HOME OF THE FUTURE. February 9, 2007 Orlando, FL. Presented at IBS 2007 by GOPAL AHLUWALIA

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1 HOME OF THE FUTURE February 9, 2007 Orlando, FL Presented at IBS 2007 by GOPAL AHLUWALIA Staff Vice President - Research Economics Group National Association of Home Builders 1

2 Demographic Changes 2

3 Exhibit 1 Projected Population of the US, By Race and Hispanic Origin Population (in thousands) 282, , ,371 Percent of Total Population White alone, not Hispanic 69.4% 65.1% 63.2% Hispanic (of any race) Black alone Asian alone All other races Source: U.S. Census Bureau. Compiled by NAHB Economics Group. 3

4 Exhibit 2 Projected Population Change in the US, By Race and Hispanic Origin Numerical Change (in thousands) , ,869 Percent Change White alone, not Hispanic Hispanic (of any race) Black alone Asian alone All other races 2.8% % Source: U.S. Census Bureau. Compiled by NAHB Economics Group. 4

5 Exhibit 3 Number Per Households By Type, Race and Hispanic Origin: 1995 to 2015 Average Number of Persons Per Household Year TOTAL WHITE BLACK ASIAN AND PACIFIC ISLANDER HISPANIC ORIGIN (of any race) Source: U.S. Census Bureau. Compiled by NAHB Economics Group. 5

6 Changing New Homes 6

7 2,500 Exhibit 4 Median and Average Square Feet of Floor Area in Single Family Homes Completed 2,350 2,200 Square Feet 2,050 1,900 1,750 Average Median 1,600 1, * Source: US Census Bureau. Compiled by NAHB Economics (*) Based on the first three quarter of

8 Exhibit 5 Average Square Feet of Floor Area in Single Family Homes Completed U.S. 1,660 2,459 2,434 Northeast 1,595 2,585 2,556 Midwest 1,615 2,277 2,310 South 1,670 2,496 2, * West 1,715 2,472 2, ,000 1,500 2,000 2,500 3,000 3,500 Source: US Census Bureau. Compiled by NAHB Economics (*) Based on the first three quarter of

9 Exhibit 6 Single Family Homes Completed with 3 Bathrooms or More U.S. 12% 26% Northeast Midwest 8% 13% 21% 21% South 11% 27% West 17% 30% 0% 5% 10% 15% 20% 25% 30% 35% Source: US Census Bureau, Characteristics of New Housing. Compiled by NAHB Economics 9

10 Exhibit 7 Single Family Homes Completed with 4 Bedrooms or More U.S. 23% 39% Northeast Midwest 21% 26% 32% 36% South 21% 40% West 29% 45% 0% 10% 20% 30% 40% 50% Source: US Census Bureau, Characteristics of New Housing. Compiled by NAHB Economics 10

11 Exhibit 8 Single Family Homes Completed with One or More Fireplace U.S. Northeast 44% 47% 55% 57% Midwest 37% 59% South 40% 49% West 56% 61% 0% 20% 40% 60% 80% Source: US Census Bureau, Characteristics of New Housing. Compiled by NAHB Economics 11

12 Exhibit 9 Number of Stories in Single Family Homes Completed % 23% 10% % 55% 1% 0% 20% 40% 60% 80% 100% 1 story 2 stories or more Split level Source: US Census Bureau, Characteristics of New Housing. Compiled by NAHB Economics 12

13 55% Exhibit 10 Single Family Homes Completed With Outdoor Features 50% 45% 40% Porch Patio 35% 30% Deck 25% 20% Source: US Census Bureau, Characteristics of New Housing. Compiled by NAHB Economics 13

14 HOME OF THE FUTURE HOME OF THE FUTURE REPORT IS BASED ON 60 INTERVIEWS WITH ARCHITECTS, DESIGNERS, MANUFACTURERS AND MARKETING EXPERTS AND ALSO ON RESPONSES TO AN EXTENSIVE SURVEY QUESTIONNAIRE SENT TO A SELECTED SAMPLE OF ARCHITECTS, DESIGNERS, MANUFACTURERS AND MARKETING EXPERTS 14

