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Consumer Design Interest Remains Solid for Kitchens and Baths
As the housing market recovery resumes, sustainability and accessibility continue to be priorities for kitchen and bath features and products

By Kermit Baker, Hon. AIA, AIA Chief Economist

Quartly Report

Click to View the 2014 Q4 Home Trends Slide Show

Kitchens and bathrooms remain the key areas of the home, where households focus much of their attention in terms of ensuring that these spaces reflect their lifestyle needs. Kitchens in particular are seeing added features as households utilize this space as the center of operations within their homes.

Sustainability objectives—such as energy efficiency, water conservation, healthy home concerns—are seen in consumer product choices in kitchens and baths. Likewise, accessibility considerations are often reflected in the planning for these areas of the home. Since residents spend a lot of time navigating these spaces, households with accessibility concerns typically concentrate on these rooms.

These are among the major findings from the AIA’s Home Design Trends Survey for the fourth quarter of 2014, which focused on kitchen and bath design trends. As the housing upturn continues to unfold, kitchen and bath features often are a priority in the design of new homes and the redesign of existing homes.

Residential architects also report very solid business conditions at their firms. New project activity coming into their firms has pushed up project backlogs close to levels last seen during the housing boom. Firms in the Sunbelt regions—the South and the West—are reporting the healthiest conditions, suggesting that the areas of the country hardest hit by the housing crash are progressing nicely in their recovery. Finally, all of the major housing sectors are seeing some improvement in conditions, though two in particular—entry-level homes and second/vacation homes—are having particular problems gaining traction given current economic conditions.

Kitchens Remain a Design Target

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In the survey, residential architects reported a continued strong interest among households in kitchen areas. Almost a third of respondents indicated that the number and size of kitchen/food prep/food storage areas was increasing, modestly up from the share who reported an increase in the fourth quarter 2013 survey. There was a comparable increase in the size of kitchen areas, according to the residential architects. While over a third reported that kitchen areas were increasing in size, a mere 4 percent reported a decrease. (Figure 1)

The increasing size of kitchens during this housing recovery in part reflects the expansion of key kitchen features. Residential architects report the growing emphasis on pantry space for storage and even on butler’s pantries for meal staging. A growing share of respondents report the increasing popularity of double islands in kitchens, while others note the resurgence of wine refrigeration and wine storage facilities.

However, a lot of the recent emphasis on kitchen areas has little to do with cooking activities. Many respondents noted the revival of kitchen as the “hearth” of the home in the traditional sense: for family gathering, for entertaining, for daily activities. In fact, there was significant growth in the share of respondents indicating that one of the features increasing the most in popularity in kitchens was a computer work and recharging area for portable electronic devices. Additionally, residential architects are reporting that kitchen designs are intended to promote accessibility and adaptability. With households changing homes less frequently in recent years, homeowners may see themselves staying in their current home longer, and therefore are more concerned that their home will meet their evolving needs. (Figure 2)

Some kitchen products that are growing in popularity—such as under-counter appliances and upper-end appliances—reflect the general upscaling of kitchens with the stronger housing market. However, two of the strongest emerging trends fall into the sustainability category: energy efficiency and healthy home design.

LED lighting, which among other considerations uses energy more efficiently, is seen by residential architects as dramatically increasing in popularity. Almost nine in 10 respondents reported this to be a kitchen product increasing in popularity, while hardly any reported it to be decreasing. Induction cooking appliances, which are more energy efficient and generally felt to be safer for occupants, also rated high on our net popularity scale in the first time it’s been covered by this survey. Healthy home concerns also were reflected in the popularity of kitchen products. Drinking-water filtration systems saw gains in popularity with this survey, while sensor faucets—which promote water conservation as well as heathy home goals—also were seen as growing in popularity. (Figure 3)

Bathrooms Also Continue to Attract Design Focus

Nauck B&A2 Nauck B&A1The increased attention to kitchens is closely matched by trends in bathroom design. Fully a quarter of residential architects report that the number of bathrooms is increasing for projects in their area, while virtually the same share also see the size of bathrooms increasing. For both the number and size of bathrooms, only a very small share sees decreases. (Figure 4)

While bathrooms have become somewhat more upscale with the housing rebound, the most distinguishing feature in bath design at present is accessibility, according to residential architects. General adaptability/universal design considerations was the feature residential architects indicated was increasing the most in popularity. Larger walk-in showers, which generally promote accessibility, also were seen to be increasing in popularity. (Figure 5)

