All-in-one compact stereo systems and home-theater-in-a-box (HTiB) systems appeal to one type of convenience-oriented consumer. Another type of convenience-oriented customer opts for custom-installed multi-room-audio systems, often called distributed-audio systems.

These systems are built around a central audio system that distributes music through in-wall and in-ceiling speakers to multiple rooms in a house and through outdoor speakers to patios and poolsides. With the most sophisticated systems, consumers use in-wall or tabletop controllers in each room, or a handheld remote, to turn on the central sound system, select a song for playback from a CD changer or hard-disc-drive (HDD) music server, or tune to local radio stations or satellite radio channels.

With a custom-installed multi-room-audio system, consumers don’t have to clutter up every room with a stack of audio components or with a tabletop compact music system, nor do they have to lug CDs from one room to another to listen to music throughout the house.

Installers who sell these systems also install custom home-theater systems, often using custom-made cabinetry to conceal the video display, associated electronics and front speakers. In some sophisticated installs, hitting a single button on a remote controller turns on all of the components in a home theater system, activates a motorized projection screen that drops from the ceiling, and activates motorized in-ceiling surround speakers that tilt down to direct sound to the listeners.

Soar Point
Custom-installation sales are soaring, driven as much by consumer demand for convenience as by record decade-long growth in new-home construction. Custom systems typically are installed in homes while they’re being built, but many are installed when homes are extensively remodeled.

The custom market’s rapid upward climb roughly coincided with the longest uninterrupted string of million-plus single-family housing starts in U.S. history. That string continued for 14 years through 2005, when the number of single-family housing starts rose an estimated 6.3 percent to an all-time high of 1.71 million, according to the National Association of Home Builders (NAHB).

With rising interest rates expected to reduce the number of single-family home starts in 2006, builders are expected to get more competitive and aggressively market custom-installed audio and home theater systems to keep custom-installation revenues rising, according to Parks Associates.

Future Growth
During the next ten years, demographic changes support continued long-term strong growth, barring unforeseen economic calamities, according to the NAHB and the National Association of Realtors (NAR). The changes include immigration and a growing number of baby-boomers’ “echo-boom” children entering their home-buying years.

Other drivers of recent custom-installation growth include:

·    Home-centric lifestyles,

·    Demand for bigger homes with more amenities,

·    Growing consumer awareness,

·    Growing awareness by builders, architects and interior designers,

·    Growing availability as a standard feature or option through new-home builders,

·    Declining multi-room-audio costs,

·    Growing demand by baby boomers who’ve entered their peak earnings years and no longer are paying for their children’s college tuition,

·    High housing prices that have encouraged consumers to reinvest in their homes by remodeling and adding new amenities, and

·    A growing number of second- and third-time custom-install buyers.

Those are the conclusions of a variety of authoritative sources, including key suppliers, CEA, NAHB and the Custom Electronic Design and Installation Association. All of these factors combined in 2005 to deliver an estimated 17.7 percent growth in installer-level residential-install revenues to $7.3 billion, according to Parks Associates, which based its conclusions in part on installer surveys. The figure consists of $3.1 billion in product sales and $4.1 billion in labor revenue.

For 2006, Parks estimates revenue growth of 13.7 percent to $8.3 billion ($3.5 billion in product sales, $4.8 billion in labor).

New homes today are larger and have more amenities than ever before, according to an NAHB report. In 1970, for example, the median new-home size was 1,385 square feet. In 2003, the projected median home was 2,123 square feet. In 2003, 19 percent of new homes were at least 3,000 square feet, up from seven percent in 1986, Census Bureau statistics show. Amenities in demand range from central air conditioning and security systems to whole-house audio and video systems.

 “For years, builders have emphasized amenities like larger kitchens, bigger closets and elegant master baths,” Parks Associates contends. “But in this digital era, lures are expected to include multi-room audio, home theater, security systems and structured wiring [for features such as home networks], all of which appeal to the new iPod generation of home buyers.”

Growing Consumer, Builder Interest
While consumers buy new homes at historic rates, their awareness of distributed-audio has grown because of efforts by the CEA and NAHB to educate home builders, architects and interior designers. A growing percentage of new-home builders, for example, offer custom-installed AV options, and a growing percentage of new homes are sold with such systems, according to the latest study completed jointly by the CEA and NAHB.

The organizations’ State of the Builder Technology Market study, based on surveys of hundreds of builders nationwide in early 2006, found 74 percent of builders that offered home technology in 2005 offered multi-room audio as standard or optional, up from 68 percent in 2004 and 56.8 percent in 2002. A total of 69 percent offered installed home theater systems in 2005, up from 2004’s 59 percent.

In fact, more builders in the latest survey offered home technologies of all types with the exception of structured wiring, which consists of a centralized utility-room wiring hub that looks like a circuit-breaker box but centralizes the control of multiple home systems from automated lighting systems and air conditioning to multi-room audio and PC networks. Structured wiring enables complete control of a home’s multiple systems from in-wall or tabletop controllers in one or more rooms.

Rising Install Rates
With more builders marketing the custom-install option, installation rates continue to rise.

Surveyed builders who offer home technologies installed multi-room audio systems in 15 percent of the homes they built in 2005, up from the previous year’s12 percent, which in turn was up from 8.6 percent in 2002, the CEA/NAHB survey found.

Home theater install rates rose to 11 percent in 2005 from the previous’ years eight percent.

Rates are rising, according to the Builder Technology Market study, because builders realize that home technologies are important to successfully market new homes. The overwhelming majority of all surveyed builders – 86 percent – agree that home technologies are very important or somewhat important to marketing homes. That’s up from 79 percent in the early-2005 survey and 66 percent in the early 2004 survey. Only 14 percent called technology not important at all, down from the previous survey’s 21 percent.

The percentage of all builders calling technology very important is on the rise, the survey also found. A total of 27 percent called technology very important to selling a new home, up from the previous year’s ten percent.

Profit Boost
On top of that, a third of builders believe home technology not only helped them sell new homes but also boosted their revenues in 2005, the early-2006 survey found. That percentage is up from the 25 percent and 20 percent who responded that way in the early-2005 and -2004 surveys, respectively.

Builders offer a variety of reasons for offering home technologies, ranging from a simple need to compete, to differentiating oneself, to boosting profits. Many builders also indicate that the home buyer or architect are asking for the technologies.

Among all home technologies, multi-room audio packs the most profit-building potential in the eyes of builders. Among surveyed builders offering home technologies, 46 percent cited multi-room audio as boosting profit potential, followed by home theater, automated lighting controls and monitored security, which were each cited by 40 percent. Structured wiring was cited by only 28 percent of those surveyed.