Smart Home Technology in New Homes Todd Tomalak SVP Research - - PowerPoint PPT Presentation

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Smart Home Technology in New Homes Todd Tomalak SVP Research - - PowerPoint PPT Presentation

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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

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Smart Home Technology in New Homes

Todd Tomalak SVP Research ttomalak@realestateconsulting.com August 16, 2018

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JBREC OBJECTIVE: GET IT RIGHT

Other 5% Banks 4% SF Rental Landlords 5% Land Developers 12% Stock / Bond Funds 10% Home Builders 37% Building Product Companies 12% Private Equity Funds 15%

JBREC Research Subscriber Membership Distribution

Collaborative Effort to Call it Right

  • Wall Street: Our investor clients help us catch

macro trends, and helped us become very negative in early 2007

  • Private Equity and Banks: Our bank and

private equity capital clients who fund private developments help us understand growth, and helped us call a bottom in 2012 when they began buying homes in bulk.

  • Builders: 18 of top 20 builders subscribe

to our research and provide feedback by local market on our forecasts. 350+ local builders selling ~20% of all US new home sales answer

  • ur monthly survey and help us identify shifts in

new construction trends (like smart homes)

  • 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

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Smart Product Overview Smart Features in New Homes Major Changes Ahead: Next Ten Years

Agenda:

1 2 3

3

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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

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LENNAR ANNOUNCMENT: ALEXA IN ALL NEW HOMES

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SMARTHOMES TECH: FINALLY CATCHING UP WITH A 50+ YEAR OLD CONCEPT

1915 - Universal Appliances “Spring Cleaning with Electricity” 1939 – POPULAR MECHANICS “ELECTRIC HOME OF THE FUTURE”

  • News reports and pictures as soon as the news happens

1960’s – “1999 AD” Film – sponsored by

Philco-Ford showed computers helping homeowners with diet decisions, schoolwork, and more

1960’s – Echo IV Home Automation Machine

  • Controlled temperature, lights, and make shopping lists
  • Enormous and impractical

Smart Product: Roomba SAMSUNG SMART THINGS

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HOW TO THINK ABOUT TECHNOLOGY ADOPTION

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Technology Adoption Rate

Microwave 95%+ Today Microwave 20% 1982 Microwave 80%+ ~1992 10 yrs

Comin and Hobijn, PEW, OurWorldinData, John Burns Real Estate Consulting, LLC

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SMART HOME TECHNOLOGY ADOPTION: JUST SCRATCHING THE ‘SWEET SPOT’ FOR GROWTH

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Technology Adoption Rate

Smartphone 78% Smart Speaker 21% Microwave 95%+ Netflix 52%

Comin and Hobijn, PEW, OurWorldinData, John Burns Real Estate Consulting, LLC

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~12 Years For Technology Adoption to Grow from 20% to 80%.

Microwave

Number of Years For Technology Adoption to Grow from 20% to 80%

10 Years

Mobile Phones Internet

11 Years 15 Years

Tablet

12 Years*

*Estimated Based on 6 Years from 20% to 50%

Avg ~12 Years

Implies:

  • 6 Million smart homes built
  • r retrofited per year
  • Implies ~12% CAGR growth

rate for 12 years…

Comin and Hobijn, PEW, OurWorldinData, John Burns Real Estate Consulting, LLC

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HUGE REGIONAL DIFFERENCES IN PERCENTAGE OF NEW HOMES THAT OFFER SMART TECH.

81% 78% 76% 65% 65% 63% 53% 51% 30% 23%

Florida S Cal N Cal Northwest Southwest Midwest National Texas Southeast Northeast

Percentage of New Homes Offered with Smart Technology (2017)

John Burns Real Estate Consulting, LLC Independent Survey of 16% of all new home sales (Aug-17)

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42% OF NEW HOME BUYERS PURCHASED HOMES WITH SMART TECH FEATURES IN 2017

53% 42% Percentage of New Homes with Smart Technology (2017)

Offered Delivered

Implies Upgrade Rate

  • f ~80% When Smart

Features Offered

John Burns Real Estate Consulting, LLC Independent Survey of 16% of all new home sales (Aug-17)

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Smart Product Overview Smart Features in New Homes Major Changes Ahead: Next Ten Years

Agenda:

1 2 3

12

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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

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JBREC NEW HOME SHOPPER SURVEY PROCESS

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Ecobee4 Smart Thermostat

THERMOSTAT

Nest Learning Thermo

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SMART THERMOSTAT NEW HOME BUYER PURCHASE RATE LOOKS VERY PROMISING AT 60%!

