Emerging Consumer Interest in Home Automation

 by Abbe Will
Research Analyst

Home automation is poised for significant growth with the rising prevalence of smartphone use, advancements in wireless technologies, and entrance of the millennial generation—the largest and arguably most tech-savvy generation to date—to the housing and home improvement markets. To better understand this emerging market segment, our Remodeling Futures program is undertaking research to measure the current and future size of this market, investigate the most promising technologies and services for homeowners, identify key players operating in the market, and explain homeowners' perceptions of the benefits and drawbacks to automating their homes.

A first look at homeowner attitudes and behaviors around home automation trends comes from a 2015 consumer survey by The Demand Institute. According to Joint Center tabulations of this survey data, of homeowners who said they were likely to do a home improvement project in the next three years, nearly half expressed excitement to incorporate more “smart home” technology into their homes, and nearly 30 percent reported that they are somewhat or very likely to install home automation products or features. About 29 percent of homeowners likely to remodel placed high importance on their homes having the latest technology, like built-in speakers, remote-controlled thermostats, electronic window coverings, etc. Another 44 percent said having the latest home technologies was somewhat important. Yet only 16 percent said that their current home could be described as already having the latest home automation technologies, which suggests a large gap in current home automation use and interest (Figure 1).

Note: Provided examples of latest home automation technologies included built-in speakers, remote-controlled thermostats and electronic window coverings. Source: JCHS tabulations of The Demand Institute 2015 American Communities Survey: Consumer Interview data

Compared to homeowners who place little or no importance on their home having the latest automation technologies, those who place a lot of importance on home automation are younger, have higher incomes and home values, and live in more urban areas (Figure 2). These homeowners are also much more likely to be planning a home improvement project of any kind in the next three years—68 percent compared to 56 percent of those placing some importance on having the latest home technology and 44 percent for those placing little or no importance. Over half of homeowners who place a high level of importance on having high-tech homes and are likely to remodel in the coming years reported that they are somewhat or very likely to install home automation products or features (52 percent) compared to 28 percent of homeowners expressing some importance and only 10 percent of owners expressing no importance for having an automated home.

Notes: Tabulations are of responses to the following question: How important is it to you that your home has the latest technologies, like built-in speakers, remote-controlled thermostats and electronic window coverings, etc., where 1=not at all important and 10=extremely important? Very important includes rankings of 8-10, not important includes rankings of 1-3.Source: JCHS tabulations of The Demand Institute 2015 American Communities Survey: Consumer Interview data.

There is a dramatic difference in attitudes toward home automation products and services by age of owner. Only 28 percent of homeowners age 65 and over who are likely to remodel in coming years expressed excitement to incorporate “smart home” technologies, compared to over two-thirds of owners under age 35 who either somewhat or strongly agreed with this sentiment. And where only 13 percent of homeowners age 65 and over reported being somewhat or very likely to install home automation products or features in the coming three years, almost 43 percent of owners under age 35 reported the same intent. A slightly higher share of owners age 35-44 expressed likelihood to install home automation improvements at 45 percent, but this share fell sharply for owners age 45-54 (30 percent) and age 55-64 (23 percent).

Although many homeowners are motivated to automate their homes, it is unclear how thoroughly they will act on their enthusiasm. According to a 2015 poll reported by The Demand Institute, homeowners may be hesitant to fully engage in home automation products and features because of high product costs, security flaws and glitches, and concerns for whether smart products will function as well as traditional home products. More research on the emerging home automation market will be shared in the forthcoming 2017 Improving America’s Housing report.