Recent research reveals that a majority of homeowners want, and builders are providing, at least basic home technology features.

Builders are creatures of habit. In general they like to learn a process, and then vary little from it as they work on new housing starts, but there are two areas where builders definitely like to learn new tricks of the trade-when it can shortcut their work or add to their profits.

Home technology rarely helps in the first of these endeavors, but it is a major influence on the latter. As a result, builders want all the information they can get on what sells, and they want to know how to do it when it comes to home technology.

An increasing amount of research is focusing on the types of technology offered in new homes today and how often homebuyers are selecting the growing variety of digital products and systems available to them. Manufacturers are fashioning "builder programs" for their digital technology and control products.

At the same time, residential custom electronics installers/integrators are targeting home-builders in their sales and marketing programs and in their long-term strategic planning. Of course, research and consulting firms are developing surveys and analysis that provide the market intelligence needed by both of these groups.

Parks Associates, a market research and consulting firm focused on digital home products and services, recently conducted a comprehensive survey of homebuilders on home technology. They asked residential builders to provide information about the kinds of electronic products and control systems they incorporate into their homes. They also asked builders how technology-buying decisions are made and whether incorporating certain technologies into the home really makes a difference when it comes to selling the house (the survey was focused primarily on the single-family home market).

The underlying premise of this survey was that homebuilders are looking to home technology as a way to differentiate their company in competitive local markets. The Parks survey found that in most cases this is true-despite the fact that prospective homebuyers are still swayed by a large kitchen or a spacious master bath rather than by the incorporation of a computer network or a separate media room.

Home Tech All Around

Parks Associates surveyed more than 400 U.S. builders. They found that the advanced technology products and systems offered most frequently in new single-family homes were programmable thermostats (84 percent of all new homes), security systems (79 percent), and multizone HVAC (75 percent).

In addition, between 60 percent and 70 percent of builders are also offering multiroom audio, indoor and outdoor lighting controls, central vacuum systems, structured wiring and computer networking in new single-family homes. Perhaps most impressive, approximately 45 percent of builders said they were offering built-in home theaters in the new homes that they were bringing to market during the final months of 2004.

So, how do homebuilders decide which home technology products and services to offer as a standard part of their new home "package" or as a selectable option? Obviously the decision hinges upon what builders believe homebuyers are excited about, what they're looking for vis-à-vis the competition, and what they'd be willing to pay extra for. Reflecting the growing importance placed on home technology, 26 percent of the builders surveyed have dedicated staff responsible for evaluating new technologies for sales potential and as a means of differentiating their new homes.

The Parks Associates' survey reveals that builders increasingly believe that it's simply "good for business" to offer products and systems like structured wiring that enhance the digital infrastructure in their new homes. Indeed, it's absolutely necessary if the goal is to get the attention of the progressive, tech-savvy prospective homebuyer.

Homebuyers are coming to expect that new homes will not only be prewired for communications, broadband Internet access and home entertainment, but also at least some of the basic hardware needed to enjoy the lifestyle-enhancement advantages of these amenities.

Homebuyers' expectations are changing over time, as their awareness of what options are available and what's within reach of their budgets evolves. Washers and dryers became standard pre-installed amenities for most new homes several years ago. Granted, computer networking, multiroom audio systems and home theaters are likely still years away from reaching comparable status, but these home-tech offerings are coming on fast for those who wish to buy into the digital-home experience at the same time they select the latest in attractive design and high-end options in their kitchens and bathrooms.

If You Wire It, Do They Come?

Despite the recent surveys on structured wiring and home technology features provided by builders, the type of home-tech features prospective homebuyers would like is less documented. The most complete research available comes from a survey conducted by the National Association of Home Builders (in conjunction with the Consumer Electronics Association's TechHome Division) during the first half of 2004. Among the highlights from this "State of the Builder Technology Market" survey:

• Structured wiring is offered in more new houses than any other home electronics technology.
• Nearly 60 percent of all new homes are now built with structured wiring included as part of the move-in infrastructure.
• Monitored security is offered in 75 percent of all new homes built, but actually installed (after homebuyer-option-selection) in approximately 26 percent of all new homes sold.
• Builders installed distributed audio systems in 12 percent of all new homes this past year-up from 8.7 percent during 2003.
• Automated lighting control systems were incorporated into 7.4 percent of the new homes built during 2004-an exceptional gain from the 1.1 percent reported by builders the year before.
• The share of new homes that come equipped with some sort of broadband connection was 52 percent in 2004-a substantial increase from the 36 percent reported two years earlier.
• 55 percent of builders say they offer structured wiring in new homes in order to better compete in their markets although the (slight) majority still cite "lackluster" demand for most kinds of home electronics' technologies that take advantage of this infrastructure.

Homebuyers Want Lifestyles Not Gadgets

There is plenty of evidence that the educated consumers view home technology options as increasingly desirable and attainable. A recent survey by Electronic House magazine, a sister publication of TecHome Builder, asked consumers "Which of the following home technology products/systems do you expect to include as part of a future home or remodeling project?" A majority of respondents said that home theater (73 percent), automated lighting control (71 percent) and/or home networking (70 percent) would be a part of their new home purchase/remodeling project future.

Admittedly, readers of Electronic House magazine aren't your typical middle class homeowners. They have a median annual income of $113,300 and median net worth of $464,300. Still, they do represent the vanguard of desires on the part of American households, and they should be a bellwether of the kinds of lifestyle enhancements that are likely to become mainstream parts of U.S. homes in the years immediately ahead.

Regrettably, there is little in the way of data on home technology installation trends or spending in the area of home remodeling. It is safe to assume that home tech spending in remodeling projects is on the rise as well, both because of what the respondents to the Electronic House survey revealed and because of overall national trends in remodeling spending.

The Joint Center for Housing Studies estimates that total spending on home improvements increased by 5.7 percent between 2003 and 2004 to a level of $126.7 billion. And periodic government surveys have shown that approximately 20 percent of total home improvement spending is devoted to additions and alterations to rooms other than kitchens and baths, with another 7 percent of the total being concentrated on HVAC and electrical system replacements and upgrades.

More research is needed before we can develop credible estimates of how much of this spending goes specifically towards home technology products, systems and the interior infrastructure investments required for home theaters, media rooms, distributed audio and other home tech options.

For many homeowners, the only consideration when deciding whether to spend money on a home theater vs. a swimming pool, for example, is how much they think they will use it now, and get in return when they sell the home later. There are plenty of current surveys on how much of the cost for a remodeled kitchen or a roof replacement is likely to be recouped at the time that an existing home is sold. Similar information would help homeowners and builders evaluate the long-term value of various home technology investments and upgrades as well. Unfortunately, no such information is currently collected, making the decision to invest in home technology strictly one based on immediate return.

Daryl Delano is director of research at EH Publishing.