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Community Design Trends Emphasize Infill Development
Simplicity and durability dominate home styles as housing market remains soft
By Kermit Baker, Hon. AIA
Large greenfield residential and commercial development in the exurbs has gone on hiatus, if not into permanent retirement. With home construction numbers at less than a third of their peak 2005 levels, development is now occurring in smaller-scale projects that pay greater attention to affordability. These more modest infill developments are an effort to compete effectively with the glut of foreclosed homes now selling for a fraction of their value just a few years ago.
In this context, neighborhood design trends currently reflect the desires of today’s buyer for homes that are accessible to transportation, commercial opportunities, and jobs. Furthermore, consumers are interested in neighborhoods that can accommodate the growing number of multigenerational households, encourage more interaction with the community, and houses that are constructed with materials that emphasize durability and affordability. These are some of the key findings from the AIA’s third quarter 2011 Home Design Trends Survey, which concentrates on emerging neighborhood and community design trends.
This survey also reveals that business conditions at residential architecture firms remain very weak. Billings were down again in the third quarter, reflecting (to some degree) the slowdown that traditionally occurs toward the end of the year. However, longer-term trends are also consistent with a market that is still bumping along the bottom of a protracted cyclical downturn. One of the few positive signs is that project backlogs have been inching up in recent quarters. But currently all the major residential construction sectors remain in decline, with second and vacation homes rated as the weakest. Conversely, most residential architects rate the home improvement market in their area as healthy.
Infill housing continues to dominate
With the downturn in the housing market, there are fewer opportunities available for new greenfield community design initiatives by developers. Infill options continue to be a popular development strategy because they lend themselves to smaller-scale projects, and because the required infrastructure already exists. Access to public transportation, commercial opportunities, and mixed-use facilities all received high ratings by residential architects. These features are also more likely to be present at infill locations.
Multigenerational housing also remained popular as an element in neighborhood design. A recent study by the Pew Research Center found that 16.7 percent of the U.S. population was living in multigenerational households in 2009, up from 15.1 percent in 2000. Growth in the Hispanic and Asian populations has contributed to this increase because higher shares of these populations traditionally live in multigenerational households. However, the recent housing market downturn and national economic recession have also been factors, as many people have chosen to live with family members as a way of coping with worsening economic conditions (Figure 1).
Due to concerns about housing affordability, home styles have become somewhat simpler, with the trend toward placing fewer upscale elements on the façade accelerating over the past year. Front and side porches also have remained popular features, reflecting the increasing popularity of infill homes. However, the popularity of porches has slowed significantly from a year ago. The popularity of single-story homes, which are more accessible for an aging population, and contemporary home styles is largely unchanged from a year ago (Figure 2).
Consumers are favoring homes with low-maintenance exterior materials such as fiber-cement, stone, tile, and natural earth plasters; this significantly outpaces any other home exterior feature in terms of its increase in popularity. Over the past year, there has been a dramatic decrease in the popularity of sustainable roofing materials, as well as in “cool” roofs with high solar reflective characteristics. Tubular skylights have also decreased in popularity over the past year (Figure 3).
No significant improvement in business conditions for residential architects
Since mid-2007 when the market peaked for residential architects, these firms have reported only one quarter of revenue growth (the first quarter of 2011). However, since the beginning of 2010, the downturn has been milder, indicating that business conditions may begin to recover in the quarters ahead. Inquiries for new project activity have been more positive over the past year, although many of these inquiries have not yet materialized into active projects, as clients continue to be preoccupied with the uncertain economy (Figure 4).
One of the few positive signs at residential architecture firms is the recent increase in project backlogs. Backlogs are the amount of time a firm could operate at current levels with no new project activity. From 2005 through 2007, backlogs were averaging in excess of five months. They dropped to under four months on average in 2008, and declined further—to under three months—in 2009. Since then, they have been slowly trending up, hitting 3.4 months in the third quarter, the highest level since the end of 2008. If backlogs continue to grow, residential architecture firms will begin adding staff to avoid losing projects (Figure 5).
Regional trends in design activity have been even more volatile than national trends. Firms in the Midwest have recently reported slightly better business conditions than firms in other regions; in the third quarter, the Midwest was the only region to experience revenue gains. Firms in the Northeast that had been reporting reasonably healthy conditions in recent quarters saw an unusually large decline this quarter. Volatility in regional billings scores is likely to continue for the next several quarters (Figure 6).
There are beginning to be signs of recovery on the rental side of the housing market. Ideally, this would soon translate into improvement in the starter-home segment, as renters begin to move back into home ownership. However, this transition is taking much longer than usual. The steep decline in home prices over the past several years has many households nervous about buying, and more stringent underwriting standards for home buying are also dragging down ownership rates. As such, the national homeownership rate has declined by 3 percent over the past several years.
At present, residential architects are reporting continued weak conditions among first-time buyers, thereby limiting any improvement in the trade-up market. The only segment to see a substantial easing in decline is the custom/luxury market. The portion of the construction market that is currently seeing the steepest declines are houses designed as second or vacation homes. Because owners of these units traditionally rely on housing appreciation as a motivation for purchases, so the decline in home prices has been particularly devastating.
Home improvement activity remains very healthy. Some of this strength comes from owners who have decided not to trade up, and have instead chosen to remodel their current homes. Additionally, improvements to distressed properties to prepare them for sale, or to fix them up after a sale, are creating opportunities in many markets across the country (Figure 7).
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