IF SUMMERHILL HOMES, BASED in the tech Mecca of Palo Alto, Calif., is putting structured wiring behind the walls of every home it builds, can the rest of the country be far behind? Probably not, since low-voltage wiring provides the foundation for a host of other home technologies vying for consumers' attention—and their checkbooks. Although sales of home electronics ticked up a modest 2 percent last year, growth has been steady. The Consumer Electronics Association of Arlington, Va., said it expects a 5 percent boost in product sales for 2004, topping $100 billion for the first time.
For many builders, offering structured wiring—and the gadgetry that goes with it—is simply a way to get an edge on the competition. But other builders are responding directly to customer demand. Three years ago, SummerHill began installing bundled wiring, universal outlets, and a distribution panel in each home. “Buyers expect structured wiring in the most usable rooms of the house so that they can add voice, video, data, and whatever the current technology is,” says Roger Menard, president and CEO of SummerHill Homes, which delivers about 400 houses a year ranging in price from $600,000 (starter homes and first-time move-up buyers) to $3 million. “It's a big plus for a starter home to have that capability.” A recent study by the CEA and the NAHB indicates that three out of four builders now offer structured wiring, with the proportion of those offering it as a standard feature having grown from 34 percent in 2003 to 47 percent this year (see chart).
“Those items are not like carpet and granite countertops. The technology is so specialized and changes so rapidly that it's difficult to keep up with,” Menard says. “Because our buyers have got to have the latest and greatest, it would require a huge amount of manpower to keep up. So we leave it up to individual contractors.”
Testing The Market No doubt because it's all so complicated, home technology has not boosted the bottom line as much as builders might expect. Only 19 percent of those polled in the 2004 CEA/NAHB study said that the installation of home technologies had increased their company's revenue over the past two years. Nearly two-thirds of the builders also cited lackluster demand as the reason for not putting structured wiring in more new homes. And yet, an equal percentage considered it important to include the latest home technologies in their marketing.
U.S. Home's Denver division is luring buyers by including a plasma TV with every home purchase, which averages $275,000. That's in addition to the structured wiring that comes standard in all living spaces except the formal living and dining rooms. The homes are designed with a recessed niche so the plasma TV sits flush with the wall, and the screen's size varies with the size of the home.
Experts On Board To eliminate that perception, and to help buyers navigate the labyrinth of ever-changing technologies, both Pardee Homes in Las Vegas and U.S. Home in Denver have recently started partnering with electronics specialists to sell products. In November, U.S. Home retained sales-people from Denver-based Ultimate Electronics to meet with buyers in each of its four design centers. Design studio manager Nick Riney says it has taken the load off the interior designers who specialize in how things look and feel. “I hesitated to add more technology products because they were too complicated,” Riney says. “Now I'm offering more in that category than in the past, and we've seen some very big increases in sales.” Riney estimates that 50 percent of buyers spring for a technology upgrade such as a $2,500 home theater.
Chris Mauzy, director of operations for builder services at Ultimate Electronics, which partners with 19 regional builders, says the company's most popular product is a central vacuum system, followed by whole-house audio. And there is “huge interest” not just in sharing information between PCs, but also in being able to pull family photos stored on a PC to the TV for a slide show, or piping music stored on files throughout the house—what Mauzy calls Internet Protocol (IP).
“The consumer electronics industry is trending to IP,” he says. “It's about streaming audio and video and being able to network any device that's IP based. People want to have mass amounts of music stored on a music server and distribute it throughout the home.”
Structured wiring, which connects such devices together, has come down in price 30 percent to 40 percent over the past four years, Mauzy says. As time makes technology more affordable and builders get savvier about selling it, no doubt the profits will follow.