15 Exhibit 11 INSIDE OF THE HOME BY 2015 Somewhat to Significantly Different Average Home 65% Upscale Home 78% 0% 20% 40% 60% 80% OUTSIDE OF THE HOME BY 2015 Somewhat to Significantly Different Average Home 57% Upscale Home 67% 0% 20% 40% 60% 80% 15

16 Exhibit 12 Will Changes to Homes in the Next Decade Be More Significant/Greater than in the Past 10 Years? Yes 40% No 19% About the same 41% Comments Accessibility issues Emphasis on technology Greener Construction materials Changing demographics, Aging population and growing environmental concerns will continue to cause more changes. 16

17 Exhibit 13 Compared to Today, Type of Housing Design More Commonly Built in 2015 (Percent of Respondents) Average Home Split level 1% One-story 34% Two-story 65% 0% 15% 30% 45% 60% 75% Upscale Home Split level 3% One-story 41% Two-story 56% 0% 15% 30% 45% 60% 75% 2005 Census Data: Split level * One story 44% Two stories or more 55% (*) Less than one percent. 17

18 Exhibit 14 SIZE OF THE HOME Average size of new single-family home in 2005: 2,434 square feet Expected size of new single-family home in 2015: Average: Median: 2,300 2,500 square feet 2,330 square feet 18

19 Exhibit 15a Areas of the Home Likely to Increase, Decrease, or Stay the Same As a Share of Total Floor Area during the Next 10 Years Family Room Other Bedroom Baths Basement Other Bedrooms Entry Foyer Mud Room Average Home 67% 69% 67% 65% 84% 79% Most Likely to Increase About the Same Living Room Laundry Room Kitchen Master Bedroom Bath Parking Garage(s) Master Bedroom Closet Spaces Dining Room 68% 58% 56% 51% 50% 49% 47% 47% Most Likely to Decrease Divided Opinion 0% 20% 40% 60% 80% 100% 19

20 Exhibit 15b Areas of the Home Likely to Increase, Decrease, or Stay the Same As a Share of Total Floor Area during the Next 10 Years Upscale Home Family Room Kitchen 72% 68% Most Likely to Increase Basement Entry Foyer Other Bedroom Baths Other Bedrooms Mud Room Dining Room 63% 73% 71% 70% 68% 77% About the Same Clos et Spaces Parking Garage(s) Laundry Room Mas ter Bedroom Bath Living Room Master Bedroom 58% 55% 55% 51% 50% 48% Divided Opinion 0% 20% 40% 60% 80% 100% 20

21 100% 75% 50% 25% Exhibit 16 ENTRY FOYER One Story vs. Two Story Average Home 80% 20% 0% One-story Two-story 100% 75% Upscale Home 70% 50% 25% 30% 0% One-story Two-story 21

22 100% 75% Exhibit 17 FAMILY ROOM One Story vs. Two Story 82% Average Home 50% 25% 18% 0% 100% 75% 50% 25% 0% One-story 45% One-story Upscale Home Two-story 55% Two-story 22

23 Exhibit 18 FUTURE OF LIVING ROOM Average Home Vanish 55% Become parlor/retreat/library or music room 31% Stay as is 13% 0% 25% 50% 75% Upscale Home Vanish 4% Become parlor/retreat/library or music room 67% Stay as is 28% 0% 25% 50% 75% 23

24 Exhibit 19a Rating of Need for Items/Features in New Homes in Next 10 Years Rating on a scale of 1 to 5, 1=Not at all critical, 5=Very Critical Average Home % Rated 4 or 5 Family room 90% Low maintenance Exteriors 83% Design 78% Location of the home 75% Two car garage 73% 0% 20% 40% 60% 80% 100% 24

