HOME TECHNOLOGY ACCESSORIES such as giant-screen HDTV and surround-sound speakers not only add family entertainment value but also allow adults to escape the tensions of their stressful lives. But that other great modern plaything, home automation, is also gaining ground. The Consumer Electronics Association of Arlington, Va., reports a swelling consumer interest in well-designed technology products that integrate seamlessly into the home. It's one of the trends driving up sales of consumer electronics products: Factory sales to U.S. dealers are projected to top $125 billion this year—an 11 percent gain over 2004's volume of $113 billion.
Earlier this year, the CEA's third annual State of the Builder Technology Market Survey showed that while structured wiring and security systems remain the two most common technologies included in new home starts, the number of builders offering whole-house technologies such as energy management systems is on the rise. More importantly, thanks to the decline in installation costs over the past year, builders report that their profit potential on tech products is creeping upward.
HIGH-TECH ESSENTIALS By now, about half of all builders install at least a standard structured wiring hub that gets buyers ready for add-ons, according to the survey. One such builder is Centerline Homes of Coral Springs, Fla., whose houses range in price from $270,000 to $700,000. Its buyers currently receive a generic structured wiring system, although starting with the next single-family home community, the builder plans to take its tech offerings a step further. “We've interviewed some subcontractors and are just about to offer some home automation options like security or lighting,” says Debi Brown-Whitcomb, design options department manager. She adds that although touch-screen controls and programmable lighting pathways don't regularly appear on the wishlists of Centerline's buyers, the builder wants to stay in step with other builders and with the high-tech customers who walk through the door.
Ray Scenna, president of Laurel, Md.-based IQS, a Craftmark Homes subcontractor, says that while the hottest trend in tech-savvy homes is multi-room distributed audio, the company's top seller is built-in speakers for the kitchen, family room, and master suite, followed by surround-sound and security systems. “Security is No. 3 on the list,” he says, “even before structured wiring.”
PUTTING OUT FIRES Builders point out that because high-tech options are more complicated to sell and install than other upgrades, it's harder to realize a traditional 30 percent markup. “We don't make a ton of money on home technology,” says Chris Weir, vice president and director of production operations at Brookstone Homes in Oconomowoc, Wisc. “We offer it more for the home buyer convenience of rolling it into their mortgage.” This fall, however, the company will roll out a new twist on home security—whole-house fire sprinkler systems. Brookstone currently is in the process of getting such a sprinkler system up and running in a model home. In addition to offering it as an option, Brookstone wants to install the sprinklers as standard in certain communities in order to qualify for municipal incentives allowing builders to increase the density of developments.
“We're seeing absolutely every market installing sprinklers, from home builders doing entry level to [home builders doing] $2 million houses,” says Alden Spencer of Affordable Fire Protection, which he says has outfitted more than 2,000 homes in Atlanta for builders such as D.R. Horton and KB Home. The sprinklers, which cost roughly $1.50 per square foot when installed throughout a development, operate off the household water-main through CPVC piping that's run behind ceilings and walls. “It's a calculated system that's more technical than plumbing,” Spencer says. “We have to figure the demand on the system, work our way back to the supply, and work out the hydraulics. It often will require a larger meter and pipe size coming into the house.” He adds that concerns about extensive water damage are unfounded, since only the sprinkler that senses a fire will activate.
Whatever the application, CEA's research shows that home technologies are becoming bigger players in the marketing of new homes and, at least in parts of the country, a necessity for competing for buyers.
SOURCE: THIRD ANNUAL STATE OF THE INDUSTRY BUILDER TECHNOLOGY MARKET SURVEY, CONSUMER ELECTRONICS ASSOCIATION