AIA HOME TRENDS DESIGN SURVEY: THIRD QUARTER
Households Look for More Activities Integrated into Their Communities
Traditional neighborhood designs, and low maintenance and durable materials preferred for home exteriors

by Kermit Baker, PhD, Hon. AIA
Chief Economist

Summary: With rising energy costs and longer commutes, community and neighborhood design trends are favoring greater diversity of land uses and increased accessibility to transportation and commercial opportunities. Homes are being designed to encourage more neighborhood interaction. Households are favoring exterior materials that require less maintenance, as well as those that have sustainable characteristics.

These are some of the key findings of a recent AIA survey of home design trends dealing with community and neighborhood design issues. With the overall weakness in the housing industry, residential architects are reporting declining business levels. Particularly hard hit are speculative home building projects, as custom home building has stabilized, while improvements to existing homes are generally showing healthy conditions.

Growing popularity of mixed-use facilities and infill projects as owners look for greater access
As major metropolitan areas across the country are becoming more built-out, thus forcing new development at the urban fringe, households are facing longer commutes and less accessible commercial opportunities. As a result, residential architects are reporting continued strong interest in mixed-use facilities within developments; that is, projects where residential uses are integrated with retail and other commercial activities. They also see increasing interest in infill housing to take advantage of more desirable locations. For both mixed-use facilities and infill development, almost two-thirds of residential architects felt that these trends were increasing in popularity, while hardly any felt that their popularity was declining.

Additionally, households are looking for communities that offer more recreational opportunities integrated into the development, and better access to public transportation opportunities and alternative transportation systems, such as bikeways and walkways. Traditional neighborhood design—with smaller lots where homes are close to the street and typically emphasize porches and sidewalks—is also growing in popularity. With these smaller lots, there is growing interest in having more communal open space available. Providing affordable housing in developments, where costs may be subsidized by the market-rate housing provided, was reported as having mixed popularity.

Traditional design with a low maintenance twist
Homes with a traditional feel are maintaining their popularity at present. Greater use of front and side porches are seen as increasing in popularity by more than half of the residential architects in our survey, while few saw this trend as declining. Respondents were about evenly split between those seeing contemporary (as opposed to more traditional) home styles and facades growing in popularity as those who saw them declining. There was a consensus that nontraditional window shapes and sizes in homes, as well as simpler detail of home exteriors, were not picking up momentum. However, single-story homes are gaining popularity, likely in part due to the preferences of an aging population for easier access around the home.

Along with the preference of traditional home designs is the growing popularity of durability and low maintenance in exterior materials. Over three-quarters of residential architects surveyed (78 percent) indicated an increased popularly of low maintenance exterior materials (e.g. fiber-cement, stone, tile, natural earth plasters), while fewer than 4 percent reported a decrease in the use of these materials. Many also noted an increase in the use of sustainable roofing materials.

Despite the downturn in the housing market, there continues to be strong interest in selected upscale exterior products. Both exterior accent lighting and upscale entry doors were seen as increasing in popularity by close to half of residential architects. However, there are limits to homeowners’ interest in upscale features: heated driveways have limited interest, with more residential architects reporting them to be declining in popularly as are reporting their popularity to be growing.

Business conditions deteriorate in the residential market
With the continued downturn in the housing markets, residential architects are reporting weaker business conditions at their firms. The national billings score was 47 in the third quarter, down from 56 in the third quarter of 2006, where any score below 50 indicates a decline in overall activity. This compares to a score of 57 in the second quarter of 2007, but since residential activity varies a lot over the course of a year, it may be inaccurate to make comparisons across different quarters. Inquiries for new work also eased in the third quarter, with a national score of 50 in the third quarter compared to a score of 53 during the third quarter of 2006.

Backlogs at residential architecture firms—defined as the time that current staff can be fully occupied with current projects—have also declined with the housing downturn. Firms are currently reporting backlogs of 4.9 months, down from 5.0 months a year ago, and 5.2 months two years ago. At present, 10 percent of firms have less than one month of project backlogs, while an additional 32 percent have a least a month, but less than three months.

Residential architecture firms in all regions of the country are reporting softer business conditions, but firms in the Northeast and Midwest have reported the greatest declines. Only 10 percent of firms in the Northeast and 13 percent in the Midwest reported increased billings in the third quarter, while about 38 percent in each region reported a decline. As a result, the billings score for firms in the Northeast was 36.3 and 37.5 for firms in the Midwest. Both of these figures are well below year-ago levels.

However, firms in the South and West are reporting reasonable healthy conditions. In both regions, more firms are reporting increased billings as are reporting declines. Also, firms in both regions are reporting smaller declines in their billings index than are firms in the Northeast and Midwest.

The weakness in business conditions in the residential sector varies considerably by type of project. While residential architects report softer conditions compared to a year ago for all types of projects, some are much weaker than others. For example, about 44 percent of residential architects with projects in the remodeling markets (either additions and major structural alterations, or kitchen and bath remodeling) report improving conditions, while fewer than 10 percent report that conditions are weakening.

Those that report improving or weakening conditions are about balanced in the custom/luxury home construction market. For all other types of residential construction, the consensus of residential architects is that market conditions are weakening. For entry-level homes—targeted for first-time buyers—only 4 percent of respondents felt that conditions are improving, while 58 percent felt them to be weakening.