25 Exhibit 19b Rating of Need for Items/Features in New Homes in Next 10 Years Rating on a scale of 1 to 5, 1=Not at all critical, 5=Very Critical Upscale Home % Rated 4 or 5 Design 98% Family room 97% Location of the home 96% Home office 94% Security 93% 0% 20% 40% 60% 80% 100% 25

26 Exhibit 20 CEILING HEIGHT Ceiling height in an average home has been rising for the past 10 years. By 2015, it is expected that most average homes will have 9 ceiling on the first floor and some may even have 10 ceiling. Upscale homes will have at least 10 standard ceiling (10 to 12 range) in entry level and a 9 standard ceiling on the second floor. 26

27 Exhibit 21a Importance of Amenities/Products in the KITCHEN Rating on a scale of 1 to 5, 1=Not at all critical, 5=Very Critical Average Home % Rated 4 or 5 Counter space 76% Cabinet space 74% Double sink 72% Table space for eating 70% Size (floor area) 65% 0% 20% 40% 60% 80% 100% 27

28 Exhibit 21b Importance of Amenities/Products in the KITCHEN Rating on a scale of 1 to 5, 1=Not at all critical, 5=Very Critical Upscale Home % Rated 4 or 5 Cabinet space 96% Quality of appliances Size (floor area) 96% 96% Counter space 96% Double sink 94% Walk-in pantry Flooring 94% 94% 0% 25% 50% 75% 100% 28

29 Exhibit 22a Importance of Amenities/Products in the BATHROOM Rating on a scale of 1 to 5, 1=Not at all critical, 5=Very Critical Average Home % Rated 4 or 5 Double vanity 64% Both shower stall & tub in master bedroom 61% Large mirrors 57% Linen closet 45% Size 40% 0% 10% 20% 30% 40% 50% 60% 70% 29

30 Exhibit 22b Importance of Amenities/Products in the BATHROOM Rating on a scale of 1 to 5, 1=Not at all critical, 5=Very Critical Upscale Home % Rated 4 or 5 Double vanity 94% Both shower stall & tub in master bedroom 94% Size 94% Large mirrors 88% Linen closet 88% 0% 25% 50% 75% 100% 30

31 Exhibit 23 Demand for TWO MASTER BEDROOM SUITES by 2015 Rating on a scale of 1 to 5, 1= will decrease significantly, 5= will increase significantly Average Home 13% % Rated 4 or 5 Upscale Home 62% 0% 20% 40% 60% 31

32 Exhibit 24 Demand for OUTSIDE KITCHEN Rating on a scale of 1 to 5, 1= will not change, 5= will increase significantly % Rated 4 or 5 Average 18% Upscale 66% 0% 20% 40% 60% 32

33 Exhibit 25 Demand for OUTSIDE KITCHEN FEATURES Rating on a scale 1 to 5: 1= Will not change and 5=Will increase significantly % rating 4 or 5 Average Home Upscale Home Grills 35% Grills 76% Sinks 15% Sinks 65% Refrigerators 13% Cooking islands 60% Cooking islands Beer dispensers /wine coolers 6% 12% 0% 20% 40% 60% 80% Refrigerators Beer dispensers /wine coolers 47% 58% 0% 20% 40% 60% 80% 33

34 Exhibit 26 Demand for OUTSIDE ROOM FEATURES Rating on a scale of 1 to 5: 1= will not change, 5= will increase significantly % rating 4 or 5 Average Home Upscale Home Decking/patio covers/enclosures 28% Decking/patio covers/enclosures 78% Outdoor lighting 26% Ourdoor audio/tv equipment 74% Pools/spas Ourdoor audio / TV equipment Outdoor fireplaces Decorative water fe ature s Patio Heating: Portable Patio Heating: Built in 6% 3% 13% 10% 17% 16% 0% 20% 40% 60% 80% Outdoor lighting Outdoor fireplaces Pools/spas Decorative water features Patio Heating: Built in Patio Heating: Portable 31% 27% 60% 57% 73% 70% 0% 20% 40% 60% 80% 34

