Practicing ArchitecturePracticing Architecture
Accessibility and Outdoor Property Improvements Top List of Popular Home Characteristics
Residential architects report improved conditions throughout the residential sector, but the pace of growth is beginning to slow
By Kermit Baker, Hon. AIA
As yet further proof of the ongoing improvement in the residential market, a growing share of residential architects reported that the sizes of homes increased in the first quarter of 2014. While entry-level homes are not seeing much in the way of space gains, upper-end housing and additions to existing homes are increasing in size. Facilitating greater accessibility into and around the home has become the dominant home layout consideration, while the most popular property improvements deal with enhancing outdoor living areas and blending the indoor and outdoor spaces of the home.
These are some of the key findings from the AIA’s first quarter 2014 Home Design Trends Survey, covering emerging home characteristics: home sizes, home layout and design issues, and property improvements and enhancements. Business conditions at residential architecture firms continue to show solid gains, as billings, new design contracts, and inquiries for future project activity are all improving. Business activity at these firms is strong in all regions of the country, but particularly in the South and West. While all major residential sectors—with the exception of second and vacation homes—are improving, the pace of growth has begun to moderate as the housing recovery progresses.
Homes getting larger
Across the entire housing market, 15 percent of residential architects report increases in home sizes, a figure that has gradually been trending up since 2010. Likewise, the share of respondents reporting that home sizes have been decreasing declined to 20 percent in 2014, down from almost 34 percent in 2013 and a high of 57 percent in 2010. While trends in the square footage of homes is somewhat mixed, residential architects are generally in agreement that home volumes (e.g., ceiling heights, two-story entryways) continue to rise. So while 28 percent of respondents report volumes to be increasing on average, only 7 percent see them as declining. (Figure 1)
However, the share of residential architects reporting increasing home sizes varies by the type of home. For upper-end homes, 25 percent of architects say sizes are increasing, with a comparable figure for additions and other improvements to existing homes. A much smaller number of residential architects see these types of homes or projects getting smaller. Entry-level homes are still facing more space pressures, as only 6 percent of respondents report sizes to be increasing, while 28 percent are reporting declines in the size of these homes. (Figure 2)
Accessibility remains dominant trend in home layouts
As home sizes declined during the past downturn, and have recovered very slowly in recent years, households have been moving toward more flexible uses of space. This has included the growing popularity of an open space layout, often with informal family space integrated into kitchen space. Informality in home layouts also has become more popular, with casual eating areas substituting for formal dining rooms, and family rooms and dens substituting for formal living rooms. The popularity of outdoor living follows this trend.
However, residential architects report that the most significant trend in home layouts is improving accessibility. In-home accessibility (e.g., wider hallways, fewer steps) is reported as increasing in popularity by almost two-thirds of respondents, while 55 percent of respondents report that accessibility into and out of the home (e.g., ramps, on-grade entrances) is becoming more popular. In both instances, these shares have been trending up over the past several years. (Figure 3)
Outdoor improvements and property enhancements remain a priority
With home sizes increasing only modestly, households are investing more energy in exterior and property improvements. Outdoor living space, which may include anything from decks, porches, and grilling areas to fully furnished outdoor rooms, continue to grow in popularity, even in areas that have relatively limited outdoor seasons. Almost seven in 10 residential architects report outdoor living to be increasing in popularity, while only 4 percent report it to be declining.
Related to the increased popularity of outdoor living, blended indoor/outdoor space was reported to be increasing in popularity by a majority of respondents. Exterior lighting and security lighting has been a feature that continues to grow in popularity. Finally, continuing the focus on property improvements, outbuildings—including sheds, storage facilities, barns, and pool houses—have been increasing in popularity in recent years, as have outdoor facilities such as gazebos, tennis courts, courtyards, and swimming pools. (Figure 4)
Along with adding more facilities and improvements to their home exteriors and properties, households are also enhancing the quality of their properties—this in spite of (or maybe because of) the ongoing trend toward smaller lot sizes. Even with house sizes beginning to increase after the downturn, lot sizes continue to decline. In this survey, only 3 percent of respondents reported that lot sizes are increasing, while over 30 percent reported that they are decreasing. This continues a trend that has been in place even during the last housing boom. Related to the trend of smaller lots are reported difficulties in preparing lots for construction—obstacles such as zoning limitations as well as topographical and soil conditions.
