The House Of Tomorrow From The Recession Today

NC2X4

This Data & Article was written by my Director Of Marketing & Sales Craig Sherrett. "But despite economic doom and gloom reports, homes will continue to get bigger because the more we ask for change, the more we really just want more - much more - of the same."Weather you agree or disagree the facts are in the numbers complied by census data

For those of you returning to your childhood home over the holidays, you might have noticed how much houses have changed over the years. Lifestyle trends, building product technologies and economic fluctuations have all had a hand in changing the American home. How will the current economic outlook affect the homes of tomorrow? If the current recessionary period is anything like those from the past, you may be surprised.
Building a new home can take many months to design and build. Successful home builders use all of their powers of perception to design a home today that will sell in the housing market tomorrow. As witnessed by current events, rapidly changing demographic and economic forces can play havoc on those future markets catching many home builders off guard with homes “that don’t sell”. These changing forces sometimes alter the design of homes - for better or worse.



Over the past thirty five years, economists generally recognize five economic recessions or crisis:

• The 1973 oil embargo
• The recession of the early 1980’s
• The recession of the early 1990’s
• The recession of the early 2000’s
• The current recession that started in 2007

Each of these events (blue shaded areas of the following graphs) had short and long term influences over the way homes are designed and built. Understanding these trends, home builders may be better able to predict the needs and demands of the future housing market.

Size matters
If you think the latest recession will lead to smaller homes, think again. Historical statistics show that past recessions have merely slowed the trend for larger and larger homes. With the exception of a slight decline in the late 1970’s, home sizes have steadily increased. The average home today is fifty percent larger than one built 25 years ago.
Sleeping Conditions
The recession of the early 1980’s seems to be the only influence on the number of bedrooms in newly constructed homes. But, by the end of the 1980’s that effect was corrected and a general trend toward homes with four or more bedrooms continues to this day.
More Facilities
The events of the early 1980’s had influence on the number of bathrooms in new homes, too. A trend of building more homes with only 1 full bathroom was quickly reversed by the end of the economic challenges. Prior to 1985, data for homes with three or more bathrooms is not available. But, like bedroom allocations, a continued trend toward more bathrooms has continued for almost twenty years.
More Parking
The early eighties also affected the type of garage designed into new homes. The number of homes built with no garages increased to the detriment of homes with two car garages. But that trend quickly revered after the negative economic affects subsided. For the past fifteen years, almost two thirds of all new homes built have two car garages.
Up, not out!
As the size of new homes steadily increased over the past 35 years, so too has the number of multiple storied construction. Again, the eighties recession seems to have the most effect, but for the last fifteen years the market is almost evenly split between single and multiple story homes with a slight deviation occurring since 2001. Even with a retiring baby-boom generation, the number of homes built on one floor seems to be counter intuitive.
Burn, baby burn!
The energy crisis of the early 1970’s seems to have the most affect on the inclusion of a fireplace in newly constructed homes. Were we intending to burn our fireplaces instead of our furnaces? Maybe so, but the recession of the early 1980’s reversed this trend and today the market is almost evenly split between homes with and without fireplaces. Even with the housing booms in warmer climates, we continue to want the warmth and glow of a fire.

The magic of heat pumps
Heat pumps were introduced to new homes in the mid-1970’s. Because of the oil crisis of the early 1970’s, heat pumps were accepted quickly as a more efficient way to heat a home. So much so, in 1978 the U.S. Census created a new category to track heat pump installation. Since then, heat pump installations have remained relatively steady as their effectiveness has been questioned in many regions. In recent years, new advances in heat pump technology have resulted in increased market share. Will that trend continue? Possibly, but for more than a quarter of a century, warm-air furnaces have been the heat system of choice for the American home. Even after the 1973 oil crisis, solar, wind and geothermal technologies have continued on a disappointing trend of gaining little market share. Let’s hope that trend changes soon.
The Way We Look
External siding had considerable changes over the past 35 years. Maintenance free vinyl siding took tremendous market share from an industry dominated by wood. It should be no surprise that low cost, easily installed, low maintenance building products are quickly accepted. Quickly in the building industry is a relative term as it took 20 years for vinyl siding to become the market leader (prior to 1992, vinyl siding sales were included in the “Other” category). Again the economic recession of the early 1980’s seemed to affect the market most. Out of this recession new products and technologies were introduced to meet unfulfilled needs in the market. Primarily, vinyl siding products began to take market share from all of the other categories dominating the market in the early years of the new millennium. Recently, that domination is threatened by the introduction of fiber cement siding in the last part of the 1990’s. Will that trend continue or will there other technologies emerging from this recession that will dominate future markets?
What’s Up With That?
So what does all this mean? Taking a line from our fractured financial system, we would like to declare that “past performances do not guarantee future results”. But if history teaches us anything, the current recession will probably not impact new home design. Monetary and financial pressures of the past 35 years seem to have little lasting effect on the houses we want to live in.

More than economic performance, a number of factors has direct impact on home design. The aging population, changing industries, immigration and emerging social trends all can change the kind of homes we build. These and hundreds of other natural and man-made issues will continue to contribute to the design and style of the American dream. Assuming that a serious economic downturn is going to drastically affect home design is just not true. The forces that change home design have been in the market for years and will continue to influence home design despite the economy. The economy may slow a trend or temporarily change its direction, but empirical data shows that a trend is a trend and will continue on its path despite the economy.