35 Exhibit 27 Number of Bathrooms Expected by 2015 AVERAGE HOME: 2 FULL and 1 HALF TO 3 FULL and 1 HALF UPSCALE HOME: 3 FULL and 1 HALF TO 4 FULL and 2 HALF 35

36 Exhibit 28 Features Offered in the Next 10 Years: Standard vs. Optional Increase in the number of features offered as Standard and decrease in features Upscale Home 81% Average Home 68% 0% 20% 40% 60% 80% 100% 36

37 Exhibit 29 Exterior Materials Most Likely to Be Used in 10 Years Rating on a scale of 1 to 5: 1=most unlikely, 5=most likely % rating 4 or 5 Average Home Upscale Home Vinyl 57% Stone 97% Fiber cement 53% Brick 83% Brick 50% Stucco 76% Stucco 44% Fiber cement 61% Stone 38% Wood 44% Artificial stucco 23% Cedar 42% Wood 21% Artificial stucco 33% Cedar 11% Vinyl 8% Aluminum 11% Aluminum 0% 0% 20% 40% 60% 80% 100% 0% 25% 50% 75% 100% 37

38 Exhibit 30 Standard Outdoor Features by 2015 Average Home Upscale Home Front porch 70% Front porch 79% Patio 61% Patio 76% Deck 42% Deck 61% Rear porch 24% Rear porch 79% 0% 25% 50% 75% 100% 0% 20% 40% 60% 80% 100% 38

39 Exhibit 31 Location of Stairs Average Home Upscale Home Stairs will stay in the foyer 61% Stairs will stay in the foyer 44% Stairs will move to the back or side of the home 39% Stairs will move to the back or side of the home 56% 0% 25% 50% 75% 0% 25% 50% 75% Stairs will be more functional rather than a piece of decoration. Upscale homes will have two staircases. 39

40 AVERAGE HOME Exhibit 32 Front Doors by 2015 UPSCALE HOME Single door 36" or 42" wide without side lights 87% Single door 42" wide with side lights Double door with or without side light OR 34% 39% 0% 25% 50% 75% 100% 0% 15% 30% 45% More single doors used in upscale housing, partly because of exterior design. Door size wide doors, looks more elegant will be used extensively in place of a 3 wide door. Side lights will be used (if there is a room). Upscale homes will have two side lights and one above the door. 40

41 Exhibit 33 LIGHTING Lighting driven by the market. Chandelier in the dining and entry foyer Definite trend towards recessed lighting Recessed cans more in kitchen, media room, finished basements. Some unique hanging fixtures designed as artwork. Industry has not recognized power of mood lighting. 41

42 Exhibit 34 COLORS A trend away from white. A lot more interest in colors. Interior of home seeing bolder colors. 42

43 Exhibit 35 Fiber Optic Network by 2015 Average Home Upscale Home Yes 66% Yes 87% No 34% No 13% 0% 50% 100% 0% 50% 100% 43

44 Exhibit 36 Electronic Features Standard in AVERAGE HOME by 2015 Programmable thermostat 78% Structured wiring system 61% Multiline phone system 59% Multi Zone controlled HVAC 43% Remote control fireplaces 36% 0% 10% 20% 30% 40% 50% 60% 70% 80% Comments Only basic technology will take hold in average home: security system, automatic lighting control, and energy management system. Structured wiring is being installed in about 40% of new homes today, but use of wireless technology may enter housing market in big way. 44

45 Exhibit 37a Electronic Features Standard in UPSCALE HOME by 2015 Multi Zone controlled HVAC 88% Multiroom audio 87% Whole home control/automation system 86% Monitored burglar alarm system 81% Programmable thermostat 80% Structured wiring system 80% Instant hot water in bathrooms/kitchens 80% Monitored burglar/fire/toxic gas alarm system 77% Lighting control system 75% 0% 15% 30% 45% 60% 75% 90% 45