Green property enhancements are at the top of the list of property upgrades growing in popularity. Low-irrigation landscaping (xeriscaping) is reported as increasing in popularity by 60 percent of respondents, and rainwater catchment and gray water reuse are reported as growing in popularity by close to half of respondents, even though these activities are not permitted in some areas. Better defined lot boundaries (e.g., fencing, walls) is a popular option, likely due to smaller lots. More green fencing options (hedges, bushes, trees) are being used to define these lot boundaries. (Figure 5)
Housing slowdown not evident for residential architects
Even though the broader housing market recovery has been uneven over the past year, with homebuilding levels falling over the second and third quarters of last year before rebounding in the fourth quarter, residential architects have been reporting very positive business conditions over this period. Though revenue tends to climb in the first quarter of the year, the billings index for residential architects was at 68 in the first quarter, the highest reading since before the housing downturn began. Since inquiries for new project activity were showing strong growth, and new contracts for future design work also increased, residential architects should see continued growth in revenue in the coming quarters. (Figure 6)
Reflecting this projected future increase in design activity, project backlogs at residential firms remained a healthy 4.2 months, on average. Backlogs indicate the amount of work currently in-house at architecture firms, and represent how long they could keep current staff employed without any new project activity. Backlogs are currently exactly the same as they were a year ago and down a bit from their high for this cycle of 4.5 months in the third quarter of last year. Backlogs, however, remain well over a month above their levels of 2010 and 2011, when they were at their most recent low since the downturn. (Figure 7)
Regional business conditions for residential architects are following two very distinct patterns. While positive in all four major U.S. Census regions, billings at firms in the South and West have been accelerating in recent quarters, and currently are at their high point for this cycle. In contrast, firms in the Northeast and Midwest have seen more volatile conditions, where growth rates have been trending down for the past several quarters. (Figure 8)
Residential recovery begins to moderate
Residential architects, because they work in all major residential new construction, additions, and remodeling sectors, have a unique perspective on the relative strength of these sectors. Some of the sectors are well into their recovery, while others have seen very little improvement to date.
Even during the depths of the housing downturn, residential architects reported very little weakness in the home improvement sectors. Both kitchen and bath remodels, as well as major additions and alterations to existing homes, were reported to be relatively strong throughout this past cycle.
The first-time buyer segment, in contrast, has had a bumpier recovery. According to residential architects, this sector began weakening in early 2005, and the weakness continued through mid-year 2012. Even though a relatively healthy recovery began in the second half of 2012, recently this sector has seen more volatile conditions. Rising house prices and mortgage rates, a restrictive lending environment, a weak job market, and high student-loan debt levels have all taken their toll on the first-time buyer market. As of the first quarter, an almost equal share of respondents see this segment as weakening (24.7 percent) as see it strengthening (29.2 percent).
The trade-up and custom/luxury markets are seeing a fuller recovery, according to residential architects. However, for both segments the pace of acceleration has slowed. The net improving scores for move-up homes is more than five percentage points lower than in the first quarter of 2013, and the score for the custom/luxury segment is almost eight points lower. Less favorable weather conditions relative to the first quarter of 2013 may have played a role in the slowdown in improvement in these two sectors.
The townhouse/condo market is seeing modest net improvement, according to residential architects. Given the overbuilding of condo units in many markets across the country, this was one of the last major housing sectors to recover. However, as of the first quarter, the townhouse/condo sector was still considered stronger in aggregate than the first-time buyer market. The weakest major sector as of the first quarter—and the only one still in recession—was the second-home market. Over a third of respondents reported that this sector was declining in activity, while only a quarter saw it as increasing. However, rising house prices should signal an impending recovery here as well. (Figure 9)
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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