smart home technology in new homes - memberclicks smarthome presentation 8.16...three key takeaways....

Smart Home Technology in New Homes

Todd TomalakSVP Researchttomalak@realestateconsulting.comAugust 16, 2018

JBREC OBJECTIVE: GET IT RIGHT

Other5% Banks

4%SF Rental Landlords

5%Land

Developers12%

Stock / Bond Funds10%

Home Builders

37%

Building Product

Companies12%

Private Equity Funds15%

JBREC Research Subscriber Membership DistributionCollaborative 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 our 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

Smart Product Overview

Smart Features in New Homes

Major Changes Ahead: Next Ten Years

Agenda:

1

2

3

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: F INALLY 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

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

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

~12 Years For Technology Adopt ion to Grow f rom 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

or retrofited per year• Implies ~12% CAGR growth

rate for 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.

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)

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 of ~80% When Smart

Features Offered

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

Smart Product Overview

Smart Features in New Homes

Major Changes Ahead: Next Ten Years

Agenda:

1

2

3

12

W E A S K E D 2 3 , 7 2 0 N E W H O M E S H O P P E R S A B O U T T H E I R N E X T H O M E A N D W H AT T H E Y W E R E W I L L I N G TO PAY F O R

JBREC NEW HOME SHOPPER SURVEY PROCESS

Ecobee4 Smart Thermostat

THERMOSTAT

Nest Learning Thermo

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)

…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 RemoteControlled Thermostat (operated from phone)

Builders Offering: Smart Heating/CoolingManagment

Features Buyers Willing to Pay Extra for in Next Home

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

August Smart Lock

Arlo Indoor/Outdoor

Nest Cam

LOCKS AND SECURITY

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

60%63%

75%

60%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Exterior SecurityCamera

Keyless Entry Wireless SecuritySystem

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)

Lifx Smart Lighting

Philips Hue

L IGHTING

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

54%

37%

0%

10%

20%

30%

40%

50%

60%

Smart Lighting Controls (Programmable) Builders Offering: Programmable LightingManagement

Features New Home Buyers Willing to Pay Extra for:

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

U by Moen Smart Shower

SHOWER SYSTEMS

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

• Married or partnered• Has children under 18

in the household, all under 12 years old

Young FamilyYoung 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)

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 T O 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)

WILLINGNESS TO PAY MOST FOR SMART PRODUCT CATEGORIES DIFFERENT BY L IFESTAGE

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

Smart Product Overview

Smart Features in New Homes

Major Changes Ahead: Next Ten Years

Agenda:

1

2

3

28

Amazon Echo Google Home Microsoft Cortana

PERSONAL ASSISTANTS

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

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)

A M A Z O N H A S V E RY A M B I T I O U S G O A L O F I N C O R P O R AT I N G A L E X A I N TO M A N Y A S P E C T S I N T H E H O M E … W I L L B O O S T A D O P T I O N

Business & FinanceCommunicationConnected CarEducation & ReferenceFood & DrinkGames, Trivia & AccessoriesHealth & FitnessHome ServicesKidsLifestyleLocalMovies & TVMusic & AudioNewsNovelty & HumorProductivityShoppingSmart HomeSocialSportsTravel & TransportationUtilitiesWeather

Alexa ‘skills’ categories

Amazon Echo

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

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

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

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%

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

QUESTIONS? CONTACT US:

Todd TomalakSVP - Researchttomalak@realestateconsulting.comAugust 16, 2018