46 Exhibit 37b Electronic Features Standard in UPSCALE HOME by 2015 Multiline phone system 74% Multiroom video access 74% Integrated security and lighting control system 70% Communicating thermostat 70% Remote control fireplaces 68% Integrated HVAC and security system 62% Window covering controls 54% Sensor-operated faucets 52% 0% 15% 30% 45% 60% 75% 90% 46

47 Exhibit 38a Trends in AVERAGE HOMES Expected in the next 10 years Toilet in the master bedroom bath will have separate enclosure 68% You will see a definite trend towards recessed lighting 63% You will see a growing trend towards universal design/handicap access 56% You will see a trend away from white to bolder colors in the house 50% 0% 20% 40% 60% 80% 100% 47

48 Exhibit 38b Trends in UPSCALE HOMES Expected in the next 10 years Toilet in the master bedroom bath will have separate enclosure The master bedroom bath will have multiple shower heads Two car garages will increase from 20 x20 to 24 x24 Most garage doors will increase from 7 x 9 to 8 x 10 You will see a definite trend towards recessed lighting You will see a trend away from white to bolder colors in the house You will see a growing trend towards universal design/handicap access 88% 87% 84% 79% 76% 66% 63% 0% 20% 40% 60% 80% 100% 48

49 Exhibit 39a Trends in Neighborhood/Communities Expected in the next 10 years AVERAGE HOME Dedicated open space/communal space in the subdivision 94% Higher-density development (smaller lots) 91% More mixed-use facilities within developments 84% Walking/jogging trails, walkways, etc. in the new community 78% More recreational opportunities integrated into development 73% In-fill development 67% Better access to public transportation/alternative transportation Greater access to commercial facilities 63% 67% Gated/distinctive community entrance: Open 54% 0% 20% 40% 60% 80% 100% 49

50 Exhibit 39b Trends in Neighborhood/Communities Expected in the next 10 years UPSCALE HOME Walking/jogging trails, walkways, etc. in the new community 85% More recreational opportunities integrated into development 81% Dedicated open space/communal space in the subdivision 66% More cul-de-sacs than thru streets in the new subdivision/ communities 61% Gated/distinctive community entrance: Electronic card 57% Gated/distinctive community entrance: Guard controlled 55% More mixed-use facilities within developments 51% In-fill development 51% Higher-density development (smaller lots) 49% More services integrated into development 48% 0% 20% 40% 60% 80% 100% 50

51 Exhibit 40a Green Building Trends Expected by 2015 AVERAGE HOME You will see an increased demand for energy efficiency appliances and mechanical equipment There will be a growing trend on water or energy conservation devices Energy performance will play a bigger role in window purchases 89% 89% 98% You will see greater desire for green/sustainable product offering Builders will seek green certification for his/her products 66% 75% 0% 25% 50% 75% 100% 51

52 Exhibit 40b Green Building Trends Expected by 2015 UPSCALE HOME You will see an increased demand for energy efficiency appliances and mechanical equipment Energy performance will play a bigger role in window purchases There will be a growing trend on water or energy conservation devices 97% 97% 94% You will see greater desire for green/sustainable product offering Builders will seek green certification for his/her products 76% 73% 0% 25% 50% 75% 100% 52

53 TRENDS 53

54 Exhibit 41 Average Home Upscale Home Average Size 2,330 sq. ft. >4,000 sq. ft. Single vs. Two Stories Two-story Two-story Entry Foyer One-story One-story Family Room One-story Two-story/One-story Living Room Will vanish or become parlor/retreat/library Will stay as is or become parlor/retreat/library Ceiling Height 1st floor: 9' 1st floor: 9' 2nd floor: 8'/9' 2nd floor: 9'/10' Two Master Bedroom Suites x Outside Kitchen x Definitely yes 54

