Voice-controlled smart homes are now on Amazon’s roadmap, as demand for cheaper prefab houses grows

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Vincent Paguia’s new house caused quite a spectacle when it arrived in his neighborhood in the beach town of Half Moon Bay, about 25 miles south of San Francisco. It took just three hours and some very heavy machinery to crane all the ready-made modules of his home into place, lifting them off the back of two semis that pulled up in front of his lot. The new 1,300-square-foot family home had been built in sections in the factory and arrived complete with faucets, kitchen appliances, wood floors and shower heads. It’s a fully functioning smart home, equipped with Amazon Echo-controlled lights, Nest-controlled heat, air-conditioning, and five internet-connected Ring security cameras.

Plant Prefab, the company behind Paguia’s new home, is one half of Amazon’s deepest partnership yet with a housing firm. The e-commerce giant had already worked with the regional construction group TRI Pointe, and Lennar, one of the largest home construction companies in the United States, to integrate smart home technologies into new builds. But Amazon went further with Plant Prefab, investing $6.7 million (along with the VC firm Obvious Ventures, which was co-founded by Medium CEO Ev Williams) in 2018 through its Alexa Fund, which backs companies that are developing uses for voice technologies and A.I. prefabricated homes are an intriguing proposition for Amazon, a company that already controls a powerful distribution network and sells anything you could want for your home. Could “Amazon home delivery” really mean just that?

Based in Rialto, California, Plant Prefab integrates smart home features into all the models in its Living Homes range, including a Ring video doorbell, Nest smart thermostat and smart lighting system like Lutron. Homeowners can use either Amazon Echo or Google Home to control the devices.

Homes range from a 406-square-foot accessory dwelling unit for $112,000, to a 2,090-square-foot three bedroom, two bathroom home for $501,600. Plant Prefab also works with star architects like Yves Behar, Ray Kappe and the collective Brooks + Scarpa to create high-end custom models. While most of Plant Prefab’s designs are angular and modern, prefabricated homes can be designed in any architectural style.

Construction industry analysts have been predicting off-site construction was going to become the norm, but rising materials costs and a labor shortage means they could finally be right.

As well as the prefab itself, the customer also pays for permits, delivery, installation and site preparation that all vary by location, in addition to buying the lot itself. Vincent Paguia in Half Moon Bay chose a standard three bedroom, two bathroom design, paying a little extra for some customization to fit his narrow lot, plus an electric car charger and solar-ready flat roof. The entire process took 11 months and cost nearly $900,000 — a bargain in the overheated San Francisco market.

Smart homes fit Amazon’s aggressive consumer technology strategy, which includes acquiring the Ring video doorbell and recently premiering more than a dozen Alexa-powered smart home devices, including lighting, temperature control, security systems, and kitchen appliances. Such a voice-powered domestic world could become Amazon’s fourth business pillar, along with its three originals: Prime, retail, and web services.

“We know we’re just scratching the surface of what’s possible,” says an Amazon spokesperson. “Our vision for the smart home is the ability for Alexa to understand the state of the whole home and its devices, adjust the living environment accordingly, be helpful without customers having to ask, and provide the peace of mind when people are home or away.”

Partnering with Plant Prefab enabled Amazon to get in on the ground floor of off-site construction. Despite a century of experiments with off-site building in the United States, the format has never really taken off, accounting for only 2% of homes. The method is far more widely used outside the United States, with 20% of homes in Germany and 11% of homes in the U.K. built off site.

For years, construction industry analysts have been predicting off-site construction was set to become the norm, but rising materials costs and a labor shortage means they could finally be right. “A younger generation is heading toward tech and not construction jobs,” says Mark Boud, chief economist for Hanley Wood, which provides business intelligence and data-driven services to the construction industry. “The current administration’s immigration policy discourages immigrants who might enter into the U.S. to work in construction.”

Boud says that in some regions, immigrant labor has accounted for as much as 30% of construction workers, and if fewer immigrant workers are available the costs of labor are likely to rise significantly. That has a knock-on benefit for prefabricated homes. “You can build a factory-built home with about 25% of the labor force you’d need to build on site,” he says.

Brad Hintze, director of marketing at Control4, one of the biggest names in home automation and networking systems, sees a future in which smart features become the standard in homebuilding. Like Amazon, Control4 works with large, nationally recognized home builders — like Toll Brothers and MHI in Texas — to integrate smart features up front. But Hintze says that while Amazon “has the big moonshot ideas, they’re missing pieces of tech like the operating system and more interfaces than simply voice control,” which Control4 has with its OS3.

Other big players are eyeing the industry, too. Boud predicts that Google, Apple, and Tesla will all get involved in providing smart technologies to residential home builders. This is all part of the inevitable disruption of the construction industry, says Ali Wolf, director of economic research at the real estate advisors Meyers Research. “Amazon entering the space is going to keep home builders on their toes. They will have to innovate: how do you build homes more efficiently, what ways do you cut costs, in which ways do you implement technology in the home to create a better experience?”

Amazon has all the parts in place, and with Whole Foods they can even stock your refrigerator.

Hintze foresees some consolidation among these businesses. “But the major tech players won’t win on their own until they can get into a place where they embrace an open ecosystem,” he says. “Amazon is the most open and inviting for manufacturers to integrate with.” In October Amazon announced it was rolling out a fleet of truck tractors that could be used for trips of 400 miles or less — trucks that would be perfect for delivering large prefab homes. “Amazon has all the parts in place, and with Whole Foods they can even stock your refrigerator.”

Paguia, meanwhile, says his family’s ready-made home hasn’t been stress free. The municipality required him to pay $20,000 to reconstruct sidewalks on two sides of the corner-lot property, and connecting to mains water cost him $64,000, neither of which he’d planned for. It took a long time to find a general contractor that had time for the project and was willing to work with prefab components. And a more recent problem with a fault in the heating system may end up costing him a lot more money. He is still working with Plant Prefab and LivingHomes on defining the issue and figuring out options.

As for the smart home features, Paguia says he turned down some options because of concerns about privacy. He’s not alone: Recent research by the National Association of Homebuilders shows that most consumers were mainly interested in smart devices that helped improve home security: 46% of respondents would like security cameras, 45% want a video doorbell and 40% would opt for a wireless home security system. “I’m okay with the amount of tech we have,” says Paguia, “but I didn’t put any cameras inside the house. We’re not fully embracing everything.”