So where are we going?
The three common home characteristics - square footage, number of bedrooms and number of bathrooms - won’t change drastically. In fact, we think the average home size will continue to increase, more four bedroom homes will be built and these homes will have even more bathrooms. But the reason for this will not be to satisfy ego alone (although that will continue to influence the market). An aging population combined with improved health care means people live longer. Challenging economic conditions means that they may not have the money to do it.
House sizes will continue to grow because they need to support more people. Facilities for aging parents moving in with their children will be part of the new home design. More bedrooms, more bathrooms and even more fireplaces will be built for more people. Separate, self sustained living quarters with separate entrances will be built all under one roof. The lines on the graphs will continue to increase - for reasons already in the market - while floor plans for those designs will satisfy new market demands.

Technology will play a large part of the new home design. New product developments spurred from stricter building codes, energy codes and manufacturer differentiation will allow larger homes to be built for less. Home designs will have to incorporate plugs and power sources for electric cars. Water collection and recycling along with solar panels and geothermal energy will be included in future designs as will improved home monitoring and control. “Smart” windows and doors and even “smart” walls and roofs will all maximize energy performance, minimize operating costs and help Americans keep their American dream alive.

The future house will be bigger, better, more efficient with wider hallways, fewer stairs and a place for more than just the immediate family. It will be repurposed to accommodate the lifestyle changes of a diverse population. The death of the dining room is finally a reality while larger, more versatile eating areas designed as part of the kitchen facilities will be in demand. Outdoor and even “semi-outdoor” areas will become more sophisticated. Studies, computer nooks and entertainment rooms will replace dining rooms, family rooms and dens as homes become more functional dwellings for occupants of all ages. Room sizes, floor plans and integrated functionality will be significant changes. But despite economic doom and gloom reports, homes will continue to get bigger because the more we ask for change, the more we really just want more - much more - of the same.

Craig Sherrett
Director Of Marketing & Sales
AVID Home Studios

Magnettica

Hey, bailout the banks, bailout the people who've had their properties foreclosed, and everything will be just fine.

Dow closing at 7062 today.

God Bless our most awesome president ever.

NC2X4

Yea, no kidding! I really don't think we will see bottom until 6500. It is what it is. We all have to get through it. I'm hoping it's sooner than later.

Cdat

I'd like to say half that stuff in the 1st post is bunk. Anyone thinking we'll see the dow at 1400 any time soon is high on some quality drugs. Care to share? Houses ain't gonna' get bigger 'cause so much wealth was lost to those of us that tried to play by the rules. Those that spend more then they make will continue in their bad ways unless people stop giving them free handouts.

NC2X4

Cdat

I said 6500 points not 1400. In fact we would never hit 1400 because if it ever got that low I promise you we would not even be here. WWIII would start somewhere around 3000-2500. LOL

About large vs. smaller homes. The facts are in the census data. Some recessions run flat in growth however after the recession things climb. Sq Ft, bedrooms, baths, garages, ect. Yes us Americans are spoiled. The point here is this. If you show a typical American how to build green and save $300 a month off their utility bill that most Americans would then ask how much more home can I get for $300 bucks? Point: Human behavior is predictable and does not change.

Yes this economic slow down is different and may have a deeper impact to these numbers but the behavior will not change. Green, more smaller conservative home plans will continue to rise and as costs lower and things stabilize Americans will want more. As bad as it is now we have to remember we were making it hand over fist in the good times. Does not make it easier to deal with today however I will focus on market trends and small and concretive is in but not forever. How long? Who knows!

Cdat

I meant we'll never see 14,000 again. Not 1400. My bad.

Tom Struble

from what i understand ''green building''is the only segment in construction that's growing right now not alot but it is growing

SLSTech

I am not a financial guru, but it looks like we are seeing the last bubble pop. Looking at the chart - you can see the IT bubble & the inflated prices bumping up the DOW, along with the oil & housing bubbles. 6500 might be just about right, of course if everyone goes completely doom & gloom - I doubt 6500 would be the bottom. Unfortunately the system is based off of beliefs & feelings, nothing that is really substantive.



An interesting look at when the DOW closed at certain values
http://www.mdleasing.com/djia.htm

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nlgutters

Your crazy it will be at 14k within 3 years. This is when real money is made. They say people average a 125% return for 2 or 3 years after a recession. We will be back stronger than ever.

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Tom M

I think the green building is a load of crap. Its too expensive in residential, just like the new sprinkler codes. Tax credits wont offset those numbers. In the 80's people used vinyl siding, formica, flush doors, casing for baseboard trim. Cheap construction. The last 6 years regular people were doing 40k paving stone driveways, stone veneer, granite counter tops and so on. Hardie plank is more than vinyl too. These things beat up the industry and it will take longer weather this storm.

Lets not forget in the 80's, middle age and seniors still used cash. Today no one has money its a giant credit ponzi system.

Tom M

This is when real money is made, question is who has any money left? I started a sep account in 2000 and dropped 20k in mutals a few months later that reccession killed me. It never regained what I put in it. People say you gotta think long term, thats bull. Dollar cost averaging is the only way outside of jumping in at historic lows. Of if your out of work and already took a heavy hit your at a disadvantage. Money goes to money.

SLSTech

Uhhh, remember this little place that is called Japan & there collapse? They have never gotten close to their old numbers & that happened 10 years (?) ago. The crash was based off of land values back then & inflated worth...

I don't see us going past 10K for quite a few years. Look at the chart above & project it out based on real growth not inflated numbers. Yes I still see money being made - but like everything else it takes time & perseverance. Just my .02

__________________
Alabama Full Service Remodeling, Renovation, and Preservation by SLS Construction
Certified Energy Efficiency Audits, Ratings, Modeling, Verifications, & Consulting
Residential, Commercial, & Industrial Infrared Thermography Scans