55 Exhibit 42 Average Home Upscale Home Outside Kitchen Features x Grill x Sinks x Cooking Island x Refrigerators x Beer Dispensers x Maybe Other Outdoor Room Features Decking/Patio Covers x Outdoor Lighting x Outdoor Audio/TV Equipment x Outdoor Fireplace x Pools/Spas x Decorative Water Features x Patio Heating x x 55

56 Exhibit 43 Average Home Upscale Home Bathrooms Two full one half to Three full one half to Three full one half Four full one half Exterior Wall Material Vinyl Stone Fiber cement Brick Brick Stucco Fiber cement Outside Features Front Porch Rear Porch x Patio Deck x Stairs In the foyer More in the back or side of the home Front Doors Single door, 36" or 42" wide Single door 42" with side lights or Double door with or without side lights Fiber Optic Network 56

57 Electronic Features Exhibit 44 Average Home Upscale Home Programmable Thermostat Structured Wiring System Multiline Phone System Multi Zone Controlled Hvac x Remote Control Fireplaces x Instant Hot Water in Bathrooms/Kitchens x Monitored Burglar Alarm System x Monitored Burglar/Fire/Toxic Gas Alarm System x Lighting Control System x Multiroom Audio x Multiroom Video Access x Whole Home Control/Automation System x Integrated Security and Lighting Control System x Integrated Hvac and Security System x Communicating Thermostat x 57

58 Exhibit 45 Trends Expected in New Homes in the Next 10 Years Average Home Upscale Home Toilet in the Master Bedroom Bath Will Have Separate Enclosure Definite Trend Towards Recessed Lighting Growing Trend Towards Universal Design/Handicap Access Trend Away From White To Bolder Colors In The House Divided opinion Two Car Garages Will Increase From 20 X20 To 24 X24 x Most Garage Doors Will Increase From 7 X 9 To 8 X 10 x The Master Bedroom Bath Will Have Multiple Shower Heads x 58

59 Exhibit 46 Features in New Neighborhood/Communities by 2015 Average Home Upscale Home Dedicated Open Space/Communal Space in the Subdivision Higher-Density Development (Smaller Lots) x More Mixed-Use Facilities within Developments x Walking/Jogging Trails, Walkways, etc. in the New Community More Recreational Opportunities Integrated into Development More Services Integrated into Development x Better Access to Public Transportation/Alternative Transportation x Greater Access to Commercial Facilities x 59

60 Exhibit Homes by 2015 will generally look like the homes of today or would by very much different (Rated as "somewhat different" to "significantly different") Average Home Upscale Home Inside of the Home 100% 78% Outside of the Home 91% 85% 2. Changes to homes in the next decade be more significant/greater than the past 10 years Yes 40% About the Same 41% 3. Areas of the home likely to increase, decrease, or stay the same Average Home Upscale Home Family room area likely to increase Living room most likely to decrease Family room and kitchen area likely to increase 60

61 Exhibit Top 5 features rated critical to very critical Average Home Upscale Home Family room, Low maintenance exteriors, Design, Location and Twocar garage Design, Family room, Location, Home office, and Security 5. Top 5 most rated features in kitchen and bathrooms Average Home Upscale Home Size, Double sink, Counter space, Cabinet space, and Table space for eating Quality of appliances, Double sink, Walk-in pantry, Flooring, Size, Counter Space, and Cabinet Space 6. Increase in the number of features offered as standard Average Home Upscale Home Yes Yes 61

62 Exhibit 49 Average Home Upscale Home Green Building Trends by 2015 Increased Demand for Energy Efficiency Appliances and Mechanical Equipment Growing Trend on Water or Energy Conservation Devices Energy Performance Will Play A Bigger Role in Window Purchases Greater Desire for Green/Sustainable Product Offering Builders Will Seek Green Certification for His/Her Products Source: Economics Group 2007 NAHB Study Home of the Future 62

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