Initial Reflections on CES 2023 and the Homebuilding Industry

Observed & recorded by Tim Costello

Welcome to CES 2023! CES has never been known as a major show-stopper for home builders. But as technology reaches every corner of our world, CES has become a window into our future. I am sitting here today after a day and a half of pre-show media events and have been reminded that our future may look very different than our past. Technology is a wild beast, hard to predict, and difficult to harness. But it is the treadmill beneath our feet and if we don’t pay attention to it we simply find ourselves desperately behind and increasingly irrelevant.

While I will certainly have many more posts about individual technologies and opportunities for homebuilders, many of the themes are already very clear. So, allow me to share my initial thoughts and inspirations from the first 36 hours here in Las Vegas.

I try to separate technologies, innovations, and disruptions…into three categories. 1) those that we can adopt or need to respond to today, 2) Ideas and concepts that are transformational but sit on our horizon (our adjacent potential) waiting for further development in order for us to take concrete action, and finally 3) underlying themes which will permeate society, impact our business and launch a number of phase 1 and 2 initiatives.

Let’s start with six Phase 3 observations today.

1. Autonomy: The concurrent advancements in sensors, batteries, AI, and software are heralding an age of autonomy. The market opportunity is being driven wide open by a simultaneous reduction in the size of the working population in the U.S. and around the world. Competitive market pressures will require builders to adopt autonomous machines in their operations. The impacts on builders run across their organization from automated marketing, content development, floor plan creation, and quality control to autonomous equipment and robotics displacing human activity and improving material utilization and product quality. Autonomous vehicles could change the very design of the communities we build and the economics of land development. What if we design a future where there are no personal garages, and no streets in front of our homes as we know them? The future is what we design and build!
2. Housing as a Service: 30% of technology spent today is on technology as a service vs the device. Housing is still stuck in the “device” economy. How could we adopt the home as a service model and generate 30% of our revenue from soft “services” in a customer-for-life model? This would fundamentally change the economics and valuation of the homebuilding industry.
3. Integrated home health: Advancements in remote health management are making it possible for us to think of the home as our personal health management center. If the home monitors and manages our health on a daily basis we have moved our product up Maslov’s hierarchy from being shelter to saving our lives. We have also tapped into a housing as a service vein. Sekisui House demonstrated home-integrated stroke detection and management at CES 3 years ago. Since then advancements in home health, driven by the pandemic have driven technology forward by leaps and bounds. Toilets that perform daily urine analysis, real-time air quality sampling, and remote telematics…. We are potentially on the verge of creating a whole new category of real estate that will obsolete the crude/dumb structures we live in today.
4. The Metaverse: Forget the hype, builders are already the poster children for commercial application of the metaverse. VR models of our homes that allow consumers to explore and configure their own dream homes have been used for years. But the concept of doing business in the virtual world will not just expand through this application. Think of remote sales and design centers providing assistance in a builder’s own metaverse. Soon digital twins will provide the ability to review designs, bid products, manage construction and live with the house for its useful life, yet another opportunity to tap into the technology as a service value stream.
5. Electrification: Electricity needs a strategic rethinking at the home and community levels. From microgrids to distributed generation, to bans on natural gas, to local storage and system resilience, electrical systems of the future will go far beyond code compliance and provide a new way to live. A conversation last night with Schneider Electric drove home the need for us to reposition electricity as a required utility function to a strategic design weapon to compete against the housing stock. Changes like this are hard and expensive to retrofit into older homes. New homes can further separate themselves from the “red ocean” market of used housing by “electrifying” their design.
6. Ubiquity of sensors and data: Sensor technology is getting more capable and less expensive. Battery technology is smaller and cheaper and now we can harvest endless “free” energy from the electromagnetic waves that pass through our homes every day, allowing sensors to be deeply embedded and perpetually powered without a wired connection. What this could do for liability and insurance management could drive lower insurance costs and lifetime revenue. I saw a great example last night of Moen’s new smart sprinkler system. The system has gone eons past other systems by creating wireless hydrometers driven into the ground in each zone. So, no more mechanical catch cups, or online systems reading average local rainfalls. This system knows the exact moisture content in the soil down to 5 inches in each zone. So you water what needs to be watered when it really needs to be watered. This is just a simple yet elegant example of how this trend will impact housing design that you can start using today.

Ok, that’s it I certainly have six more we can talk about later but I hope you were intrigued and stimulated by the potential our industry has by leaning into and leading with technology innovation. Here’s to us all building the future together.

Tim Costello

@bylinetim