Hot Projects for the ‘20’s
Get ready for the 21st Century Roaring Twenties… or will it be the Evolution Epoch? Which way will the wind be blowing?
The construction industry has always tried to predict future construction trends that will gain the biggest return in turbulent times. Homeowners, real estate investors and house flipping-artists are all looking for the next decade’s winning renovation project that will best resonate with end-users.
Let’s start with the big picture: 2020 is an election year, if you didn’t notice, and the Fed always keeps interest rates low and cash flowing into the economy. Hopefully construction inflation will slow. Since 1993 it has held a steady increase of 3.5%/yr even in the Great Recession. However, the recent economic stampede has averaged 8%/yr.
We Californians avoided the nationwide renovation slump. 2020’s expected overall residential construction spending of $499 billion will not be near the 2018 frenzy of $562 billion, according to the latest Harvard Leading Indicator of Remodeling Activity, LIRA, which predicted the National construction renovation slump of 2019 will continue at -3%/yr., mostly due to increased labor and material costs as well as dwindling opportunities. There just aren’t enough properties at acceptable prices to jump on.
Nonetheless, there will be increased nationwide emphasis on maintenance and long-term care of residential properties, according to Buildfax.com, an industry collector and distributor of building information to insurance and investment firms. This suggests more real estate is being treated as long-term assets rather than quick turnovers.
On the micro renovation scale, kitchens, bathrooms and laundry areas, are always on top of home renovation projects, but the Outdoor or Alfresco Room is becoming very popular. Architecturally, the emphasis is less on fancy appliances but more on opening up the space to the rest of the house. Longer counters and big islands are the hot buttons with less overhead cabinets.
The 2019 remodeling impact report from the NARI, National Association of Remodeling Industry, came out with a “Joy Score”, a 1 to 10 rating of different interior projects. The highest Joy Score was kitchen renovations, at close to 95%. 74% of those surveyed after a renovation desired more time in their home, 65% experienced increased enjoyment in life and 77% felt a major sense of accomplishment. You’d think so after spending at least $50,000 for a new kitchen!
Investments in kitchens are improving homeowner’s peace of mind rather than merely flipping the residence for profit. Of course, resales are always on the horizon and a necessary target, but not the priority.
Also highly desired is the Outdoor Alfresco Room. Even in hot and cold environments, everyone wants more outdoor time. The “A Room” has become a standard in new homes and is appropriate for anybody considering a home renovation.
A trellised patio with a gas fire pit and seating area will quickly become the most important “room” in the house. Add a TV, ceiling fan or heater, and you won’t get the family uprooted for dinner.
Unfortunately, the construction industry relies on antiquated homebuyer data rather than on impending buyer/user demographics. The biggest demographic evolution will be the Millennium developing buyer profile. As non-traditional consumers, they will be the biggest challenge to builders, investors, architects and home-flippers in the ‘20s.
OK, Boomers: Move over!
Chris d. Craiker AIA/NCARB