The Residential Outlook

By Kellie K. Speed | Apr 15, 2006
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The current residential market provides additional entertainment, security, safety and convenience to homeowners, but also provides an open door for electrical contractors. Homebuilders, custom installers and contractors are now being presented with new opportunities to expand their markets, while increasing existing business through less labor-intensive system installations.

While the concept of an entirely wired home is not a novel idea, consumers are now demanding convenient homes that are safe, secure and, most importantly, wired. The home is being seen as a sanctuary, an escape from the hectic daily life, where families can gather in the living room and enjoy a movie broadcast in high definition on the big screen. As a result, there has been a significantly increased demand in home-based entertainment. Electrical contractors are now able to capitalize on this growing market by providing structured wiring systems and are working together with new homebuilders to include these basic packages in spec homes.

“More and more electrical contractors are working with top craft builders, relying on them as partners in new home construction,” said Bill Ablondi, director of home systems research for Parks Associates, a Dallas-based research and analysis firm. “Home builders are looking for enhanced entertainment options, especially in home networking and audio distribution to differentiate their offerings and increase sales. Builders are looking to include multiroom audio, home theater, security systems and structured wiring into their offerings and electrical contractors are capitalizing on this market.”

Residential applications can be less expensive, as they are able to replace numerous competitive devices. Often, the products and systems being installed are not overly complex and the basic electrical and wiring techniques are similar to what can be found in larger installations. Structured wiring systems now allow electrical contractors the ability to add a larger profit margin to their residential business offerings.

“This market is becoming a way for electrical contractors to become involved with work that involves much more than just electrical work, but now also includes multiroom audio and low-voltage wiring,” Ablondi said. “There has been a political dispute between electrical contractors and low-voltage wiring experts, but electrical contractors should focus on realizing the benefits.

“They are in an excellent spot to capitalize on the trend of builders trying to offer more electronic amenities with their packages. They should look at the entire opportunities available to them with new homes. This is a developing area for electrical contractors with enhanced opportunities. It’s an area for them to get some extra training and stand apart from the competition.”

Market growth

Over the past few years, the housing market has been the strongest level in history.

“There are a lot more condos and townhouses being built and electrical contractors are now looking at the residential market on the larger scale,” said Philip Tilton, president of Interconnect Computer Cabling Services Inc., Weymouth, Mass. “When working with a condominium development, installations include everything from voice, data, cable and television for the kitchen, living room and bedroom, so a basic townhouse could have $250 to $300 per outlet and there could be 10 per unit. Contractors could have a significant job to provide connectivity.”

While many electrical contractors focus solely on commercial installations, those such as Bosso Electric Ltd., Rock Island, Ill., are realizing the increasing need to consider the residential market, especially with this increased focus on connectivity at home.

“We mostly do commercial work with a little residential,” said Joe Bosso, of Bosso Electric. “It has certainly become a growing trend around here, but I think it is stabilizing because the growth in the residential end has been so strong over the last few years that it will eventually reach its peak.”

But it hasn’t yet reached that peak, and the construction growth in residential is not limited to condos, townhouses and your run-of-the-mill housing developments. A demand has arisen for luxury homes requiring an array of electronic products, making the homes safer and more enjoyable.

“A high-end home system could average $100,000 for an installation,” Ablondi said. “High-end entertainment systems used to be available only to the wealthy, but as most Americans are realizing, you can get a simple home theater system in a box at Best Buy or some other consumer electronics store. Installation has formed a gap; the products are readily available at an affordable price, but installation is not available.

“More contractors are expanding into these newer areas through further training and developing partnerships with builders and low-voltage experts,” Ablondi said. “That’s why wolves travel in packs—so they can bring down bigger game.”

Electrical contractors are now seeking out the residential marketplace and working with homebuilders and general contractors to advise them of new products that may differentiate a certain development by offering the latest technology.

Residential applications may include interior features such as dimming systems and energy-efficient lighting. In addition, the demand for residential low-voltage wiring has grown tremendously over the past few years. Multiple home computers require networking, and a fiber optic system can be put in place for high-speed Internet access.

Structured wiring systems have become the ideal solution to the customer’s ever-changing demands for increased flexibility and convenience. Generally speaking, these systems provide connectivity to enable consumers to share electronic equipment and exchange data or video signals through a series of connected networks. Simple base units can offer flexibility, though keep in mind base systems should be affordable and offer the homeowner the ability to upgrade at some point in the future.

Of course, those contractors who are able to provide structured wired solutions are at an advantage over their competitors, and they also stand apart with builders looking to reduce the number of contractors on a job. A contractor who is able to offer a flexible format with enhanced features and competitive pricing for both electrical and structured wired installs are at a greater advantage (see “Fit to Please,” page 132, for more information on structured wiring).

Home offices are also on the rise, requiring the installation of computers, printers and other peripherals, including high-speed Internet access, linking computers throughout the home, requiring the need for more access points within the house.

Integrated ‘smart’ homes

The “smart” home, a house designed with interactive systems that pass information to one another, is making a stronger showing in the residential market. In fact, more manufacturers are designing products to fit this trend.

“The hot item in the residential market now is smart box home integration where you run video, voice and data cabling to a living room for Internet, printers and television,” Tilton said. “Then when you come back, you have to hook all the closets together in the complex. Another trend is to install a drop-down screen that utilizes a high-definition projector with DLP quality. The contractor would install motor, switches, wiring and an outlet for where the projector is to be mounted that houses the media equipment.

“Many residential townhouses are wiring cameras to telephones so at the simple push of a button, you can not only let the UPS person in, but there is also a mini camera installed in the speaker, so you can see the person at the door. It’s an inexpensive solution and the easiest way to tie into telecommunications.

“People are looking for the ability to control their sound systems in a media center from anywhere in the house,” Tilton continued. “Home automation is also growing. You could have different lighting go off with sensors. The most cost-effective way to install is to have the lights go on when you enter the room and off when you leave, but you could have controls for everything from a hot water heater to energy-efficient lighting systems. There is a tremendous opportunity here for people who have hands on understanding intricate schematics and a knowledge of low-voltage [voice, data and video].”

Moving into a home market

One of the major obstacles contractors have encountered is the need for extensive training in residential applications. While most of the residential structured wiring systems installed today are basic units that require minimal training, homes requiring upgrades may require significantly experienced and trained installers. If you plan to enter the residential market, be sure to learn new installation techniques, always remaining a step ahead of the competition.

What does the future hold for electrical contractors in the residential market? As more and more families continue to install multiple computers, high-end home theater audio and visual systems, along with security systems, the market can only continue to offer new opportunities.    EC

SPEED is a freelance writer based in Weymouth, Mass. She can be reached at 617.529.2676 or [email protected].



About The Author

Kellie Speed is a freelance writer based in Weymouth, Mass. She can be reached at 617.529.2676 or [email protected].





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