67% 60% 0% 10% 20% 30% 40% 50% 60% 70% 80%

New Home Buyers: Oversized Kitchen New Home Buyers: Remote Controlled Thermostat (from your smart phone)

Features Buyers Willing to Pay Extra for in Next Home

John Burns Real Estate Consulting, LLC Independent Survey of New Home Shoppers (Jan-18)

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…AND ONLY 58% OF NEW HOMES OFFER SMART HEATING/COOLING FEATURES

60% 58% 0% 10% 20% 30% 40% 50% 60% 70% Buyers Willing to Pay Extra for Remote Controlled Thermostat (operated from phone) Builders Offering: Smart Heating/Cooling Managment

Features Buyers Willing to Pay Extra for in Next Home

John Burns Real Estate Consulting, LLC Independent Survey of New Home Shoppers (Jan-18)

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August Smart Lock Arlo Indoor/Outdoor Nest Cam

LOCKS AND SECURITY

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NEW HOME BUYERS ARE VERY FOCUSED ON SECURITY – HUGE POSITIVE FOR SMART FEATURES

60% 63% 75% 60% 0% 10% 20% 30% 40% 50% 60% 70% 80% Exterior Security Camera Keyless Entry Wireless Security System Builders Offering: Smart Security / Locks

Features New Home Buyers Willing to Pay Extra for:

John Burns Real Estate Consulting, LLC Independent Survey of New Home Shoppers (Jan-18)

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Lifx Smart Lighting Philips Hue

LIGHTING

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54% OF NEW HOME SHOPPERS ARE WILLING TO PAY FOR SMART LIGHTING IN THE HOME

54% 37% 0% 10% 20% 30% 40% 50% 60% Smart Lighting Controls (Programmable) Builders Offering: Programmable Lighting Management

Features New Home Buyers Willing to Pay Extra for:

John Burns Real Estate Consulting, LLC Independent Survey of New Home Shoppers (Jan-18)

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58% OF NEW HOME SHOPPERS TELL US THEY EXPECT SMART GARAGE DOOR OPENERS

Gogogate2 Chamberlain Smart Garage

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U by Moen Smart Shower

SHOWER SYSTEMS

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LIFESTAGE DRIVES HUGE DIFFERENCES IN PRODUCT SELECTION…

Only difference? Kids!

John Burns Real Estate Consulting, LLC Independent Survey of New Home Shoppers (Jan-18)

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EXAMPLE OF HOW KIDS CHANGE BUYER PREFERENCES…REGARDLESS OF INCOME

  • Married or partnered
  • Has children under 18

in the household, all under 12 years old

Young Family Young Couple

(No Kids)

  • Age 18–44
  • Married or partnered
  • No children under 18

in the household

John Burns Real Estate Consulting, LLC Independent Survey of New Home Shoppers (Jan-18)

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62% of this group will also pay an extra $2,000 for a separate Bathtub instead of tub/shower combo 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

John Burns Real Estate Consulting, LLC Independent Survey of New Home Shoppers (Jan-18)

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WILLINGNESS TO PAY MOST FOR SMART PRODUCT CATEGORIES DIFFERENT BY LIFESTAGE

Young Single

(No Kids)

Single Parent Young Couple

(No Kids)

Young Family Family Plus Mature Family Empty Nester Active Adult

(Retired)

  • Age 18–44
  • Unmarried
  • No children under 18

in the household

  • Age 45+
  • Unmarried
  • No children under 18

in the household

  • Unmarried
  • Has children under 18

in the household

  • Age 18–44
  • Married or partnered
  • No children under 18

in the household

  • Married or partnered
  • Has children under 18

in the household, all under 12 years old

  • Married or partnered
  • Has children under 18

in the household, both under 12 years old and 12+ years old

  • Married or partnered
  • Has children under 18

in the household, all 12+ years old

  • Age 45+
  • Married or partnered
  • No children under 18

in the household

  • Age 55+
  • Retired

Mature Single

(No Kids)

#1 for Smart Thermostat #1 for Smart Garage #1 for Smart Lock

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Smart Product Overview Smart Features in New Homes Major Changes Ahead: Next Ten Years

Agenda:

1 2 3

28

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Amazon Echo Google Home Microsoft Cortana

PERSONAL ASSISTANTS

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KEY BOOST FOR TECH ADOPTION: THIRD PARTY APPLICATIONS

“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

Review at 2007 Iphone debut: 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

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ALEXA SKILLS JUST GETTING STARTED…REMINICANT OF IPHONE APP UNIVERSE OF 2009

3.8 Million 2 Million 669,000 234,500 30,000

Google Apple Windows Blackberry Amazon Alexa Skills

Number of Apps Available by Platform

~Roughly Equal to Apple IOS in 2009

Apple, Google Play, Blackberry, Statistica, John Burns Real Estate Consulting, LLC (Jan-18)

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A MA ZO N H A S VERY A MB ITIO U S G O A L O F IN C O R PO R ATIN G A LEXA IN TO MA N Y A SPEC TS IN TH E H O ME…W ILL B O O ST A D O PTION

Business & Finance Communication Connected Car Education & Reference Food & Drink Games, Trivia & Accessories Health & Fitness Home Services Kids Lifestyle Local Movies & TV Music & Audio News Novelty & Humor Productivity Shopping Smart Home Social Sports Travel & Transportation Utilities Weather

Alexa ‘skills’ categories

Amazon Echo

Blue = Segments Amazon is Paying $$$ to Developers to Build ‘Skills’

Amazon, John Burns Real Estate Consulting (Aug-18)

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AMAZON IS PUSHING THIRD PARTY DEVELOPERS TO INVENT ALL SORTS OF NEW ‘SKILLS’

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SMART SPEAKERS / PERSONAL ASSISTANTS JUST STARTING TO GET TRACTION

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Technology Adoption Rate

Smartphone 78% Smart Speaker 21%

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IN CONCLUSION: 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

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QUESTIONS? CONTACT US:

Todd Tomalak

SVP - Research ttomalak@realestateconsulting.com August 16, 2018