Trends Revealed

The warm spring weather typically awakens the interest of those thinking about buying a new home. As those folks prepare to meet with designers and builders, it’s important for you to know what they’re looking for. Our annual Market Trends Report in this issue contains information that will enlighten you to that end. The charts you’ll see illustrate the most interesting findings we’ve extracted from the nearly 800 responses received from readers in January. Rather than summarize the entire survey for you here, I will touch on the highlights for your consideration. Read the full report.

Financing troubles. Our survey reveals that 83 percent of you, at some point in 2008, encountered clients who had trouble getting financing for their projects. This is striking evidence of the depth of the nation’s financial troubles, when even the wealthy clients who can afford the homes you design and build can’t get financing.

Profit margins. The pool of readers earning profits between 6 and 25 percent in 2008 shrank by nearly 20 percent from 2007, while the number of you earning less than 5 percent has doubled in the past two years. Clearly, profits come second to revenue these days.

Green building. Green building finishes at the top in terms of client interest, and your efforts to educate clients about it. However, closer examination of the results reveal that energy efficiency is far more important than, say, products containing recycled content. The lure of green buildings is saving money, not the Earth.

To corroborate our findings, see the story in our industry news section on page 6 about a survey conducted by The Shelton Group. They found that 71 percent of consumers cited saving money as a reason to buy energy-efficient products. Far fewer chose “to protect the environment” (55 percent) and “to protect the quality of life for future generations” (49 percent).

Just as interesting, we find that green products are toward the top of the list of products sacrificed when budgets get tight. In addition, more than 70 percent of readers indicate they’re uncertain if they’ll generate more revenue from green building in 2009 than they did in 2008. This is evidence that, despite the undeniable gains green design and construction have made in recent years, consumers are willing to forget about green when money becomes an issue.
Similar threats. For the first time in the three years we’ve published our market trends report, the three segments of readership we survey — architecture firms, construction firms and design/build firms — are threatened by the same issues. All three groups of readers cite, in this exact order: the economy in general; client’s financing difficulties; declining home values; cash flow; and cost of materials.

RD&B interviewed top economists from the American Institute of Architects, the National Association of Home Builders and FMI Corp., and the good news is all three experts agree the housing market is at the bottom in terms of production levels. They don’t claim that recovery will begin tomorrow; In fact, they suggest we’ll be at the bottom for a few months. But they all believe the situation will not get worse, and predict recovery will begin toward the end of the year.