will it?
Realtors have noted that this technology won’t necessarily make or break the sale of your home, although it could impress potential buyers.
“Smart home tech doesn't necessarily have a direct value in driving home sales, but it can be an amenity or perk that supports a buying decision,” says Leonara "Leo" Riordan, a realtor with Coldwell Bankers in Los Gatos, Calif. “The quality of the smart home tech can be a factor – if it crashes or doesn't work reliably, say, then it's just going to get ripped out after the sale.”
"When it comes to reselling your home, these smart home products are increasingly becoming the norm – and are even expected from younger homebuyers,” says Rob Caiello, vice president of Utility Products and Marketing at Allconnect, a company that helps millions of homeowners with the purchase or transfer of smart home services.
Savings on Utilities
Amenities that cut monthly home maintenance costs could be thought of as a selling point for smart home tech.
“Smart home products can help homeowners save money,” says Caiello. Indeed, a joint survey conducted a year ago by CNET and Coldwell Banker found that 45% of Americans who have installed smart products in their homes – such as a Nest thermostat ($250 for a Learning Thermostat), an August lock ($250) or a Lutron lighting kit ($230) – averaged a savings of over $1,100 a year on their bills. In addition, some utility and insurance companies may offer reduced rates or rebates for houses with smart technology.
The Bottom Line
Last year, a survey by Coldwell Banker found that about 33% of agents agreed that houses with smart home features sell faster. Since the inclusion of technology in a home may not drive a sale, opting to add smart tech instead of a brand new kitchen may not be the best choice. But it could be a nice perk for an interested buyer, especially if the buyer is young. Having it already installed and integrated, says Caiello, may just grab a house hunter's attention.