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Kitchens and Baths Go Upscale

The last to drop off during a recession and the first to come back when it’s over, kitchens and baths are getting upmarket upgrades

By Kermit Baker, Hon. AIA
AIA Chief Economist

Providing a clearer sign that the housing market has returned to a mode of steady growth, households are placing greater emphasis on kitchens and baths. A sizable share of residential architects report that the number and size of kitchens and baths are increasing. Even more telling is that upscale features and products used in these areas of the home are growing in popularity. During the housing downturn, of course, households tended to simplify design elements in their homes and selected fewer high-end products.

These are among the major findings from the AIA’s Home Design Trends Survey for the fourth quarter of 2013, which focused on kitchens and bathrooms. Other quarterly AIA Home Design Trends Surveys look at the changing characteristics of homes and communities, and emerging features and products used within homes.

Now that house prices have hit bottom and are beginning to recover, households are more willing to invest in their homes, and are willing to undertake higher-end home improvement projects. Kitchens and baths tend to be the areas that households look to first when they want to upscale their home as markets improve, just as they remained a high priority even during the depths of the downturn.

Now residential architects are reporting much stronger market conditions. Design billings at residential architecture firms, as well as inquiries for new design projects, have steadily improved over the past two years. Likewise, the level of project backlogs—the amount of work currently in-house for these firms—has increased.

Households refocus on kitchens

In this survey residential architects reported a strong increase in interest in kitchen areas. Almost a third of respondents indicated that the number and size of kitchen/food prep/food storage areas was increasing, up from about a quarter who reported this trends when this survey was last conducted a year ago. Likewise, a much smaller share of respondents indicated that the number and size of kitchens was decreasing. At the tail end of the housing boom, in 2005 and 2006, interest in kitchen areas was extremely high. The Q4 2013 results point to solid improvement in the emphasis on kitchens, and indicate the strongest gains since the housing downturn began. (Figure 1)

While the overall space devoted to kitchen activities suggests resurgence, the emerging popularity of select kitchen features points to a more upscale focus. While the integration of kitchens with family space (such as great rooms) and emphasis on adaptability and universal design remain popular, other priorities are beginning to reemerge. The share of respondents reporting increasing interest in wine refrigeration or storage areas jumped sharply with this survey, as did the share reporting a general increase in pantry space. More functional features in the kitchen—such as computer work or recharge areas—were reported to be increasing in popularity by a much smaller share of respondents. (Figure 2)

The emerging focus on kitchens is demonstrated by the revival of upper-end products, which were reported to be increasing by over a third of respondents—double the share reported just a year ago. Specific upscale kitchen features growing in popularity include under-counter appliances and built-in appliances. (Figure 3)

Bathroom features move toward accessibility, sustainability

While residential architects report a strong upturn in interest in kitchen features and products, the renewed focus on bathrooms is a bit more modest. While the Q4 2013 survey indicated some increase in the share of residential architects reporting increases from the 2012 survey in both the number and size of bathrooms, the overwhelming majority indicated that bathrooms were stable along these dimensions. (Figure 4)

In contrast to emerging trends in kitchen design, the features increasing the most in popularity in bath design address a growing desire for accessibility. Larger walk-in showers were a feature added to this quarter’s survey, which struck a strong note among residential architects; more than 60 percent of respondents indicated that this feature is increasing in popularity. A similar share of respondents reported that bathrooms generally designed for adaptability with universal design features were growing in popularity. Additionally, many residential architects reported that baths designed with only a stall shower and no bathtub were increasingly popular. (Figure 5)

Popular bathroom products reflect growing attention to accessibility issues, sustainable design, and reviving appeal in more upscale items. While LED lighting topped the list of products reported as growing in popularity, many respondents reported that both doorless/no-threshold showers and hand showers were also becoming more popular.

