The U.S. housing market is starting to gain traction. Still, households have remained hesitant to add space to their homes through special function rooms, with a few exceptions such as home offices and mud rooms for the storage of everyday items. The home features and products attracting attention are generally focused on energy efficiency or accessibility around the home, as well as wireless systems and low-maintenance, sustainable products.
These are some of the key findings from the AIA’s Home Design Trends Survey, covering activity during the second quarter of 2012. Business conditions continue to trend up for residential architects, as design billings increased for the second consecutive month, the first two-quarter increase since 2007. Even though growth slowed somewhat in the second quarter, inquiries for new projects remained strong. Project backlogs—the amount of design work in-house and under contract—have been increasing very slowly but are currently at their highest level since early 2008. And while design work for improvements to existing homes remains very strong, there are signs that key construction sectors—including entry-level homes, trade-up homes, and custom and luxury homes—are beginning to stabilize and may soon move back to an expansion mode.
Optional special function rooms clustered in a few categories
Even though home sizes appear to be slowly increasing in most markets and in most housing segments, optional special function rooms are limited to just a few key uses. Over a third of residential architects participating in the Home Design Trends Survey identified home offices as the most popular special function room. With the continued popularity of telecommuting—and with many workers catching up on work at night and on weekends, and a growing share of the labor force working on a self-employed or contract basis—home offices remain a priority.
Two other areas were reported to be popular special functions areas of the home. Over one in five residential architects selected mud rooms/drop zones (for backpacks, outerwear, or even personal electronics) as the most popular special function room, while almost as many selected outdoor living areas/outdoor rooms. Both selections reflect the growing lifestyle informality of typical households (figure 1).
Even these areas of the home are not increasing in popularity as much as they were a year ago. Likewise, the popularity score for home offices also declined a bit. Scores for mud rooms/drop zones increased slightly over the past year.
Many special function rooms popular during the housing boom all but left the scene during this past downturn. For example, almost 40 percent of residential architects reported that media rooms/home theaters are declining in popularity, while only 12 percent reported them to be increasing. Likewise, 28 percent of respondents reported exercise/fitness/sauna spaces to be declining in popularity, with only 13 percent reporting increases. Even interior greenhouses, which might be expected to gain popularity with the renewed interest in gardening and eating locally grown foods, are declining (figure 2).
Home features promote sustainability and accessibility
As with trends toward simplicity in special function rooms, household interest in special features in the home tends to focus on two key pragmatic objectives: energy efficiency, and making homes more accessible for an aging population. Merely adding some insulation in the attic remains a hugely popular home feature, as over two-thirds of respondents report it as increasing in popularity and hardly any see it decreasing. Most of the other popular special features deal with improved accessibility: first-floor master bedrooms, ramps/elevators (including adding a shaft for a future elevator), easy-to-use features for handles and faucets, and non-slip floor surfaces.
Many of these features fall under the aging-in-place category, which allow residents to remain in their home as they grow older. As members of the Baby Boom generation reach retirement age, they are more concerned with these home features. But it’s not just about homeowner demographics. Given the lack of residential mobility caused by plummeting property values during the recent housing crash, many aging households plan to continue living in their current homes for the foreseeable future (figure 3).
Popular home systems at present are heavily focused on sustainability. Energy management systems top the list of features growing the most in popularity, with 52 percent of respondents reporting increases in popularity, and only 4 percent reporting declines. Solar panels, geothermal heating and cooling systems, and water reclamation systems are all increasing in popularity, although they are not mainstream in most markets.
Wireless telecommunications and data systems are just as popular as energy management systems, perhaps due to the growing popularity of home offices. The two systems that have seen the greatest gains in popularity are backup power generation systems and electrical docking stations. Growing interest in backup power generation has no doubt resulted from recent unpredictable weather patterns throughout the country that have left millions without power for days at a time. Growing interest in electrical docking stations reflects the increased popularity of electrical vehicles: still limited, but building momentum (figure 4).
Home products with low maintenance requirements top the list of most popular items. Synthetic and engineered materials also remain quite popular, in part due to their low maintenance requirements. Other popular home products fall into the sustainability category: Energy efficient products such as triple-glazed windows, tankless or point-of-use water heaters, water-saving or conserving devices such as low-flush toilets, and recycled or salvaged materials all are high on the product popularity list. Enhanced lighting/task lighting and thermal moisture control systems aimed at mold reduction are also increasingly popular for households. (figure 5).
Business conditions trending up
Residential architecture firms have been reporting generally negative business conditions in the AIA’s HomeDesign Trends Survey since the middle of 2007. However, the past two quarters have seen relatively healthy gains, with the strongest billings scores since the second quarter of 2007. Because these figures are not adjusted for seasonal variation, there may be a backslide in the third or fourth quarters, even though general market conditions continue to improve.
Inquiries for new work have strengthened significantly over the past two years. The inquiries index saw slower growth in the second quarter, most likely because of seasonal trends. The general upward movement in inquiries suggests that billings should also continue to rise in the coming quarters (figure 6).
One sign of improving business conditions is the current trend in firm backlogs. Prior to the housing downturn, residential architecture firms were averaging about five months of project backlogs, meaning that they could keep their current staff employed for about five months with no additional project activity. During the heart of the downturn, backlogs declined to an average of under three months. Backlogs have slowly climbed back up, reaching 3.8 months on average during the second quarter of this year. As conditions continue to improve, backlogs should continue to trend up, but are unlikely to hit the same levels they did during the housing boom, at least on an ongoing basis (figure 7).
Residential architecture firms in most regions have followed the national trend of a general upward movement in business conditions. The one major exception have been firms in the Northeast, which reported fairly steep declines in billings during the second half of 2011 and again in the second quarter of 2012. Firms in the other three major regions reported healthy growth in billings through the first half of this year (figure 8).
Improvements to existing homes remain the strongest sector of the housing market. For both kitchen and bath remodels, as well as additions and alterations to existing homes, over half of respondents report market conditions to be improving, while fewer than 10 percent report them to be weakening.
However, there are finally signs that market conditions are stabilizing for several of the new construction categories. A growing number of respondents in the first-time buyer/affordable, move-up, and custom and luxury home sectors report market conditions to be improving. While all three still have negative scores, these sectors may be close to bottoming out.
In contrast, market condition scores for townhouse/condominiums and second/vacation homes remain quite negative. For townhouse/condos, fewer than 15 percent of respondents report market conditions to be improving, while over 40 percent indicate that they are still weakening. For second/vacation homes, almost 60 percent report continued weakening, while fewer than 12 percent report improvement. These two market sectors are likely to be the last to see a national recovery (figure 9).