"The notion that bigger is not necessarily better has come home in a lot of ways recently. The sudden shock of what it costs to heat and cool a house evokes the same response as what we've seen with gas and cars—oh my god, I don't need an SUV anymore. Another piece to the puzzle is that when there's fragility in the economy, people hunker down. Being financially overextended feels very insecure. The desire for less square footage but a place that makes you feel comfortable and sheltered is really important. People are forced to look at the choices they've been making in a different way. It's similar to the auto industry. When Japan started introducing smaller cars in the 1970s, Americans didn't know if they would sell. Only when energy standards go up do people move in droves to a different model.
Sarah Susanka, FAIA
Credit: Lissa Gotwals
In a market like this, architects have the opportunity to help connect the dots for the production builders. Current conditions are encouraging the desire for better-quality homes, as people realize that buying cheaply is inefficient. Right now people are much more aware that the longevity of their home is quite critical, along with the idea that it will maintain itself well. As our growing ability to model houses through virtual reality and CAD allows people to really see the character of the inside of the house, people will make different decisions. I am participating in a project with the University of Waterloo where people walk through a Frank Lloyd Wright house, one of my not-so-big houses, and a typical McMansion in virtual reality mode, wearing 3-D glasses. As soon as they try on the McMansion compared to a better-designed model, they instantly grasp why they'd want one or the other.
I think this concept will show up in our shopping malls—people can try on a house or two. You have to have a fairly large house to accommodate the numbers of people who show up at Parade of Home events, so the sense of space is distorted. Whoever offers this virtual reality technology in a big way will find there's a market for it. I think the way we go about building houses is going to change in the near future too. Some form of factory-made house components will happen on a larger scale. It doesn't necessarily equate to less expensive, but when we move toward a higher level of design, it's easier to control quality in a factory setting. That's a hard nut for a lot of architects to swallow, but I think the market will push for it.
I also have a feeling that in the near future, with the advent of higher-efficiency photovoltaic systems, a lot of communities will be part of the power supply—not off the grid, but feeding it. I don't believe that we're in the kind of economic downturn that means we'll have to tighten our belt and have fewer good houses. Rather, this market movement will encourage the innovation that's desperately needed in the world of energy production, with the result that our own houses will become part of the solution. It's like superconductivity. There's a way for all these innovations to start to feed one another; a lot of people are waiting for the right moment."
—Sarah Susanka, FAIA, Susanka Studios, Raleigh, N.C.
"If the Obama administration gets eight years and pushes the emphasis on alternative lifestyles, there may be new programs created to reactivate housing production. I would like to believe that these new realities of being more frugal will create a shift toward learning to do more with less stuff. We're developing lofts that are relatively compact and know they will work with the younger generation. But 20 years from now, will these owners want the 3,000-square-foot houses? There's an optimistic side of me that says, yes, we'll see significant cultural change, and another that says, been there, done that. But we are seeing a new spate of green materials, and developers see sustainability as a marketing tool. I think things will continue that way.
Regarding the way houses are delivered, we manufacture more and more parts of houses. But it's hard to get the densities to make prefab work, and there are so many regional differences in this country. The dream still lingers that prefab will save the day and help us produce less expensive houses, but I don't think that's really going to take hold here. It's at its best in Scandinavia, which has small, homogeneous societies, and research and development is subsidized by the government. I think we'll continue to see more sophisticated use of industrialization within the building industry, but local markets will resist its occurrence on a grand scale."
—Michael Pyatok, FAIA, Pyatok Architects, Oakland, Calif.
Director, Phoenix Urban Research Laboratory
Arizona State University
Credit: Jason Franz
"It's a good moment to look at what's working and what's not, so that when things rebound we're in a stronger position. We have to seriously evaluate the success of low-density single-family homes on greenfield sites. The production home builders do it well and quickly, and for many years there's been a market for that. But in Phoenix, that market has disappeared, at least for a while. Even though gas prices have come down, if you read the science, they're going to go back up. Even if they remain the same, you have road congestion and social isolation. We've seen that real estate in the center [of the Phoenix metro area] is holding its value. It's a simple message that exurbia is increasingly tenuous. We've got to build houses as well as we can in terms of green technology, but we've got to put them in the right places and connect them to transit options and bike lanes."
—Nancy Levinson, director, Phoenix Urban Research Laboratory, Arizona State University, Phoenix
"I anticipate we'll see affordable-housing leadership from the governors and mayors of pace-setting states and cities. In Los Angeles, the Housing Authority of the City of Los Angeles [HACLA] Board of Commissioners has embraced a goal to produce up to 30,000 new affordable housing units—a significant commitment toward the mayor's goal of 50,000 units. HACLA is mobilizing resources and engaging the community in South Central L.A. to initiate redevelopment of Jordan Downs, a public housing neighborhood in Watts that will produce a dynamic, sustainable, mixed-income community. They have another 16 public housing neighborhoods that may also be suited for redevelopment.
The commitment of HACLA underscores two important trends that will intensify nationally in the next few years: the hard unit replacement of redeveloped properties (no net loss of low-income units) and an abiding commitment to environmental and economic sustainability.
Look for more bold moves toward sustainability in cities such as Toronto, where carbon-neutral new-construction goals have been set by the mayor. Chicago officials will build on a successful track record of sustainability in pursuit of their Olympic bid. Portland, Ore., will demonstrate whether or not its proposed system of carbon 'freebates' will help make a market for the commodity. Mayor Greg Nickels in Seattle has already demonstrated leadership nationally and locally in this regard, including enactment of the so-called 'Sea Green' building standards.
Finally, no prediction would be complete without some discussion of capital markets and ownership trends. New shared-equity models adapted from successes in the United Kingdom will inform a new hybrid of ownership in the United States. The concept of shared equity will build on the land trust model and move into the mainstream market as households see the benefits of something other than a traditional mortgage with long-term ownership. That's because it's abundantly clear to millions of households that housing can be an illiquid asset (or liability) with high transaction costs. With approximately 18 percent of mortgage holders underwater nationally, according to Zillow.com, the marketplace will demand alternative ownership vehicles in the future.
Capital flows will gravitate to markets, market segments, and borrowers who can ensure reasonable returns on equity. Real estate investors will return cautiously to participate in high-value-added, transit-oriented developments in proven markets. Some cities, counties, and states will step up to guarantee projects that meet local economic development objectives. That said, developers will be fortunate to find 70 percent loan-to-value terms even in good markets.
The prospect of higher capital gains tax rates in the near term will cause some 'churn' in the commercial real estate market that may provide investment opportunities for patient capital currently sidelined until the markets settle into a new equilibrium."
—Kurt Creager, executive director, Stardust Center for Affordable Homes and the Family, Arizona State University, Phoenix