Water-saving toilets are also among the products increasing the most in popularity, indicating that sustainability concerns continue to rank high on consumer preference lists. However, there has been renewed interest in upper-end bathroom products. While upscale showers were very popular in AIA Home Design Trend Surveys conducted in 2005 through 2008, their popularity waned during the downturn. With this survey, upscale showers are making a strong return to the market. The Q4 2013 results indicate the strongest increase in the popularity of these products since 2008. Other more upscale products, like sensor-operated faucets and double-sink vanities, are seeing increases in popularity, although less so than upscale showers. (Figure 6)

Business conditions strong

With all this interest in upmarket kitchens and baths, and with the general upturn in the housing market, residential architects are reporting improving business conditions at their firms. In the fourth quarter, the national billings score was 62, where any score above 50 indicates growing revenue. The billings score has been above 60 for four straight quarters and above 50 for eight straight quarters. Inquiries for new project activity have also been strong, running above the 50 threshold since the third quarter of 2012 and above the 60 level for seven of the past eight quarters. (Figure 7)

Continued strong workloads have allowed residential architecture firms to accumulate a larger reserve of project activity. Projects backlogs, which indicate the amount of work currently in-house and under contract as measured by the amount of time that these projects would keep current staff fully employed, currently average almost 4.5 months across residential architecture firms. Backlogs were averaging about five months during the housing boom before dropping down to about three months in 2009 and 2010. In the fourth quarter of 2013, almost a quarter of firms reported project backlogs of six months or more. (Figure 8)

Residential architecture firms in the South and West are generally reporting stronger business conditions than are firms in other parts of the country. While the national billings score stood at 62 in the fourth quarter, firms in the South and West had average scores of 67 and 69, respectively, while firms in the Northeast and Midwest had average scores in the lower 50s.

This trend reflects a reversal of regional residential design activity from as recently as two years ago. As residential design activity stalled during the housing downturn, regions that had seen strong growth during the housing boom were the most vulnerable. However, with the recovery in most residential markets over the past two years, areas that have typically seen stronger growth over the past few decades are now seeing this activity return. (Figure 9)

Given the steep downturn experienced in most of the major residential sectors, the recovery has generally been slow and uneven. Home improvement activity (both additions and alterations to existing homes, as well as major kitchen and bath remodels) have generally seen the strongest recovery, largely because these sectors are the least reliant on financing. Most home improvement projects are financed on a cash basis, and given the restrictive nature of lending to residential markets, home improvement projects have been affected the least.

The housing recovery is also moving through the new residential construction sectors, although more slowly than home improvement activity. As of the fourth quarter of 2013, all of the major residential construction sectors—with the exception of second homes—were reported as improving. Second homes often have an investment motivation, and as house prices began to fall in late 2005 and early 2006, the second-home market was unusually hard hit. As a result, this segment of the market has seen weakening conditions since the fourth quarter of 2005.

Other major residential construction sectors also began to falter around that time. The first-time-buyer market was the first reported as weakening, beginning in the first quarter of 2005. The move-up market, as well as the custom and luxury market, began its descent in the fourth quarter of 2005. Net weakening in the townhouse and condo market was first reported by residential architects in the third quarter of 2007.

However, as of the fourth quarter of last year, all of the major residential construction sectors were seeing modest improvement, with the exception of the second- and vacation-home market. But even this sector looked to be approaching a recovery, as 26 percent of respondents reported it to be improving, while 31 percent reported it to be weakening.

The other major residential sectors seem to be squarely in recovery mode. The first-time-homebuyer and move-up markets turned positive in the third quarter of 2012, as did the custom/luxury market in the fourth quarter that year. Even the townhouse/condo sector, which was extensively overbuilt in many markets across the country, began seeing more positive numbers from residential architects in the first quarter of 2013. One area of concern is that the first-time homebuyer sector has not recovered as quickly as other sectors, indicating that younger buyers either are less interested in homeownership or are running into obstacles when they do try to buy a home. The strength of this market segment is crucial to the longer-term health of the industry. (Figure 10)

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View the Home Design Trends Slideshow


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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.

Visit the Housing Knowledge Community homepage on AIA KnowledgeNet.

The HDTS panel is open only to principals, partners, and other firm leaders of AIA member–owned firms with a residential specialization. Apply to join the HDTS panel by completing a brief background information form on your firm here.


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