by Kermit Baker, PhD, Hon. AIA
Chief Economist

The vibrant housing market has not only affected the number of homes built nationally, it also has changed the characteristics of these homes. Although some homeowners are looking for less space in their home, which is more customized to their lifestyle, others remain interested in enlarging their living space, particularly with additional rooms to provide opportunities for special functions. Home offices, for example, continue to grow in popularity among households, while exercise rooms appear to have peaked in many markets.

Households also are looking for other features in their homes. Low maintenance materials and more storage space (kitchen pantries, closets, etc.) are increasing in popularity according to residential architects. Features generally associated with more formal homes—upscale entryways and defined hallways—are decreasing in popularity according to architects.

Business conditions strong
A durable housing market continues to offer business opportunities for residential architects. Almost 40 percent of responding architecture firms indicated that billings had increased in the second quarter this year as compared to the first, while fewer than 10 percent reported that billings had declined. Residential architecture firms can look to further gains in business conditions; 42 percent reported an increase in inquiries for new work during the second quarter, while only 10 percent reported a decrease.

Growing workloads have created an increase in project backlogs at firms. During the first quarter, residential firms reported that backlogs (the amount of design work in house) averaged 5.2 months; by the second quarter they had increased to an average of 5.4 months. Almost a third of residential firms reported that their current project backlogs were six months or greater.

Within a continued strong housing market nationally, the remodeling market remains as the strongest sector. Both additions and alterations to existing homes, as well as kitchen and bath remodeling projects, ranked at the top of the list for improving sectors, with the percentage of firms rating these market sectors as improving minus the share rating them as weakening each in excess of 40 percent. The townhouse/condo market is the other very strong housing sector and the strongest new construction sector, reflecting the ongoing desire among households to purchase homes in this low-interest-rate environment, with townhouses and condos often the only remaining affordable option in many high-priced markets in the country.

The second tier of housing sectors covers the more traditional upscale construction segments: move-up homes (for buyers trading up to more expensive housing) and custom/luxury homes (newly constructed homes at or near the top of the price spectrum). Both of these sectors are strong—each with about 30 percent of respondents reporting them as improving and only 7–9 percent reporting them as weakening—but clearly a step below the remodeling and condo sectors.

The second-home market remains reasonably solid, with about 27 percent of respondents reporting it as improving and 13 percent reporting it as weakening, while the first-time homebuyer market remains stable, with virtually as many respondents reporting it as weakening as are reporting it as improving.

Conditions strongest in the South
The residential market remains strong nationally, but residential architecture firms in some regions report stronger business conditions than in others. As in the first quarter of 2005, firms in the South are most upbeat about conditions, with more than half of responding firms reporting increased billings during the second quarter. More than 40 percent of firms in the West reported a growth in billings in the second quarter, compared to 30 percent of firms in the Midwest and 27 percent of firms in the Northeast. Firms in the Northeast indicated the most caution in business conditions, since 44 percent of firms in this region reported an increase in billings during the first quarter of 2005.

Telecommuting and relaxation in; fitness waning
With home sizes generally continuing to grow, homeowners are able to add more features to meet their evolving lifestyles. One room type growing quite substantially in popularity is the home office. Home offices not only accommodate home businesses, self-employed individuals, and regular telecommuters, but also provide more flexibility for working a portion of the workweek at home, or for those working some extra hours on nights and weekends.

Several other special function rooms are gaining in popularity according to residential architects. Recreation rooms and mud rooms provide space for activities and allow households (particularly those with growing families) to get outerwear out of the main living spaces in the home.

With growing audio- and video-technology options, media rooms also are gaining in interest in many markets. Almost 38 percent of respondents reported growing popularity for media rooms, but almost 14 percent reported them to be declining in popularity.

Dedicated living space for other household members also is seen to be increasing in popularity. This may be a wing of the home for children or guests, or a suite in the home—typically with a private bath and often with separate kitchen and living space—for aging parents or live-in child-care providers. More than a third of respondents reported increased popularity of au pair or in-law suites; however, 15 percent also reported a declining popularity for these special function areas, the most of any listed in the survey.

Laundry rooms remain a popular feature, according to most residential architects, but the popularity of exercise rooms seems to be beginning to wane in some markets.

Home features emphasize convenience and informality
The increasingly popular features that architects are reporting in homes mirror the special function rooms in that they reinforce the desire for ease of use and more flexible use of space in the home. At the top of the list are low-maintenance materials—for siding, decking, floor and wall finishes, and countertops, among others—which over half of respondents report to be increasing in popularity and fewer than 2 percent report as decreasing.

Close behind is storage space, either an enlarged pantry off the kitchen or more closet or general storage space throughout the house. A related trend is the increasing popularity of easy-to-use features (e.g. handles, faucets), which not only encompass a general convenience issue, but increasingly are necessities for an aging population.

At the other extreme is the waning popularity of several previously popular upscale features. In spite of growing automobile ownership nationally, multi-car garages (three or more cars) are not increasing in popularity as fast as most other features. Two special features are reported to be declining in popularity: upscale entryways and hallway/circulation space in the home. Upscale entryways and foyers often are at odds with the more informal and open layout for homes, which is growing in popularity. Hallways, likewise, are more popular in homes with a more formal layout, where room boundaries are more clearly defined and dedicated hallways connect more tightly defined rooms. For both entryways and hallways, more respondents felt that these features were decreasing in popularity than felt they were increasing.

Energy management, home-safety systems generally becoming more popular
With rising energy costs, households are becoming more sensitive to energy use within the home and concerned with more efficient energy-management systems. More than 40 percent of respondents report that these systems are growing in popularity, while fewer than 3 percent report a decrease. Security systems—including home monitoring systems—are also increasing in popularity according to almost a third of respondents. Fire-safety systems are stable in popularity according to most respondents, although more than 20 percent did report increased usage.

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