Practicing ArchitecturePracticing Architecture
Infill Locations with Access to Urban Services and Amenities are Housing Priorities
The housing recovery has spread to every sector except for second and vacation homes
By Kermit Baker, Hon. AIA
Infill locations in established communities, particularly those in walkable neighborhoods that have diversity in land uses, continue to be preferred housing options. Households generally prefer homes that promote a neighborhood feel and encourage more interaction. And though interest is growing for homes with simpler exterior detailing—specific decorative elements on the exterior—residential architects also note a renewed emphasis on broader exterior styling, often to integrate the home within its neighborhood context. Even with continuing interest in sustainable exterior features and other upgrades, low maintenance and durability in exterior materials remains an overwhelming priority.
These are some of the key findings from the AIA’s Home Design Trends Survey for the third quarter of 2013, a survey that focused on neighborhood and community design trends. Business conditions at residential architecture firms have seen steady improvement since early 2012, with firms located in the Sunbelt region reporting the strongest gains recently. The recovery from the steep housing downturn continues to unfold on a sector-by-sector basis, and as of the third quarter survey only the second/vacation home market has yet to fully recover. Over the past year, residential architects are reporting solid progress in the other major residential sectors.
Infill locations remain popular
Households are often looking for a different community and neighborhood environment than was generally popular a decade ago. Infill development topped the list of community and neighborhood characteristics that are growing in popularity, as it has for each year since 2007 when the housing downturn was just unfolding. Other features growing in popularity are related to these infill locations: access to public transportation, mixed-use facilities, and higher-density development. Along with these urban characteristics, residential architects report growing interest in neighborhoods that are more walkable, offer more recreational activities integrated into the community, and offer more opportunities for multigenerational living. (Figure 1)
In keeping with infill locations that offer a more traditional neighborhood feel, households continue to value a rich array of design options for home exteriors. Smaller homes are highly prized in many markets across the country, and front and side porches remain a popular option, even though contemporary—as opposed to more traditional—home façades are reported to be growing in popularity. Despite the trends toward simplicity and clean finishes in the exterior detailing on homes, residential architects report a renewed emphasis on exterior styling. This may be due to the greater diversity of styles in existing infill locations, in contrast to the more uniform look in newer and larger communities that was more prevalent during the housing boom. (Figure 2)
Low-maintenance, durable materials dominate the list of characteristics that are growing in popularity. Fiber-cement products as well as stone, tile, and natural earth plasters generally fit this definition. Additionally, residential architects are reporting growth in use of windows on home exteriors, both in number as well as size. Fire-resistant exterior products remain popular, as do roofs using sustainable roofing products and cool roofs that have solar reflective properties. However, for both sustainable and cool roofs, the growth in consumer interest has slowed somewhat over the past year. (Figure 3)
Business conditions remain strong
The business recovery for residential architects began in early 2012, and conditions have remained strong since. As of the third quarter, 40 percent of respondents reported that firm billings had increased over second-quarter levels, while only 14 percent reported a decrease. Those shares resulted in a national billings score of 63.0 for the quarter, the third consecutive quarter that the billings score for residential architects exceeded 60. (Any national billings score above 50 indicates that billings are growing in aggregate.) Inquiries for new project activity were even stronger, with 47 percent of respondents indicating an increase in inquiries over the quarter, compared to 12 percent reporting a decline. That produced an inquiries score of 67.6. (Figure 4)
This increase in project activity has generated growing backlogs at these firms. Backlogs, the measure of the amount of work currently in house and under contract, are typically measured as the number of months these projects would keep current staff fully employed without any new work coming in. Backlog averages are currently 4.5 months, up from 3.7 months in the third quarter of 2012, and 3.4 months in the third quarter of 2011. Backlogs hit their low for this cycle, 2.7 months, in the first quarter of 2010. Even with this strong recovery in recent quarters, firm backlogs are below their most recent high of 5.3 months in the second quarter of 2007. (Figure 5)
Though there has been a strong recovery in business conditions at residential architecture firms over the past two years, regional patterns have been much more volatile. As of the third quarter of 2013, residential architecture firms in the Northeast, South, and West were reporting strong growth in design billings, while firms in the Midwest were reporting healthy but somewhat less robust levels of growth. Results from a year ago showed almost the opposite pattern: strong gains at firms in the Midwest and more modest gains in the other three regions. As the housing recovery continues to unfold, the traditionally strong areas of homebuilding activity—which are heavily concentrated in the South and West regions—are expected to account for a majority of the gains. (Figure 6)
As is typically the case in housing recoveries, different sectors of the industry respond at different points in the cycle. So heading into the downturn, the second home/vacation home and the condo markets had seen very rapid growth, and were considered to be overbuilt in many areas of the country. By contrast, spending in the home improvement market was much closer to its historical trend.
But today, most of the traditional homebuilding sectors—oriented to first-time buyers, trade-up buyers, and the custom/luxury market—have all seen a healthy recovery. The townhouse/condo market started seeing improved conditions beginning in early 2013, while residential architects are still reporting weak conditions in the second home/vacation home sector, the only sector still exhibiting severe setbacks. These types of homes often have an investment motivation, so the downturn in house prices nationally affected this sector the most.
In contrast, the home improvement sectors didn’t see a downturn nearly as severe as the new construction side, and therefore have benefited from a much speedier recovery. In fact, residential architects reported very little weakness in both kitchen and bath remodels, and in room additions and alterations at any point of the downturn. However, as house prices have begun to recover, residential architects have been reporting strong gains in both of these activities. Over the coming quarters, the share of respondents reporting improvement in the new construction sectors will likely catch up with those reporting gains in home improvement activity. (Figure 7)
About the AIA Home Design Trends Survey: The AIA Home Design Trend Survey is conducted quarterly with a panel of over 500 architecture firms that concentrate their practice in the residential sector. Residential architects are design leaders in shaping how homes function, look, and integrate into communities, and this survey helps to identify emerging trends in the housing marketplace. Business conditions are also monitored on a quarterly basis.
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