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Home Design Trends Survey
As Housing Market Stabilizes, Development Shifts to Mixed-Use and Infill Projects
Infill projects, greater integration with community, continue as trends in post-bubble housing
By Kermit Baker, Hon. AIA
AIA Chief Economist
A much slower housing market over the past several years is changing consumer preferences for neighborhood and community features. Fewer large-scale development opportunities have shifted the emphasis to smaller infill projects where access to transportation and commercial opportunities is more highly valued. Home styles continue to emphasize porches, as households are looking for more connection with their neighborhood. Durability, with low-maintenance products, remains very popular for home exteriors, and sustainable and cool (solar reflective) roofs also are very popular. These are some of the key findings from the AIA Home Design Trends Survey for the third quarter of 2010, which concentrated on emerging neighborhood and community design trends.
In general, business conditions remain very weak at residential architecture firms. Billings were down again in the third quarter, maintaining the ongoing downturn in residential design activity that has burdened the profession since the middle of 2007. Inquiries for new project activity has fared a bit better recently, although many residential architects report that households are much more nervous than usual about proceeding on projects. All the major residential construction sectors remain in decline, with second and vacation homes rated as the weakest. In contrast, most residential architects rate the residential remodeling market in their area as healthy.
Infill housing popular alternative to larger communities
A weak housing market has cut into large-scale residential development, thereby producing fewer opportunities for innovative community designs. Given continued high foreclosure rates in many housing markets across the country, particularly in traditionally fast-growing areas with high levels of new construction during the housing boom, there are many fewer larger-scale projects underway. Instead, projects are smaller with a renewed interest on affordability. In part, the emphasis on cost is because new homes are increasingly competing with recently constructed housing that has been foreclosed. Infill development, typically in more mature communities where the transportation and services infrastructure already exists, is a popular alternative, where the residential uses are often part of a larger mixed-use project.
Multigenerational housing also has become more popular. This is reflective of the growing numbers of immigrant households occurring over the past few decades. In many cultures, multigenerational households are the norm. Additionally, though, the housing and economic downturn has created more multigenerational households. With employment options scarce and high levels of unemployment, many formerly independent children are returning home until the economy improves. Additionally, increased foreclosure rates can also force households to share space with other family member, often creating multigenerational homes, at least temporarily. (Figure 1).
With a weaker housing market, home styles have become somewhat simpler, with fewer upscale elements on the façade. One element that has remained popular in the face of general down-scaling of homes is front and side porches. These allow more interaction with the neighborhood and are another distinction from more inward-facing large exurban developments. Additionally, single-story homes are remaining fairly popular. Given the aging of our population, single-story homes are generally easier to navigate and offer fewer obstacles for households that may have mobility issues or that prefer to encourage “visitability” for friends or relatives who may have mobility limitations (Figure 2).
Along with the emphasis on simplicity for home styles, consumers are favoring exteriors that are durable and low-maintenance. An overwhelming majority of residential architects report that durable and low-maintenance exterior materials (fiber cement, stone, tile, natural earth plasters) are growing in popularity. Roofs that use sustainable materials, as well as cool roofs that can reflect heat rather than absorb it, are also reported by residential architects to be growing in popularity. However, green roofs, which are partially or fully covered with vegetation, are a somewhat less popular alternative, mostly due to their higher cost. Tubular skylights, an alternative to the traditional roof window, also are relatively popular (Figure 3).
No significant improvement for residential architects
Residential architects reported continued weak business conditions in the third quarter, a continuation of a downward trend that has plagued the profession since mid-2007. There was a hint of a recovery in the first quarter of 2010, largely driven by activity from the federal first-time homebuyer tax credit, but after that expired in the spring the residential market quickly returned to its depressed state. Recently, the downturn has begun to moderate a bit, as evidenced by the fact that the index of billings has generally been trending up. However, until the index reaches 50, billings are still declining.
Inquiries for new residential project activity have fared better, as the reading in the third quarter indicates that this measure of market activity is beginning to stabilize. However, residential architects note that many of these inquiries are unusually slow in materializing into projects (Figure 4). Part of the market sluggishness has to do with concern over economic and housing market conditions. However, consumers are often assuming that project costs will be much lower given the market slowdown--expectations that many residential architects feel are unrealistic.
With the slowdown in the market, project backlogs at residential architecture firms continue to trend down. Backlogs–the amount of work in house and under contract–are currently below three months. During healthy market conditions, backlogs would keep current staff busy for four to five months without new work coming in. Since the beginning of 2009, backlogs have been running three months or a little less, which gives firms very little cushion if new projects are delayed or don’t materialize as expected (Figure 5).
Firms in all regions have been affected by the business downturn. Firms in the South and West (where much of the overbuilding has occurred) are reporting weaker business conditions. However, firms in the Northeast and Midwest still are reporting declines, although at a somewhat slower pace. Firms in these regions traditionally have a higher share of their work in additions, alterations, or remodels of existing homes, which are market sectors that have done better recently (Figure 6).
Market conditions are stronger in some sectors of the housing industry than others. While all of the new construction sectors are reported to be weakening, the lower-end of the market is closer to hitting bottom. Homes designed for first-time buyers and move-up buyers have seen signs of being closer to a recovery than other sectors. Even these two sectors have taken a step back in recent quarters. However, custom and luxury homes, as well as second and vacation homes, remain mired in a steep downturn. Both of these sectors held up better when the housing market began to weaken in 2006, and are likely to be the last sectors to recover from this downturn.
In contrast, the remodeling sectors are reported to be healthy, with conditions improving from where they were in the third quarter of 2009. Both additions and alterations and kitchen and bath remodeling projects are reported as improving by a majority of residential architects, with only a small minority reporting that market conditions are weakening in their area (Figure 7).
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