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Smart Home Devices - Are They Worth the Investment?

Kevin GrahamOctober 23, 2019

Peace of mind, entertainment and all sorts of automation can be an app or voice command away with today’s smart home technology, and the trend is only growing. According to International Data Corp., analysts with specialization in technology, the number of smart home devices within the market is expected to have a compound annual growth rate of 16.9 billion for the period between 2019 – 2023. The 2019 growth rate was estimated at 26.9%.

Nearly any home-based system can be automated: lighting, security and surveillance systems, television and even appliances. Automation systems can be programmed or taught to turn on and off, while some even adjust their settings at certain times of the day, like automatic sprinkler systems and home alarms.

This is your basic guide to the availability and cost of smart home systems, and how smart home automation systems fare in terms of value.

Smart Home Devices And Home Sales

Smart home automation systems can provide homeowners with three huge benefits: convenience, security, and energy efficiency. When a system is installed – and especially when it’s hard-wired – it can serve as a strong selling point to entice buyers. There are several players in this particular ecosystem from companies like ADT and cable companies like Comcast and AT&T. But you can also roll your own system with a variety of smart home hubs that we’ll get into later.

It’s hard to put into perspective how many homes actually have true smart features because everyone defines it differently, but one study from S&P said that 17% of homes had smart home elements in 2017. This number was expected to increase to 28% by 2021.

Want your home controls even closer? Some automated home systems can be linked to wearable devices such as smart watches and fitness trackers.

If you have multiple devices, consider connecting them using a smart home hub, which is a hardware device that links devices on a home automation network and controls communications among them. Be sure to check that the hub is compatible with the automation systems you have before buying.

What’s A Smart Home?

This is all very nebulous because we’re in the early days of the technology, but it’s important to have some definition of a smart home. For our purposes, let’s define a smart home as a place of residence having at least one connected device that’s intended to automate or make easier some portion of your life.

Many of these gadgets are voice controlled and serve as hubs that connect to and communicate with the rest of your devices. Some of the most popular technologies for hubs are Amazon’s Alexa assistant, the Google home hubs and Apple’s Siri-controlled HomePod and HomeKit devices. Although voice control from a standard hub is in some ways the coolest set up because it enables all your Iron Man fantasies to come to life (maybe that’s a personal dream), your devices can typically be controlled from your phone as well.

Beyond your chosen hub, what really makes these devices shine is when you link them up to things within your home. These can be connected to plugs that enable power control so that you can use them with other devices that don’t have smart technology built in. You can also buy white bulbs that dim with the power of your voice and turn off when you leave the house. You can get smart thermostats that learn your schedule over time and can be remotely controlled from a phone or other capable communication device. They even have blinds that open and close without you having to move across the room.

You’re able to see who’s coming with a doorbell camera, and there are cheap cameras you can set up both on the interior and exterior of your house in order to roll your own security solution.

How Do Smart Home Devices Work?

The basic building block for any smart home is an internet connection. That’s because all these devices need to talk to each other in order to accomplish the control you desire.

That’s one of the downsides to a smart home: All your devices are out there on the internet. This does mean that if anyone has hacked one of these devices, they have a gateway onto your home network.

To deal with this problem, one thing some people do is set up a separate virtual network within their router called a VLAN where their smart home devices live. It’s like there’s a firewall separating your smart home devices from the computers, phones and other items that might connect to your network.

I acknowledge that the above solution is a lot of work and most people don’t do it. A nice middle ground is to always be aware of what’s being put on the network. One thing you can do is read the reviews. Tech blogs have all sorts of product recommendations. Additionally, if you buy from a name in the industry that’s been around a while, you have a better chance that they will have the infrastructure to put behind product support and to occasionally update the software and firmware in these devices to provide security fixes at a bare minimum.

Since these devices are connected and communicating, there’s always the potential for a security flaw to be exploited by someone who doesn’t have any scruples, but by buying well-supported devices and knowing what you’re putting on your network, you can cut down on the risk.

What Does Every Smart Home Need?

