The launch of a new industry indicator.
The Residential Design Index (RDIndex) is showing strong growth in all areas of single family home design. According to the industry survey, launched this week, 63% of the respondents are reporting an increase in new inquiries over the past 30-day period and 53% report an increase in current production (i.e. work “on the boards”). According to the index, this will result in an increase in single-family home permitting and starts four to six months from now (September – November).
In addition to inquiries and current production, 20% of the respondents reported having grown their staff size in the last 30 days and 53% reports an increase in their backlog of projects contracted but not yet started. Of those who sell pre-drawn (stock) plans, 31% are reporting an increase in sales over last month, and on the flip side, only 11% are reporting an increase in canceled projects.
The AIBD’s monthly RDIndex is a leading indicator measuring the current workload, backlog, and stock plan sales of AIBD members and non-member Certified Professional Building Designers (CPBDs). Thus, indicating the future activity in the single-family housing industry by virtue of the health and future of residential designs in production, hiring trends and project cancelations or delays. A positive index reflects an increase in new home designs entering into construction estimating, contracting, mortgage and permitting over the next six to eight months. A “zero” index indicates no change from the prior month and a negative index means a decrease in new projects entering the next phases over the coming months.
Over 20% of the qualified members and non-member CPBDs responded to the industry study. The results of each respondent produce an average resulting from the multiplication of each component by a factor reflecting its importance, i.e., a weighted average. The coefficients given to each answer are calculated as follows: (Increased) 10 points, (Stayed the Same) 0 points, and (Decreased) -10 points. The average resulting from the sum of all respondents divided by the total number of respondents produces the index.
The RDIndex is positioned to help prepare for market fluctuations and ramp-up hiring. Provide an early picture of single family home permitting trends (lead time 6 to 8 months). And, be a trusted tool for residential design and construction professionals, as well as the media, to predict and track movements in the new single-family housing market.
The next posting of the RDIndex is June 19, 2018
What the industry is saying:
“Custom Home Market and Large Remodeling is hot. We are seeing a large number of people buying homes, tearing them down and rebuilding.”
“We just began offering pre-designed plans last year and, the responses have been overwhelming. Older clientele and Millennials are not willing to pay our custom pricing for plans which, is the same pricing as it was in 2000. This has caused a huge drop in company profits due to required engineering we must supply and a lower price and GP charged for these pre-designed drawings! It is frustrating but, part of doing business!”
“Construction costs seem to have increased & subcontractor quality is becoming poorer & poorer.”
“Subcontract labor shortage and too much construction have blown most of our construction schedules — subcontractors too busy, and slowing all our jobs which are normally longer 6-8 month on larger custom homes.”
“With the change in the economy, we have noticed a significant increase in people wanting more from our services. More buyers do not equal more production. Our buyers expect higher and more personalized services.”
“Best conditions in over 8 years!”
“Due to the backlog, I am telling new inquiries it is a 2-3 month lead time to start on new projects.”
“My workload has maintained an insanity level of all manner of work for the better part of 3 years.”
“Things are great now but have been for too long. I feel the bubble is going to burst soon, just not sure when.”
“Difficult to find qualified/experienced CAD techs.”
“Delays have been related to client financing the project. It seems lending institutions are dragging their feet. The other issue is Appraisers seem to be underestimating what the project’s value is thereby banks not loaning as much money for the project.”
“Delays are mainly being caused as of now from new zoning regulations on hillside and erosion control.”
“Since we do custom home design primarily one huge limiting factor for both my custom home spec builders and individual clients is the low or sparse availability of property inventory in both planned developments and acreage lots, or the land costs are just way overpriced and undesirable. Developers should cease on the opportunity to develop for custom home builders and clients.”
“Our engagement with larger renovation retrofit projects (3500+ s.f.) is on the rise as consumers are growing more comfortable with reuse rather than a replacement.”
“Seems price sensitivity has hit the market for remodeling. A lot of clients have us develop design options and even the lest expensive variation is more than they want to invest.”
“With the new generation, it appears as a group they want a finished home and would rather not go through the design or renovate build process.”
“My project square footages and dollar amounts have increased over 40 percent in the last year.”
“busy as heck…”