Smart Home Technology in New Homes Todd Tomalak SVP Research ttomalak@realestateconsulting.com August 16, 2018
JBREC OBJECTIVE: GET IT RIGHT Collaborative Effort to Call it Right JBREC Research Subscriber Membership Distribution Other • Wall Street : Our investor clients help us catch 5% Banks Private Equity macro trends, and helped us become very SF Rental 4% Funds negative in early 2007 Landlords 15% • Private Equity and Banks : Our bank and 5% private equity capital clients who fund private Building Land developments help us understand growth, and Product Developers helped us call a bottom in 2012 when they Companies 12% began buying homes in bulk. 12% • Builders : 18 of top 20 builders subscribe Stock / Bond to our research and provide feedback by local Funds market on our forecasts. 350+ local builders 10% selling ~20% of all US new home sales answer our monthly survey and help us identify shifts in Home new construction trends (like smart homes) Builders 37% • Consumer Insights Survey : 23,000 active new home shoppers to learn what products/features they value most – identify what smart features consumers actually pay for
3 Agenda: Smart Product Overview 1 Smart Features in New Homes 2 Major Changes Ahead: Next Ten Years 3
THREE KEY TAKEAWAYS 1.High Consumer Interest for Smart Home Technology in New Homes - ~60% of New Home Shoppers are willing to pay more for smart features 2.Demographic Differences Drive Spend and Product Choices – older buyers are highly interested in safety and security, younger buyers want features! 3.Smart Home Tech Drives Change in Business Model from ‘Goods’ to ‘Services’ - Netflix (the service) was path to monetization of smart TV’s
LENNAR ANNOUNCMENT: ALEXA IN ALL NEW HOMES
SMARTHOMES TECH: FINALLY CATCHING UP WITH A 50+ YEAR OLD CONCEPT SAMSUNG SMART THINGS Smart Product: Roomba 1960’s – Echo IV Home Automation Machine - Controlled temperature, lights, and make shopping lists 1915 - Universal Appliances - Enormous and impractical “Spring Cleaning with Electricity” 1960’s – “1999 AD” Film – sponsored by 1939 – POPULAR MECHANICS Philco-Ford showed computers helping “ELECTRIC HOME OF THE FUTURE” homeowners with diet decisions, schoolwork, -News reports and pictures as soon as the news happens and more
HOW TO THINK ABOUT TECHNOLOGY ADOPTION Technology Adoption Rate 100% 90% Microwave Microwave 80%+ 95%+ 80% ~1992 Today 70% 60% 50% 10 yrs 40% 30% 20% Microwave 20% 1982 10% 0% Comin and Hobijn, PEW, OurWorldinData, John Burns Real Estate Consulting, LLC
SMART HOME TECHNOLOGY ADOPTION: JUST SCRATCHING THE ‘SWEET SPOT’ FOR GROWTH Technology Adoption Rate 100% Smartphone 78% 90% Microwave 95%+ 80% 70% 60% Netflix 52% 50% 40% 30% Smart Speaker 21% 20% 10% 0% Comin and Hobijn, PEW, OurWorldinData, John Burns Real Estate Consulting, LLC
~12 Years For Technology Adoption to Grow from 20% to 80%. Number of Years For Technology Adoption to Grow from 20% to 80% 10 Years Microwave 11 Years Mobile Phones Implies: 15 Years • 6 Million smart homes built or retrofited per year • Implies ~12% CAGR growth Internet rate for 12 years… 12 Years* *Estimated Based on 6 Years from 20% to 50% Tablet Avg ~12 Years Comin and Hobijn, PEW, OurWorldinData, John Burns Real Estate Consulting, LLC
HUGE REGIONAL DIFFERENCES IN PERCENTAGE OF NEW HOMES THAT OFFER SMART TECH. Percentage of New Homes Offered with Smart Technology (2017) 81% 76% 78% 65% 65% 63% 53% 51% 30% 23% Florida S Cal N Cal Northwest Southwest Midwest National Texas Southeast Northeast John Burns Real Estate Consulting, LLC Independent Survey of 16% of all new home sales (Aug-17)
42% OF NEW HOME BUYERS PURCHASED HOMES WITH SMART TECH FEATURES IN 2017 Percentage of New Homes with Smart Technology (2017) Offered Delivered Implies Upgrade Rate 53% of ~80% When Smart 42% Features Offered John Burns Real Estate Consulting, LLC Independent Survey of 16% of all new home sales (Aug-17)
12 Agenda: Smart Product Overview 1 Smart Features in New Homes 2 Major Changes Ahead: Next Ten Years 3
W E A SK ED 2 3 ,7 2 0 N EW H O ME SH O PPER S A B O U T TH EIR N EXT H O ME A N D W H AT TH EY W ER E W ILLIN G TO PAY FO R
JBREC NEW HOME SHOPPER SURVEY PROCESS
THERMOSTAT Ecobee4 Smart Thermostat Nest Learning Thermo
SMART THERMOSTAT NEW HOME BUYER PURCHASE RATE LOOKS VERY PROMISING AT 60%! Features Buyers Willing to Pay Extra for in Next Home 80% 70% 67% 60% 60% 50% 40% 30% 20% 10% 0% New Home Buyers: Oversized Kitchen New Home Buyers: Remote Controlled Thermostat (from your smart phone) John Burns Real Estate Consulting, LLC Independent Survey of New Home Shoppers (Jan-18)