Beyond the fact that everything is connected to the internet, the other important detail to realize is that anytime the Wi-Fi goes out, everything stops working, so it’s essential that you have a strong Wi-Fi signal. When you change routers, as I did recently, you have to reset everything, so it’s important to keep some of those manuals or at least know the model numbers of your products so you can easily Google how to get these things back to the factory settings.

If you have a big house where the Wi-Fi doesn’t necessarily reach the room reliably for your smart device, you have a couple of options. The best solution, but also the most expensive, is to get a mesh system. These are offered by companies like Eero, Netgear and Google. The way mesh systems work is that you have a base router that then communicates with other extension points throughout the house. The best part about this solution is that it’s all seen as one network and you get the same speed no matter where you are in the house.

The other solution is to get an extender, which sets up a separate network that communicates with your base router but sends the signal on to the rest of the house. This is cheaper than the mesh networking solution, but the downside is that the internet speed is cut in half because the extender spends half the time communicating with your router and half the time sending the signal to your devices.

We’re not at a point where I’ve found that smart home devices work perfectly 100% of the time, but when nothing works, the first failure point to look at is your Wi-Fi, and so that’s the component of your system that is absolutely the most crucial.

Can You Save Money?

There are two reasons someone typically switches to a smart home system: convenience or savings. Extra money in the wallet is a powerful motivator.

A common question is whether smart home automation systems can save you money. There are a lot of devices available, and since several are still new to the market, the jury is still out on many of them.

Nest, makers of a learning thermostat, conducted two independent studies and one of their own to see how much energy their thermostat was saving. According to the results, “the thermostat saved about 15% on cooling and 10% – 12% on heating. For the average home, Nest found that its $250 thermostat would pay for itself in about two years.” The study that comes up with that number is now on the older side, but it’s in line with the amount 10% amount that the Department of Energy says you could save on an annual basis.

If you were to purchase a thermostat at Lowe’s, you might find an analogue unit for $24. Even with the energy savings spread out over time, is a learning thermostat worth the investment? If you like the idea of your home thermostat learning that you want the house to be sitting at 76°F when you get home from work, and automatically adjust to all your preferences, then it may be an asset. You may not see as much value from the learning aspect if your schedule is constantly changing because there’s no pattern for the thermostat to learn

Another area where you can save money is in security devices, as the rise of smart devices allows you to build your own system without having to worry about paying subscription fees if you don't want to. There are both indoor and outdoor Wi-Fi connected security cameras. I like some options from Wyze Cam personally, but there are many competitors in this space. There are a great number of video doorbells available as well that let you see who’s at the door before ever opening it. Finally, there are a number of smart lock systems which can be unlocked via phone and other devices the person has authorized, doing away with the need for fiddling with a physical key in a lock.

Are Smart Home Systems Worth It?

Whether or not integration of smart home devices in your house is worth the investment depends on your situation. In many cases, the cost of the device and its installation can be pricey up front, but may pay off in home resale value or energy savings over time. In other cases, the convenience and safety that automated systems can provide make them well worth the initial investment.

However, when it comes to actually answering this question, there are several universal considerations you need to take into account. The rest of this article will cover them.

I’ve set up my fair share of smart devices in my living space, so I’m familiar with the benefits as well as the downsides. I’m going to use my experience as a bit of a case study, but many of the things I’ve run into will also be things you need to think about when determining the right solutions for your own home.

Pay Attention To Integration

Depending on the resources of the company you’re buying your products from, they may support one smart home assistant over another. It’s important to buy products that work with Alexa, Google Assistant or Apple Homekit, depending on your assistant of choice. Many of the bigger companies have products that support multiple standards, but we’re not at a point where that’s something that can be counted on, so it’s a consideration. Amazon had a first-mover advantage, but the players that have survived in the space all more or less have feature and support parity this point.

The differences between the systems are mostly in the first-party integrations. For example, Alexa devices will work better with Amazon Fire media systems, but don’t support working with the Chromecast as well. Because Google owns Chromecast, its Assistant products work better with Chromecast than with Amazon Fire.

