Building Tradition Episode 10: 2024 Forecast with AIA & NAHB Economists

Listen on Apple Podcasts / Amazon Music / Google Podcasts / Spotify

What is the building and design industry forecast for the new year? What are the trends driving our business? American Institute of Architect's economist Kermit Baker and the National Association's economist Danushka Nanayakkara tell host Peter H. Miller, Hon AIA what to expect in 2024.

Building Tradition Episode 10, Part I: 2024 Forecast with Kermit Baker
Dr. Kermit Baker is the American Institute of Architects Chief Economist and author of the AIA's monthly Architectural Billings Index. The ABI tracks new work contracted, projects in the backlog que and client inquiries for future design. In this interview Dr. Baker explains, "our economic forecasts for building, design and construction must examine the cyclical nature of our industry as well as the activity for each building type. Right now, manufacturing, data centers and health care building types are growing strong. College and University work is buoyant. For reasons you would expect, office, retail and multi-housing are soft."

Dr. Baker goes on to discuss the trends that are driving the traditional building market segment, we now know that adaptive use and or renovations of existing buildings is sustainable, more people accept this. Fifty percent of architect billings are for restoration and renovations, an 'under-reported' part of the market."

Residential design trends have changed since the pandemic. Thirty percent of paid work is now remote, according to U.S. Government data. There is a migration from expensive urban centers to small towns and rural areas where housing is more affordable. What does this portend? Listen in as Kermit Baker predicts what 2024 looks like for building and design professionals.

Building Tradition Episode 10, Part II: 2024 Forecast with Danushka Nanayakkara-Skillington
Large production home builders are optimistic about the immediate future for the residential housing market. But small builders are pessimistic, due to the cost of borrowing money for land acquisition and construction. "This means our forecast for 2024 is better in the second half than for the first half of '24," explains Danushka Nanayakkara , Assistant V.P. of Economic Forecasting and Analysis for the National Association of Home Builders. " As interest rates stabilize, so will the housing market for all builders."

Ms. Nanayakkara does not predict mortgage rates to ever fall below 5.5-6%. But she does think, at 6%, homeowners will be more willing to sell and home buyers will be more able to buy a single-family house. "But we have a housing affordability crisis," says Ms. Nanayakkara, "which is why multifamily housing, has been so strong lately, 1,000,000 units under construction.

"Remodeling will remain very strong for the next few years. And we think custom homes account for 20% of the total single-family housing market."

Listen in as this NAHB economist talks about the 2024 forecast, housing prices, design trends, the aging housing stock, the housing shortage, and the high cost of building regulation ($94K per SF house).