…AND ONLY 58% OF NEW HOMES OFFER SMART HEATING/COOLING FEATURES Features Buyers Willing to Pay Extra for in Next Home 70% 60% 60% 58% 50% 40% 30% 20% 10% 0% Buyers Willing to Pay Extra for Remote Builders Offering: Smart Heating/Cooling Controlled Thermostat (operated from phone) Managment John Burns Real Estate Consulting, LLC Independent Survey of New Home Shoppers (Jan-18)
LOCKS AND SECURITY Arlo Indoor/Outdoor August Smart Lock Nest Cam
NEW HOME BUYERS ARE VERY FOCUSED ON SECURITY – HUGE POSITIVE FOR SMART FEATURES Features New Home Buyers Willing to Pay Extra for: 80% 75% 70% 60% 63% 60% 60% 50% 40% 30% 20% 10% 0% Exterior Security Keyless Entry Wireless Security Builders Offering: Camera System Smart Security / Locks John Burns Real Estate Consulting, LLC Independent Survey of New Home Shoppers (Jan-18)
LIGHTING Lifx Smart Lighting Philips Hue
54% OF NEW HOME SHOPPERS ARE WILLING TO PAY FOR SMART LIGHTING IN THE HOME Features New Home Buyers Willing to Pay Extra for: 60% 54% 50% 40% 37% 30% 20% 10% 0% Smart Lighting Controls (Programmable) Builders Offering: Programmable Lighting Management John Burns Real Estate Consulting, LLC Independent Survey of New Home Shoppers (Jan-18)
58% OF NEW HOME SHOPPERS TELL US THEY EXPECT SMART GARAGE DOOR OPENERS Gogogate2 Chamberlain Smart Garage
SHOWER SYSTEMS U by Moen Smart Shower
LIFESTAGE DRIVES HUGE DIFFERENCES IN PRODUCT SELECTION… Only difference? Kids! John Burns Real Estate Consulting, LLC Independent Survey of New Home Shoppers (Jan-18)
EXAMPLE OF HOW KIDS CHANGE BUYER PREFERENCES…REGARDLESS OF INCOME Young Family Young Couple (No Kids) • Married or partnered • Has children under 18 • Age 18–44 in the household, all • Married or partnered under 12 years old • No children under 18 in the household John Burns Real Estate Consulting, LLC Independent Survey of New Home Shoppers (Jan-18)
FAM I L I E S W I T H C H I L D R E N AR E M O R E L I K E LY TO PAY E X T R A F O R B AT H R O O M F E AT U R E S – G O O D F O R S M AR T B AT H R O O M T E C H 62% of this group will also pay an extra $2,000 for a separate Bathtub instead of tub/shower combo John Burns Real Estate Consulting, LLC Independent Survey of New Home Shoppers (Jan-18)
WILLINGNESS TO PAY MOST FOR SMART PRODUCT CATEGORIES DIFFERENT BY LIFESTAGE #1 for Smart Thermostat Young Couple Young Single (No Kids) (No Kids) • Age 18–44 • Age 18–44 • Unmarried • Married or partnered • No children under 18 • No children under 18 in the household in the household #1 for Smart Single Parent Young Family • Unmarried Garage • Married or partnered • Has children under 18 • Has children under 18 in the household in the household, all under 12 years old Family Plus Mature Family • Married or partnered • Married or partnered • Has children under 18 • Has children under 18 in the household, both in the household, all under 12 years old 12+ years old #1 for and 12+ years old Smart Lock Mature Single Empty Nester Active Adult (No Kids) (Retired) • Age 45+ • Married or partnered • Age 45+ • Age 55+ • No children under 18 • Unmarried • Retired in the household • No children under 18 in the household
28 Agenda: Smart Product Overview 1 Smart Features in New Homes 2 Major Changes Ahead: Next Ten Years 3
PERSONAL ASSISTANTS Amazon Echo Google Home Microsoft Cortana
KEY BOOST FOR TECH ADOPTION: THIRD PARTY APPLICATIONS Review at 2007 Iphone debut: “the iPhone is first party software ONLY -- i.e. not a smartphone by conventional terms, being that a smartphone is a platform device that allows software to be installed . That means hungry power- users -- you know, those people ready and willing to plunk down $600 for an 8GB musicphone -- won't be able to extend the functionality of their phone any more than Apple (but thankfully not Cingular) dictates.” Engadget March 6, 2008: Apple opened Iphone to third party developers – developers invented new and original ways for Iphone to interact with users beyond phone calls, email, and music
ALEXA SKILLS JUST GETTING STARTED…REMINICANT OF IPHONE APP UNIVERSE OF 2009 Number of Apps Available by Platform ~Roughly Equal to Apple IOS in 2009 30,000 Amazon Alexa Skills 234,500 Blackberry Windows 669,000 2 Million Apple 3.8 Million Google Apple, Google Play, Blackberry, Statistica, John Burns Real Estate Consulting, LLC (Jan-18)
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