Smart Home and the US Real Estate Market
December 4, 2023
If you’ve been following our smart home journey, undoubtedly you know that our plan is to build a custom designed home that emphasizes smart home as a core element. With the state of the current real estate market in the US, Debbie and I have started to consider the investment advantages of purchasing an existing or spec home. This shift would most likely include some renovation considerations, including potential changes to my original scratch build smart home plan.
This has had me thinking about how I would modify/enhance an existing home as most have little to no infrastructure to support the level of smart home I am planning. It has also gotten me thinking about where smart home falls as a home value and purchase perspective among current US home buyers.
From a home value perspective, I looked at Redfin data on the 500 most recent home listings in the most populous US cities since July of this year — comparing the prices of smart homes to non-smart homes. To simplify the search I only considered cities with at least 10 smart home listings.
The initial key takeaways were:
- Los Angeles (30.6%), New York (26.9%), and Forth Worth (25.1%) have the highest percentages of smart home listings. Fort Worth was a little surprising.
- The top 3 most expensive cities for smart homes are Los Angeles, CA; Seattle, WA; and San Jose, CA. This was not at all surprising based on current home values.
- 46% of prospective homebuyers can’t afford a smart home.
- More than 1 in 10 Americans would go over budget to buy a smart home, spending an average of $15,323 more.
- 42% of prospective homebuyers plan to purchase a home within the next 2 years.
Before digging into the findings, let’s define what is meant by smart home. A smart home is a place with internet-connected and programmable devices, ranging from smart thermostats to doorbell cameras. Some homes have more smart features than others, but they generally include at least one of the items shown below.
Now let’s take a look at the smart home hotspots (and NOT) where buyers can expect to find the most smart homes for sale, at various price points. While smart homes are popping up nationwide, you’ll find more listings in some cities more than others. Do the lists below surprise anyone?
Los Angeles proved the most popular city for smart homeowners, as nearly one-third of all sale listings were for smart homes. From innovative communities such as Playa Vista (aka “Silicon Beach”) to energy-efficient subdivisions in nearby Riverside County, the LA area is now home to multiple growing smart communities.
It makes sense that you’ll find the largest number of smart homes in or near the largest US tech hubs. Tech-centric cities such as Atlanta (22.7%), Phoenix (16.1%), and Austin (15.0%) also ranked high on our list. Minneapolis, which is a traditionally vibrant tech scene, proved the exception to the rule with only one smart home listing currently available. Minneapolis tied with Laredo, TX, Stockton, CA, and Milwaukee, WI, as the cities with the lowest percentage of smart homes on this list.
As any homebuyer can attest, a wide range of smart home listings doesn’t mean much if every available property is out of your budget. So how does smart home impact the average price of homes in various cities? Let’s take a look …
Choosing where to buy a smart home could make a multi-million dollar difference. The average going rate for a smart home was $823,740, but buyers in Massachusetts are paying a premium. Los Angeles topped the list as the most expensive city, with an average smart home price of over $1.9 million, followed by Seattle (over $1.8 million) and San Jose (over $1.7 million).
Purchasing a smart home for substantially less in other cities is possible however. You’ll find average smart home prices for well under $1 million in cities such as Lubbock, TX ($308,025), El Paso, TX ($317,092), and Winston-Salem, NC ($331,870). And even if buyers can’t afford a smart home in their preferred city, they can transform any home by installing smart devices as their budget allows. This could be of particular interest to homebuyers with work from home flexibility. Check out the most and least expensive cities for smart home purchases below.
Not only was Seattle the second-most expensive smart home market, but it also ranked sixth in terms of the highest price increase from “non-smart” homes. Smart homes in this locale were 146% more expensive than traditional home listings. So you don’t need to avoid your favorite large cities to enjoy living in a smart home but it may be more of a DIY project than purchasing the home already equipped.
Looking at a recent survey of 1,000 Americans, 67% of whom were homeowners, 28% prospective homeowners, and 5% did not plan to buy a home. They were also asked about their sentiment surrounding smart homes and their benefits.
Some interesting data revealed here were:
- 46% of prospective homebuyers can’t afford a smart home. I found this surprising as most smart home is DIY.
- More than 1 in 10 Americans would go over budget to buy a smart home, spending an average of $15,323 more. This was not shocking as technology tends to not generally be inexpensive.
- 42% of prospective homebuyers plan to purchase a home within the next 2 years. Again, not surprising based on available home inventory and current interest rates.
While just 15% of Americans planned to purchase a home with smart features within the next year, 42% said they had plans to purchase one within the next two years. The latter category was mostly millennials (40%), among whom smart home interest appears to be particularly high.
Some American homeowners are embracing the convenience that smart technology has to offer, while others are interested in doing so. As many homeowners already use smart home technology, those surveyed shared that their favorite benefits are energy efficiency (63%), convenience and automation (49%) and enhanced security (48%).
When asked about what types of smart products they used, the most popular responses included:
- Smart entertainment system (49%) — not surprising with the popularity of surround sound systems and the integration of smart home technology.
- Smart thermostat (49%) — this is a fairly common smart home element as they’re generally easy to install DIY and drive energy efficiency. Some power companies even incentivize their users by giving them away or at a discount.
- Smart doorbell (43%) — another easy smart home upgrade and a way for homeowners to monitor their homes, especially when away.
- Smart security cameras (40%) — same reason as smart doorbells.
I found a lot of this data pretty interesting, especially as a (hopefully) soon to be new home buyer or builder. Obviously the old adage about ‘Location, Location, location’ still applies but looks to be especially applicable for a smart home purchase. Luckily for Debbie and I, looking in Amarillo or Canyon, TX is to our advantage from a cost perspective. But the going over budget point above would definitely be the case whether we buy an existing home or build new. The reason being either we’d add wiring and smart switches, for example, to an existing home, or put that stuff in a new build.
What are your thoughts about all of this? Are you looking to buy or build a new home? What is your timing on the purchase? Is your current real estate market influencing your location decision? Is smart home part of the plan? Has any of this article surprised you as much as it did me?
Let Debbie and I know what you think in the comments, DMs and emails as we really enjoy hearing from you. Thanks again to all those following Debbie and I through our home building journey. It’s great to hear your success stories and suggestions as we move through the process. And if you like the content I’m posting each week, don’t forget to ‘Like’ and ‘Follow.’
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