Why Home Automation Makes Sense During a 2023 Housing Recession

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A coffee maker that automatically brews a fresh cup of coffee, a fridge that monitors food expiration dates and recommends recipes, and motion sensors that can differentiate between homeowners, visitors, or pets. These are not scenes from a futuristic movie. They’re appliances that you might find nowadays in a smart home.

Smart home technologies are a segment of the Internet of Things (IoT) market. More commonly known as home automation, smart devices used to be seen as a novelty—impressive to have but not essential to all the work involved in maintaining a residential property. But today, owners and leasing operators are realizing the benefits of installing smart devices in their homes. As a result, analysts estimate that the global revenue for the home automation market could reach $222.90 billion by 2027.

Moreover, tech companies are developing more diverse products for smart homes. From speakers to security cameras, and small and big appliances, analysts estimate the global spending on IoT products to reach $1.1 trillion next year. As these devices communicate online, IoT SaaS platform vendors can also expect a surge in demand for home automation software used to monitor and manage IoT devices. Home automation software not only helps end users in keeping track of their installed IoT devices but also secures smart devices within the network.

Home Automation During a Housing Slump

While forecasts for the smart home market see a boom, real estate experts predict a continued slowdown in housing sales next year. Based on the Housing Market Index published by the National Association of Home Builders (NAHB), the housing market is already in a recession and has been since midsummer.

The projected market growth and increased spending on home automation seem to be counterintuitive at a time when economists are warning about a sustained 2023 housing recession. When buyers aren’t coming, how can homeowners or property managers justify the expenses associated with home automation technology?

Sales Down, Rentals Up

Though home sales are down, rental housing demand is up. Based on the Housing Vacancy Survey, renter households numbered 44 million in the third quarter of the year, an increase of about 870,000 homes from the first quarter of 2020. This surge in demand pushed the overall rental vacancy rate to just 5.8%—the lowest it has been since the mid-1980s.

Meanwhile, for professionally managed apartments, data also showed renter units shot up by 4.8% in the third quarter of 2021 compared to the previous year. In particular, higher-quality apartments (4- to 5-star ratings) experienced the highest demand with vacancy rates down to 6.2% and asking rents up by 13.8%.

Higher-income households have also been driving the demand in the rental market in recent years. They turn to rental properties because of the low inventory and higher prices in the for-sale market. There are now 11.3 million renters making at least $75,000, which is 26% of renter households.

Using Home Automation for the Rental Market

As higher-income families continue to rent, more will look for well-maintained properties with premier amenities. A smart home equipped with technology that can help improve home management and comfort could be a deciding factor for renters.

For example, tenants often look for a property with appliances included. Smart TV, dishwashers, or other IoT-enabled appliances could make home life much easier and enjoyable for tenants.

Aside from daily convenience, tenants also consider the safety and security of a rental property. By installing a home automation system, owners or leasing operators can improve home security and make the property more attractive to prospective renters. Motion detectors, automated locks, and surveillance cameras are common devices hooked up to home automation software so residents can monitor their homes or receive security alerts from any location.

Another important concern is energy efficiency. A rental property equipped with smart devices can stand out to renters that want an energy-efficient home. Smart thermostats, for instance, can help tenants have precise control over their heating and cooling or program their systems with their preferred schedule and temperature settings. Additionally, sensor-controlled lights and motorized shades can also be programmed to adjust to the natural light in the room throughout the day or automatically turn on or off when people walk into a room.

With these concerns in mind, smart technologies can provide home management insights and living conveniences that appeal to tenants in a competitive rental market. Thus, current economic conditions could be the best time for owners and leasing firms to increase their use of smart home technologies.