Energy Costs Alter Home Designs

A growing number of homeowners are concerned with utility costs. This has led to an increase in demand for energy-efficient solutions, says a report from the American Institute of Architects Home Design Trend Survey. The survey focused on systems, technologies and functional rooms in the home. Another finding from the survey: an even greater popularity of home offices.

“As the environment and utility prices become more scrutinized, homeowners are demanding more energy-efficient products and sustainable designs,” said AIA chief economist, Kermit Baker, Ph.D., Hon. AIA. “Structural insulation panels, geothermal heating/cooling systems, tankless water heaters and green flooring products such as bamboo and cork are all in high consumer demand.”

A recent AIA poll revealed that 91 percent of registered voters said they would be willing to pay $5,000 more for a house that would use less energy and protect the Earth.

For the third straight year, home offices are the most popular special function room. Addressing specific design issues, Louis B. Smith, AIA, chair of the AIA Small Projects Practitioners committee, said, “Homeowners are looking for more than just a desk in a bedroom. They are looking for additional acoustic privacy, better natural lighting and even separate entry for clients. An architect’s design can help create the proper relationship between the office and the home, as well as ensure a productive environment that allows for work to be accomplished comfortably and efficiently.”

Popular rooms/features include, in order of importance: home office, hobby/game rooms, media/home theater, exercise/fitness, au-pair/in-law suites, kid’s wing/guest wing. Popular green products include: tankless water heaters, energy-efficient, low maintenance, green flooring, synthetic/engineered, reclaimed/salvaged, water saving, indoor air quality, thermal moisture control.

Home Price

Appreciation Shows Softening

U.S. home prices increased only slightly in the second quarter of 2007 according to the OFHEO House Price Index (HPI). The HPI, which is based on data from sales and refinance transactions, was 0.1 percent higher in the second quarter than in the first quarter of 2007. This is below the revised growth rate of 0.6 percent for the previous quarter and the lowest since the fourth quarter of 1994. Prices in the second quarter of 2007 were 3.2 percent higher than they were in the same quarter of 2006, the lowest annual price change since the 1996-97 period.

OFHEO’s purchase-only index, based solely on purchase price data, indicates less appreciation for U.S. houses over the past year than do all the HPI transactions. The purchase-only index increased 2.6 percent between the second quarter of 2006 and the second quarter of 2007, compared with 3.2 percent for the HPI. However, for the second quarter, the purchase-only index increase was slightly higher at 0.5 percent (seasonally adjusted).

The figures were released by OFHEO director James B. Lockhart as part of OFHEO’s quarterly report analyzing housing price appreciation trends.

“House prices were basically flat in the second quarter despite tightening credit policies, rising foreclosure rates, and weakening buyer sentiment,” said Lockhart. “Significant price declines appear localized in areas with weak economies or where price increases were particularly dramatic during the housing boom.”

Existing-Home Sales

The market for existing-home sales is “holding on” in the face of mortgage disruptions, although current resales are about 9 percent below the level that was posted at the same time in 2006, the National Association of Realtors said last month. “Home sales probably would be rising in the absence of (current) mortgage liquidity issues,” said Lawrence Yun, NAR senior economist. Yun added that the recent rise in sales and prices in the Northeast “is promising because this was the first region that underwent sales and price weakness after the boom. Now, it appears that it will be the first region to climb back, indicating that other regions could follow a similar path.”

Remodeling Activity

Despite weakness in house prices, growth in home improvement expenditures is expected to hold steady in the low single-digit range, according to the Leading Indicator for Remodeling Activity (LIRA) developed by Harvard’s Joint Center for Housing Studies. Homeowner spending for home improvement activity will essentially remain constant through the first quarter of 2008, with overall growth in spending for this year projected to be 3 percent, housing analysts said last month.