Does Smart Home Tech Boost Your Home’s Value?

Many homeowners choose household upgrades with return on investment foremost in mind. Room additions, kitchen remodels, and bathroom makeovers are improvements that have traditionally stood out in this regard.

But as a dizzying array of “smart home” gadgets enter the market, some homeowners are wondering: Will connecting a house to the Internet of Things (IoT) pay off when it comes time to sell?

For Bruce Ailion, return on investment doesn’t matter. An Atlanta-based Realtor with RE/MAX Town and Country, Ailion calls himself a tech junkie who loves smart home amenities and their potential for peace of mind.

“I moved into a new office,” Ailion says. “My wife installed super security: cameras at the building entry that she can watch from her phone, [we can] lock and unlock the doors remotely, and when I approach the door it unlocks automatically, via Bluetooth from my phone.”

“Does it add value to the building?,” Ailion asks. “I really don’t care. It makes her feel good, and that’s primarily what matters.”

And for now, for those considering smart home upgrades, perhaps that kind of logic may have to suffice.

As smart technology continues to transform our lives, our homes are being positioned as the next great frontier. The smart home devices coming to market touch almost every corner of our dwellings, from smart bulbs designed to help us sleep better, to smart watering systems for the garden.

Svenja Gudell, chief economist at Zillow, says we can expect to see more homeowners investing in smart features, especially those that would help reduce monthly expenses. "Thermostats, lighting, keyless entry, and security are expected to rise in popularity.”

And Realtors say these types of features can help enhance a home’s appeal at sale time.

“I don’t necessarily see these features raising home prices, but having that technology there focuses attention of buyers to that house over others,” says Miami-based Hal Feldman of RE/MAX Advance Realty. “And often I’ve seen those homes sell significantly faster.”

Greg Boss, a Realtor with Better Homes and Gardens Real Estate in Boise, says that while Idaho is probably behind the smart home curve compared to places like Seattle and Northern California, "Consumers are starting to see it, appreciate it, and ask for it.”

“It won’t deter them from buying a home they like, but in real estate, any time you can bring in another wow factor, it really helps," he adds. "And builders who are cutting edge are definitely on top of it. As a younger generation moves here, they’ll be asking for it.”

Such anecdotal insights are borne out by research conducted in late 2015 by Coldwell Banker Real Estate, which polled 4,000 U.S. consumers on trends relating to adoption of smart home technology. Among the insights the survey revealed:

• Of people who do not currently have smart home technology, 27 percent say they will incorporate it into their lives in 2016.
• When asked what qualifies a home as “smart,” the top choices were locks and alarms (63 percent), thermostats and fans (63 percent), lighting (58 percent) and safety devices like carbon monoxide detectors and nightlights (56 percent). 

• The most popular technology already in today's homes is smart entertainment, including smart TVs and speaker systems, followed by smart security and smart HVAC.

• Older generations are adopting certain kinds of smart home tech faster than younger ones. For instance, 40 percent of those over 65 who own smart home products currently have smart temperature products, compared to only 25 percent of Millennials (ages 18 to 34). 


But market researcher Michael Wolf, founder of NextMarket Insights, says that the demographic spending the most on smart home features today is Gen X—consumers aged 30 to 44.

“It’s a tech-savvy audience, but they’re also in their peak earning years,” explains Wolf. “Younger consumers like throwing stuff at their smartphones, but most of them are still renting. There’s definitely a correlation between income and adoption.”

It’s not that smart home upgrades have to be costly. “There are high-end systems with their own little eco-system those can run into tens of thousands,” adds Wolf. “But the stuff you buy at retail doesn’t have to be expensive. You can buy a Nest thermostat for a little over $200 and a smart lock for $100 to $200, and they’re easy to install.”

Because many new standards rely on WiFi connectivity, consumers don't have to worry as much about future-proofing larger purchases like major appliances. For instance, because GE installed WiFi in over 70 of its kitchen and laundry appliances, the company could add compatibility with Amazon's Alexa virtual voice assistant with a simple software upgrade.

It's also smart for homeowners to pay attention where and when they install smart tech. For instance, upgrading only one or two areas of a home may be a negative, according to Zillow economist Gudell. “Just like if you were to do a high-end bathroom remodel in an older bungalow, adding expensive upgrades to one room in an older home can make the rest of the house look even more dated.”

Unless those upgrades are fairly recent, Ailion cautions that they may not have any value at all.

“How much—if any—of that technology investment pays off three to five years down the road in added value? Given the pace of change, probably none,” says Ailion.