In addition to accessibility, popular bathroom products underscore the growing trend toward energy efficiency, water conservation, and healthy home considerations. As was the case with kitchen design, energy efficient LED lighting topped the list of products increasing in popularity by a wide margin. High efficiency (low water usage) and dual-flush toilets also are reported as increasing in popularity. Also reflecting the popularity of kitchen trends, sensor faucets were seen to be increasing in popularity as a bathroom product. (Figure 6)

Business Trends Improving

Business conditions remain strong at residential architecture firms. In the fourth quarter, the national billings score was 59.9, where any score above 50 indicates growing revenue at these firms on a national basis. The billings score has been positive for 12 straight quarters, indicating that the economic recovery is well-established for these firms. Inquiries for new project activity have also been strong, as have actual new projects. This survey has just begun collecting activity on new design contracts at firms in an effort to gauge the direction of future billings activity. In the fourth quarter, the new design contracts score was 56.4, pointing to healthy growth in future workloads. (Figure 7).

In fact, workloads at residential architecture firms have been trending up very nicely. Project backlogs are defined as the length of time that work currently in-house and under agreement would keep the current staff at normal billings levels. In the fourth quarter of 2014, project backlogs averaged just under five months at residential architecture firms. Since these figures have not been adjusted for normal seasonal variation, they should be compared only to figures from the same quarter of the year. In the fourth quarter of 2013, project backlogs averaged 4.4 months, compared to 3.7 months in the same quarter of 2012. Almost three in 10 firms reported project backlogs of six months or more at the end of 2014, an extremely healthy level for residential firms. (Figure 8)

In spite of the general strong upturn in business conditions at residential architecture firms, some areas of the country continue to see a lot of volatility. Average billings scores for the fourth quarter were 65.0 for firms in the Northeast, 50.0 in the Midwest, 59.2 in the South, and 62.7 in the West.

Firms in the South and West have generally reported stronger business conditions recently. Average billings scores for firms in each of these regions have been positive (above the 50 line) every quarter since the fourth quarter of 2011. Firms in the Northeast and Midwest have generally seen somewhat lower scores over this period. Also, firms in both of these regions have reported an occasional negative quarter in recent years. Firms in the Midwest reported declines in the third quarter last year, and barely maintained billings at that level in the fourth quarter. (Figure 9)

Residential architects have the almost unique ability to observe conditions across a broad range of housing market segments. This perspective allows comparisons across the various parts of the housing market as to how they are responding to the overall housing upturn.

While all of the major sectors are reported by respondents as positive, some are performing above expectations while others have been disappointing. Generally, housing markets work best when the strength is at the bottom of the market. Newly formed households and young renters looking to buy a home would typically purchase a more affordable starter home. The seller of that home would likely trade up to a more expensive home, and eventually this process might lead to the sale of an upper-end custom/luxury home.

During this cycle, economic conditions have generally reversed this process. The custom/luxury market has been quite healthy to date, but younger groups have had a difficult time purchasing entry-level homes. Without these buyers, strength for move-up and custom/luxury homes is eventually likely to wane.

The townhouse/condo market, which was overbuilt in many markets across the country during the housing boom, is finally beginning to recover. Demographics are favorable for this market segment, since it often caters to a population looking for urban or inner suburban locations. Second and vacation homes have been the last housing segment to recover this cycle. These homes often have an investment motivation, and the crash in housing prices nationally, even with the healthy recovery in recent years, has depressed demand for these homes.

Design work in the home improvement segments, which hardly dipped at all during the downturn, has seen a strong recovery in recent years. Work on kitchen and bath remodels as well as additions and alterations to existing structures are reported to be extremely strong at present. For both segments, however, the share of respondents reporting improving conditions is slightly lower as compared to the end of 2013, which may indicate that the pace of growth for these projects will begin to slow in coming quarters. (Figure 10)

AIA-LOGOKermit Baker, Hon. AIA, is the AIA’s chief economist and part of the AIA Economics and Market Research Group, which provides AIA members with insights and analysis of the economic factors that shape the business of architecture. Learn more at aia.org/econ.

Source: The American Institute of Architects

Photo Credits: Guthmann Construction