That’s not to say there isn’t cross-platform compatibility in other areas. Apple Music works on Alexa devices, for example. Microsoft has also done a similar deal where its Cortana assistant is available on Alexa. The language you have to learn to take advantage of these capabilities is a little kludgy at this point. You have to say things like “Alexa, ask Cortana to read my calendar.” However, it works.

Prepare For Occasional Frustration

None of these systems work perfectly all the time. It’s important to note that if you rely on these things, you have to know how to figure out where in the system things are breaking down in order to fix the problem.

One of the biggest issues I often deal with is the fact that we are in a transition between smart control devices and physical switches, so if someone who is unfamiliar with the way the system works turns off the light switch, you have to turn it back on before the smart control will work. The problem is this is a shift in what humankind has done for at least the last century, so even though we’ve had the discussion several times, my mom is still going to occasionally turn off the light at the switch when she’s around.

When it’s not a power issue, but instead a matter of the voice assistant itself becoming unresponsive, one of the things you need to check is whether it’s the device itself or the Wi-Fi connection. The best way to do this is to go into the app that came with one of the devices you have smart control over. If the app properly connects and you can control the device through the app, you’ll know that the problem is the Alexa device, Google Assistant, HomePod or whatever else you might be using to connect all this together. In that case, the best thing to do is often to unplug it and plug it back in. These things are really just computers in different form factors and occasionally they need to be restarted.

I make extensive use of these systems and they give me the ability to control things like my lights, my TV and internet radio options from my bed, which is useful given my cerebral palsy. These systems enable great things, especially for people with disabilities for whom this mode of control is extremely useful. However, it does mean I’m extremely reliant on these things to work and I have to be able to diagnose what’s wrong with them quickly. I have both an Amazon Echo and one of the cheaper Google Home Mini devices in my room. If neither one of them is responding, I know it’s an internet issue. If one of them works, I can use it until the other device is fixed.

The Benefits Of A Fully Integrated Smart Home

While the last two sections have gone over some of the more frustrating points about smart home technology, I do use it every day, so there are a lot of benefits to go over as well. I would be remiss if I didn’t conclude this article with those benefits.

I have a combination of smart plugs and smart bulbs to control my lights. The advantage of the bulbs is that you can do things like set them to come on at a certain brightness level based on your voice command. You can also set things up in groups so that when you leave a room or go to bed for the night, with a simple voice command you can turn all the devices in that group on or off.

I have a couple of the Echo devices hooked together so I can use them as an intercom system should I need assistance. I have a friend who has even connected his Echo to the phone so he can make a phone call in the event that he falls.

With a device like the Logitech Harmony Hub, you can turn on the TV and say things like “Play ‘The Office’ on Netflix.” The device automatically switches inputs on your TV to the correct connected streaming media player, opens the Netflix app and starts playing your content. When this all works together, it’s brilliant.

I haven’t gotten there yet with my personal set up, but one of the things you can do is set up things like voice-controlled blinds and thermostats. One thing I will say is that if you go this route, make sure you take pictures of the way your thermostat or blinds were set up before because if you ever move out, you’ll want to take your smart system with you, and that means putting the old system back in.

These are great devices for seniors as well because they can do things like set reminders so that they’ll know when to take their pills or go downstairs for dinner. They can also ask Alexa what time it is, which can be useful if they start to lose the sense of time and place.

They’re also great search devices. Not every inquiry works, but depending on the device, if it’s a question of fact, it will pull from sources like Google, Wolfram Alpha or Wikipedia to try to answer your question. You can also use them for more trivial things like games or flipping a coin. I’m a big fan of playing “Jeopardy!” on mine.

Hopefully this has given you an overview of the pros and cons of having a smart, connected home and whether the investment makes sense for you. Check out this article for more on the difference between the smart assistants.

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    Kevin Graham

    Kevin Graham is a Senior Blog Writer for Rocket Companies. He specializes in economics, mortgage qualification and personal finance topics. As someone with cerebral palsy spastic quadriplegia that requires the use of a wheelchair, he also takes on articles around modifying your home for physical challenges and smart home tech. Kevin has a BA in Journalism from Oakland University. Prior to joining Rocket Companies, he freelanced for various newspapers in the Metro Detroit area.