Smart home technology has quickly evolved from a niche curiosity to an in-demand driver of real estate value. Gadgets that were once the province of the most tech-obsessed homeowners have gone mainstream, with noticeable impact on the housing market.
The numbers speak for themselves:
A 2024 research report by the National Association of Realtors showed 11% of overall homebuyers cited smart home technology as a reason for their home selection — up to 18% in the key age demographic of 35-44. (NAR)
Earlier NAR research revealed an average price increase of 5% for homes that come equipped with smart home technology. (CEDIA)
The NAR also found that homes with smart technology sold faster, realizing as much as a 5% sale price increase for the inclusion of nothing more than a high-tech security system, as much as 3% increase for a single smart thermostat. (The Proptech Connection)
In two years, the number of Americans willing to pay more for a “smart home” has nearly tripled, from 10% to 28%, with the average premium they were willing to pay $18,000. (CEPro)
This data paints a picture of smart home technology as one of the most cost-effective upgrades a homeowner or real estate investor can make to a home to realize outsized value upon resale of the home.
The Smart Home Features that Add Value
Energy Efficiency Upgrades. Smart thermostats, lighting, and energy monitors significantly cut energy costs at a time of rising energy prices. Homes with smart energy upgrades tend to command prices as much as 5-10% higher than homes without them. (NerdWallet)
Safety and Security Upgrades. Smart security cameras and sensors with app-based control provide peace of mind, as well as immediate cost savings. Certain insurance companies offer premium discounts ranging from 10%-20% for occupants of homes with comprehensive security systems. Many smart security devices easily qualify. Some insurance companies have started to offer discounts for occupants of homes that include smart smoke detectors, smart carbon monoxide alarms, and smart water leak detectors. (CEDIA)
Convenience and Lifestyle Upgrades. Whole-home automation systems can control lighting, temperature, audio systems, and appliances — often voice-activated with whole scenes accessible and a single one-word command. A survey by Coldwell Banker revealed that 77% of Millennials would pay more for a home with smart lifestyle and convenience features. (The Proptech Connection)
Future-Proof Infrastructure
Smart home upgrades also increase home value by “future-proofing” the home, making it adaptable to the innovations of tomorrow. Infrastructural upgrades like high-speed mesh Wi-Fi, fiber-optic cabling, electric car chargers, and smart hubs may not be obvious on the home tour, but they help burnish the narrative of a home built to maintain its value into the future. (CEDIA)
Key Concerns of Smart Home Technology
Smart home technology is not without its downsides. Rigging your home to the internet creates more surfaces for cybercriminals to attack. Even without the threat of cybercrime, consumer concerns are growing about the amount of their data that even legal organizations have access to.
The smart home technology of the future will only take hold with the savvy consumer if it walks hand-in-hand with data security and data privacy technology, fully integrated into each exposed system.
There has even emerged a minority trend among high-net-worth buyers seeking “technology-free” homes to eliminate this risk. But this remains a minority trend — 62% of consumers believe smart home technology makes a home more valuable. (CEPro)
What The Future Holds
The rising popularity — and corresponding rise in home values — of smart home devices represents a moment in time. If the trend continues, smart homes will be the rule, not the exception. With ubiquity comes the lack of competitive advantage. When every home is smart, there will no longer be a “smart home premium.”
Smart home technology represents a moment in time where property owners can realize an outsized value increase — along with increases in savings and enjoyment of the home — for minimal investment … as long as they remain mindful of the technological risks.
