Practicing ArchitecturePracticing Architecture
Home Offices and Outdoor Living Spaces are Top Choices for Special Function Areas in Homes
Residential architects report second quarter setback in business conditions
By Kermit Baker, Hon. AIA
Summary: Homes are currently being designed with an eye toward affordability due to the dramatic decline in house prices in recent years in most areas of the country. Still, many households are willing to invest in home features, systems, and products that promote greater energy efficiency and accessibility throughout the home. Even with the general downsizing of homes, residential architects are reporting growing interest in outside living spaces, home offices, and mud rooms.
Businesswise, residential architecture firms reported a softening of business conditions at their firms during the second quarter, a trend that held for firms in every major region of the country. Project backlogs (the amount of design work currently in-house) remain very low. By construction sector, homes priced at the lower end of the price spectrum are doing somewhat better at present, while second homes and vacation homes remain the weakest sector. Remodeling projects are reported to be growing at a healthy pace according to residential architects.
These are some key findings from the AIA’s Home Design Trends Survey for the second quarter of 2010. Almost three hundred residential architects, covering all facets of the residential design profession, were surveyed on emerging design preferences of households.
Households scaling back
The precipitous decline in house prices over the past five years and the resulting growth in the number of homeowners with delinquent mortgages or mortgages in foreclosure has dramatically changed the way that households are making decisions, as well as using the space within their homes. So, for example, when we asked residential architects for the most popular special function room in homes at present, very few mentioned previously popular upscale examples.
Special function rooms that remain popular include home offices, outdoor living spaces, and mud rooms. Home offices appeal to telecommuting workers as well as to the growing number individuals who work exclusively out of their home. Outdoor living areas and outdoor rooms reflect the growing interest in expanding the household’s living space into the outdoors. Interest in mud rooms reflects the need for additional closets and other storage space, as well as the increasing informality of space in the home (Figure 1).
With the downsizing of homes, special function rooms have been disappearing. For media rooms/home theaters, exercise/fitness rooms, hobby/game rooms, home workshops, kid’s wings/guest wings, interior kennels, and interior greenhouses, a growing share of residential architects responding to this survey indicated that interest in these spaces was declining. This leaves only a few examples (notably outside living areas and home offices) where there was general consensus among residential architects that interest among households is increasing (Figure 2).
As with special function rooms, household interest in special features in homes has been moderating. Exceptions to this trend are generally confined to insulation projects that have immediate energy saving implications. Alternative insulation techniques such as structural insulation panels and sprayed foam insulation as well as simply adding extra insulation in the roof or attic are examples. Special features that promote accessibility through the home include a first floor master bedroom, ramps and elevators, and easy-to-use features like handles and faucets, and nonslip floor surfaces. These features are still reported to be increasing in popularity by a minority of respondents, but the share of residential architects reporting an increase in popularity of these projects has uniformly fallen over the past year (Figure 3).
The systems and technologies in homes that are growing in popularity increasingly have an energy focus. Systems with the greatest increase in interest include energy management systems, solar panels/collectors/photovoltaics, and geothermal heating and cooling heat pumps. While it is fair to assume that the actual levels of adoption for solar panels and heat pumps still remains quite low, residential architects are indicating that saturation rates could well begin to increase as interest continues to grow. At the other extreme, systems and technologies where interest has not yet caught on, or where it has begun to wane, include electric docking stations for cars, automated lighting controls, and security systems (Figure 4).
Home products that are growing in popularity share many of the same characteristics as special features and systems/technologies. Energy efficiency in particular and environmental stewardship in general is growing in popularity. High on the list, with scores that indicate widespread consumer interest, are energy efficient products and materials such as double and triple glazed windows, tankless water heaters, and low maintenance materials. For these products, an overwhelming majority of respondents reported interest to be increasing, while only a very small minority reported interest to be declining.
In addition to energy conservation and management, home products that are increasing in popularity often promote other environmental concerns. Examples include water conserving devices, use of reclaimed and salvaged materials, products aimed at improving indoor air quality, renewable flooring products such as bamboo and cork, and moisture control systems to reduce mold. At the other extreme, products that are not currently generating much interest by consumers include heat-generating stoves (e.g. pellet stoves), automated window shades to manage passive solar heat, and safes and other security systems for valuables (Figure 5).
Business conditions take a step backwards
Since hitting a low at the end of 2008, business conditions at residential architecture firms had been making steady progress toward recovery. In fact, in the first quarter of this year, residential architects reported a small increase in billings, the first quarterly increase since mid-2007. However, the second quarter showed a reversal of this trend, with a billing score just under 41, down from a score of just over 50 in the first quarter. A national billings score of 41 indicates that more residential architecture firms reported a decline in billings in the second quarter than reported an increase, so that in total, billings at residential architecture firms declined.
In all likelihood, the softening of firm billings at residential architecture firms reflects the general weakness in the economy during that quarter. Additionally, the home buyer tax credit expired at the end of April, which encouraged many buyers to accelerate their buying plans. This has produced weakness in the housing market since the April deadline. Inquires for new projects also declined modestly in the second quarter after rising sharply in the first quarter indicating that firms’ billings are likely to be challenged over the near-term (Figure 6).
The general weakness in design billings is also reflected in firm backlogs. Backlogs are a measure of the amount of design work an architecture firm has sitting in-house. A one month backlog, for example, indicates that a firm could keep their current staff billable on active projects for one month. Firm backlogs currently average about three months, very close to the level that they have been since early 2009. However, before the housing market turned down for residential architects, backlogs were averaging four to five months, so firms typically have much less cushion at present to keep their staff covered (Figure 7).
The national downturn in billings at residential architecture firms has affected firms in all regions of the country. In the second quarter, the billings score was below 50 for every major region, ranging from a low of 35 in the South to a high of 47 in the Northeast. In general, the South and West regions that had seen stronger levels of residential construction activity prior to the downturn are currently seeing weaker billings conditions at present because they had a higher base to fall from (Figure 8). Additionally, the Northeast and Midwest have a higher share of home improvement activity, which at present is the strongest residential sector.
The setback in billings at residential architecture firms in the second quarter was also reflected in a weakening of several residential sectors. Among construction sectors, homes geared for first-time buyers remain the closest to recovery according to residential architects, although survey respondents were less upbeat about this sector than they were a year ago. Move-up homes (designed for buyers “moving-up” from their current home) and custom and luxury homes were reported as weakening in the second quarter, but at a somewhat slower pace than a year prior. The townhouse/condo market remains very weak according to residential architects, as does the second/vacation home home market.
In contrast, residential architects report that home improvement activity is growing at a fairly healthy rate. Both kitchen and bath remodels and additions and alterations to existing homes have healthy sector scores with this survey, with kitchen and bath remodeling having increased from its reading of a year ago. Without an overbuilding problem like in the new construction market, home improvement activity has been able to stage a healthier recovery than new construction. (Figure 9).