Business conditions remained weak through the third quarter of 2009 for architects who design houses, but certain segments at the lower end of the market appear poised for recovery in 2010, according to new figures from the American Institute of Architects.
This could be good news for homebuilders, considering architecture billings are often a harbinger of what’s to come in the construction pipeline.
Design work for affordable homes for first-time buyers jumped from -64 percent in the third quarter of 2008 to -2 percent in a year over year comparison, according to architects responding to the latest AIA Quarterly Design Trends survey. (Percentages indicate the number of respondents reporting sector “improving” minus the number reporting “weakening.”)
Sentiment regarding the move-up market saw slightly more modest gains, creeping from -57 percent to -29 percent in the same time period.
Both market segments have been buoyed by falling house prices and favorable mortgage rates. The affordable market also got a definitive kick-start from the federal tax credit for first-time homebuyers, notes AIA chief economist Kermit Baker.
Remodeling activity, meanwhile, enjoyed strong gains in the third quarter of 2009, with 27 percent of architects surveyed reporting an up tick in demand for renovations and additions, up from 13 percent in 2008. Kitchen and bath remodels rose significantly, from 8 percent in 2008 to 26 percent in 2009.
Other market segments haven’t been so lucky. The townhouse/condo market remained stagnant, with a score of -43 percent in 2009 vs. -49 percent in 2009. Interest in custom/luxury homes and second vacation homes remained extremely low, at -48 percent and -70 percent, respectively.
Overall, the AIA’s residential billings index rose sharply from a score of 20 in the fourth quarter of 2008 to 38 in the second quarter of 2009, but then remained flat at 38 through the third quarter of 2009. Any score below 50 indicates negative activity, although double-digit gains place some segments in the “less bad” category.
New project inquiries at architecture firms remained similarly meager last year, but inched closer to the halfway mark, moving from a score of 35 in the first quarter of 2009 to 47 in the second quarter.
Geographically speaking, reports from architects suggest that recovery will be concentrated most heavily in urbanized areas. Some 69 of respondents in the latest survey indicated a rise in demand for infill development, up from 63 percent in 2008.
Jenny Sullivan is a senior editor covering architecture and design for BUILDER.