NEW YORK (Reuters) - Home theaters are passe. Home offices are in.
The long U.S. housing downturn has led homeowners to scale back both the size of houses and the amenities found within them, but consumers are still willing to invest in energy efficiency, according to a quarterly survey by an architects’ trade group.
The survey by the American Institute of Architects (AIA) found budget-conscious Americans are less interested in having hobby or game rooms, media rooms, home workshops, or suites for au pairs or in-laws. Exercise rooms and additional laundry space are also less popular than a year ago, as are three-car garages, the AIA said on Tuesday.
The shift in tastes reflects worries about home values, tighter family budgets, and the threat of unemployment.
“Affordability is a big concern,” said AIA Chief Economist Kermit Baker. “Homeowners are not looking to spend more on their home for frills, particularly if they don’t think they can recapture that when they sell it.”
Home offices are the most popular special-function room, the survey found. Almost 46 percent of architects said home offices are gaining in popularity, up about 5 percentage points from a year earlier.
The increase is due to the appeal of telecommuting and the growing number of Americans who are self-employed or who run small businesses that have had to give up office space.
Meanwhile, more consumers are asking architects to make sure their homes are energy-efficient. Two-thirds of architects said clients increasingly demand better insulation to lower heating and cooling costs. More are also requesting double- and triple-glazed windows, water-saving devices and solar panels.
The AIA’s quarterly survey polled more than 500 architecture firms that focus on residential buildings. It reflects both work on new homes and improvements to existing spaces. A March AIA survey found a sharp decline in demand for high-end kitchen and bath amenities, amid concerns over cost and homes’ eventual resale values.
The prolonged housing downturn has led Americans to downsize their homes. According to the U.S. Census, the median home size dipped for the first time in 13 years last year, to about 2,200 square feet, and has continued to fall in 2009.
Home sizes tend to shrink during recessions, AIA’s Baker said, and were not likely to rebound in the recovery, since Americans no longer expect the steady price gains that helped justify costly expansions.
The AIA’s survey results come against a backdrop of an improving U.S. housing market. While residential architecture billings continue to decline, they have rebounded from lows reached in the fourth quarter of 2008.
An $8,000 tax credit for home buyers, which is set to expire next month, has jump-started housing activity this year. New U.S. construction of homes and permits for future building reached a nine-month high in August, and home prices rose for the third consecutive month in July.
The AIA said its residential billings index — a leading indicator of activity — was at 38 in the second quarter, up 20 points from six months earlier. Separate measures of project inquiries and project backlogs have also rebounded.
The trade group predicts the lower-end affordable housing segment will be the first to recover, as lower prices and stable interest rates attract entry-level buyers. Luxury homes and vacation homes are among the weakest parts of the housing market, according to the AIA.
Entry-level buyers were priced out of the market at the start of the downturn four years ago, in defiance of historical norm, and the unusual pattern is now playing out in reverse.
“You can have a good, healthy market,” Baker said. “Entry level buyers buy entry-level homes; those homeowners buy trade-up homes; those homeowners buy custom or luxury homes. You could have a good housing ladder with that scenario.”
Reporting by Nick Zieminski, editing by Matthew Lewis