For homebuilder Thomas Beadel, smart home technology isn’t a premium. It’s something buyers expect.
As president and CEO of Thomas James Homes, the largest urban infill developer in the country, which focuses on lot-by-lot projects instead of from-scratch new developments, Beadel and his firm focuses on acquiring properties, demoing, and building new multimillion-dollar single-family homes in West Los Angeles and Silicon Valley. Last year, they made nearly $350 million in revenue selling 110 homes. And the question potential buyers ask more than anything else is whether or not it’s a smart home.
For years, Beadel’s company been meeting the demand for high-tech homes by pre-wiring new homes with smart controls and speakers. But recently, the company found what Beadel believes is a better solution. Thomas James recently joined the recently launched Brilliant Builders program, a group of roughly two dozen large developers and homebuilders across the country installing smart home control systems from the San Mateo, California-based startup.
At a time when voice-control systems such as Alexa, Siri, and Google Home may dominate smart home discourse, the Brilliant control panel, a sort of universal remote for smart home devices that’s about as large as a typical light switch and can work with most existing products and networks, seeks to upend the market by arriving, pre-installed, with new homes. Diehl sees the controller as a perfect way to communicate a home’s high-tech features to potential buyers.
“With Ring and Nest, you need to download an app to see how something works, and if we wired a home with, say, Apple HomeKit, buyers would be stuck with Apple products,” he says. “With Brilliant, it’s a conversation starter because there’s a screen there. You can touch something and just understand the home is smart.”
Building out the burgeoning smart home market
The smart home market today is massive, and poised to grow. According to stats from IHS, a global market research firm, 98 million smart home devices worth roughly $10 billion dollars were sold in in the United States in 2018, covering everything from home assistants and smart speakers to smart lightbulbs to internet-connected refrigerators. Analysts believe the market will grow considerably in coming years; IHS predicts 50 percent growth every year through 2021.
Increasingly, according to IHS analyst Blake Kozak, growth will come from pre-installed systems in homes and new multifamily dwellings. Hello Alfred, the personal digital assistant, just announced a deal this year with Graystar, the nation’s largest apartment operator. Big builders such as Lennar and DR Horton are already starting to make smart home tech standard, and Amazon has big plans to make its voice assistant central to every place you live, investing in programs to pre-install Echo devices in apartments and newly built homes as part of a larger rush to capture voice-activated, “zero-click” commerce. New home sales, which dropped to 626,000 nationwide in May, typically make up about 10 percent of total home sales in the U.S.
“Builders are able to curate these devices and platforms to make it easy for consumers,” says Kozak. “It’ll increase the penetration of smart home devices and shift how they buy the products.”
Brilliant’s strategy, which it announced in May at the Pacific Coast Builders Conference, revolves around the insight that, as smart home systems become not just desired but expected, an affordable, universal, system, pre-installed into a home, becomes a differentiator and selling point. The company surveyed young adult homebuyers under age 36 and found 86 percent of them were willing to pay more for a smart home versus a traditional home. This gels with existing research the shows smart homes sell for a premium and have better resale value.
Brilliant CEO Aaron Emigh believes partnering with builders—those in the program get discounted demo units and volume pricing for products—helps his company get on the right side of a demographic shift.
“Since everything is pre-selected and configured to work, your house already works,” Emigh says. “It’s already a more harmonious experience.”
The Brilliant control, a touch-based system, offers a visual interface everybody in the home can use, Emigh says. It’s also good for situations where voice can be awkward; fine-tuning the brightness or a light, setting the right volume on a smart speaker, or scrolling through music playlists is easier with a physical control. Wired to work with and be able to control nearly every type of device and operating system, it offers out-of-the-box simplicity, he says, which appeals to both buyers and builders, who want new owners to be able to walk in and have their home work. Units cost that costs $299 to $499 each, and usually control one space or large room; developers such as Beadel will install three or four in a single-family home.
“Think of cars,” Emigh says. “About 15 years ago, there was a lot of interest about how computers were being added to cars. You just don’t hear anything about that anymore. Now the average car has 45 computers in it, and it’s just accepted as part of what a car is. Nobody says we have smart cars. We just have better cars.”
Seamless systems make adoption easier
Many in the industry believe the pre-install push also makes adoption easier. Scott Harkins is vice president of Residio, a $5 billion company that, among other things, sells smart home product to contractors (it used to be part of the more well-known Honeywell). He thinks having professional contractors more involved will make it easier for smart home tech—which is still mostly smart speakers, smart TVs, and home video and security systems—to expand to more aspects of the home.
“Most of the big things in your home aren’t really DIY-able,” he says. “I challenge you to find the consumer who can do an HVAC system or install a water heater. I’m sure people can, but I don’t think there’s a lot of them. If you can offer these systems from the start, and builders begin offering them as part of every home, it becomes standard to have a system designed to work together from the start.”
The push toward pre-installed systems will only accelerate, according to Zach Aarons, who runs MetaProp, a fund that invests in building technology. Consumers will see this kind of tech enter niche properties, such as senior living homes. As the cost curve bends down, this tech will makes its way into affordable housing and housing across all income levels.
“It’s just going to be the default,” he says. “You’ll really have to choose to reject it.”