Fewer homeowners choosing design over remodeling
Thursday, August 18, 2016
Design activity weakened slightly in the second quarter, even as demand for remodeling and renovation services increased. The dip in design business may be attributable to a number of factors, including fluctuations in the housing market and concern about the economy — conditions that have since improved.
Yet another reason for the decline appears to be a change in consumer behavior, with homeowners opting to spend less on design and more on upgrades.
While the majority of interior designers continue to report positive business conditions, industry indicators show some softening in demand during the second quarter. The American Society of Interior Designers' Interior Design Billings Index report for the second quarter finds "the pace of billings growth has decelerated." The American Institute of Architects' Architectural Billings Index for June also noted "an extremely modest decline" in the value of new design contracts (from 52.8 in May to 49.7 in June).
Similarly, the Houzz Renovation Barometer for Q2 2016 reports a "slight weakening" in confidence among architects, designers and design-build professionals. More specifically, states Houzz, "Further widening in the confidence gap between architects and designers relative to other sectors indicates that quarter-over-quarter market gains are not equally widespread across sectors."
Scores for architects, designers and design-build companies have declined four quarters in a row, while those for general contractors and remodelers have increased year-over-year.
A review of some recent Houzz homeowner surveys may help to explain, in part, this disparity in business outlook. Findings from this year's Kitchen Trends, Bathroom Trends, and Houzz & Home studies reveal a definite shift in homeowner spending on products and professional services over the past year or so. Survey respondents report spending more on products and materials upgrades, and on higher-quality products and materials.
Nearly half (45 percent) of respondents to the Houzz & Home survey said they went over budget because they decided to buy more expensive products and materials, and 40 percent said products and materials they chose ended up costing more than they had expected. Moreover, of those participants who had hired or planned to hire a designer to help with their project, 52 percent did so to get advice on selecting the right products, compared to 31 percent who wanted assistance with design.
Probably for the same reason, although more homeowners are engaging professionals to assist with large projects, they favor hiring contractors and remodelers over designers. Use of designers (interior designers, decorators, and kitchen and bath designers) fell from 29 percent in 2015 to 25 percent in this year's Bathroom Trends study, and from 46 percent in 2015 to 41 percent in this year’s Kitchen Trends study.
Only 16 percent of respondents to the 2015-16 Houzz & Home study hired or planned to hire a designer to assist with their renovation project, while 41 percent used or planned to use a contractor or remodeler. The current trend — at least among "typical" homeowners — appears to be more focused on replacing and upgrading older products and surfaces than on a complete redesign.
Designers are continuing to get work on these projects, of course.
Designers in the Q2 Houzz Renovation Barometer reported a 58 percent increase in kitchen and bathroom renovation projects over last year, similar to that of general contractors and remodelers. Designers also showed a significant increase in aging-in-place projects, smart home projects and health-related projects, suggesting that niche specialties are an area for continued demand, whereas generalists may be hurting more from competition from non-designers.
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