Remodeling activity rising

My recent anecdotal conversation about the increase in home remodeling has been confirmed by an article in the Wall Street Journal. The Journal reports that people are staying put and remodeling instead of trading up. They say that architects are seeing a 16% increase in interest in remodeling of kitchens and baths. How this "interest" will translate is anyone's guess, but a kitchen designer told me the other day that there was a substantial uptick in business over last year. However, people are spending roughly half of what they were during the boom times.

Today's homeowner is much more practical than the recent past - with little interest in indulgent luxuries, they are looking for recycling centers, larger pantries and renewable materials. Material properties are getting much closer scrutiny than in the past, consumers are looking for products that will last rather than what is the "trend of the moment."

What to do when headlines and facts don't match

We all want to put the most positive light on the current economic climate, but does it serve a purpose or only serve to confuse us all? There are many who think the continued weak conditions are brought on by the air of uncertainty that exists throughout the economy.

A recent Kitchen and Bath Industry house organ's headline reads "Recovery in the Air as 2009 Comes to Close" while their own projections for 2010 on the same page show 2010 to be down a further approx. $1.5B from 2009 in small print.

Until economic signals from credible sources are more clear, the uncertainty will continue to stalemate the economy.

Confusing Messages at the Builder Show

Peter Miller, president of Restore Media, the folks that bring us the Traditional Building Exhibition and Conference and a roster of magazines on restoration reports on this year's International Builders' Show on his website. He learned that consumers "want smaller, urban, energy-efficient homes. They want them well appointed and within walking distance to work, schools, shops and restaurants. They want houses in close-in neighborhoods. And while they crave new technologies, especially work-at-home connectivity, they prefer houses 'like the one their grandmother lived in.'"

He has an interesting, realistic and dispassionate take on the show that is well worth reading. He concludes with the thought that, "The 'reset button' is on. We are all trying to figure out what to do next amidst the conflicting, often contradictory advice we get from the experts. We start a new decade as uncertain as the last. We are afraid because we do not know what's next or what to do about it."

Housing - the future for the US - some insights

My new favorite magazine is The Atlantic; under its new ownership and editorial staff it continues to be well written and appears to me to be a voice of reason on our current global economy without the cheer leading, grandstanding or bs evident in so much of today's mainstream media.

THE FUTURE OF HOUSING STYLE

The lead-in to the article: "Houses of the Future" goes like this: "Four years after the levee failures, New Orleans is seeing an unexpected boom in architectural experimentation. Small, independent developers are succeeding in getting houses built where the government has failed. And the city's unique challenges—among them environmental impediments, an entrenched culture of leisure, and a casual acquaintance with regulation—are spurring design innovations that may redefine American architecture for a generation." The houses featured are small and functional, and my guess is that the classic Greek Revival shotgun style house will become a favorite, despite the attempt to "upgrade the taste" of the populace with modernism by the various players. The author describes 5 house in the article, so be sure to follow the link map in the article to see the designs by the well-known architects. These are the efforts to which Brad Pitt is lending his star-power.

The article notes that the classic New Orleans style (pictured above) is by the New York architect William Monaghan, who grew up in New Orleans and both understands and appreciates the vernacular architecture. Check his website Build Now for other classic New Orleans plans.

THE FUTURE OF HOUSING SIZE

The small houses featured in the article are functional and above all affordable. It was most instructive to read Witold Rybczynski's archived article from 1991 in the same publication "Living Smaller, the Advantages of a Small House". I wonder if he had any idea then of the McMansions that were to come. Recently, the Harvard Center for Housing Studies reported that new home sizes are slowly coming down in size, but it seems to me that their numbers are not yet significant.

THE FUTURE OF HOME OWNERSHIP

However, the most interesting article from March 2009 may be the most significant of all, as it relates to the future of housing - "How the Crash will Reshape America." Richard Florida discusses the winners and losers in the geographic lottery, the choices and opportunities as we reshape our economy and where we will live. The most interesting idea that he develops is his call for reducing our focus on home ownership, he sees renting as a much more flexible way to keep our economy strong and flourishing in the future. Renting will allow the population to follow opportunity much more readily than home ownership, moving forward. (In the past, when IBM stood for I've been Moved, home ownership was never a problem, because large companies simply bought up home at market value to remove any burden from their employees - times have changed.)

The concept entails sound thinking, and will have a major impact on interior finishes. We would be moving towards the European model, so industries must develop products that are movable like kitchen furniture instead of built-ins - a radical change for many material and product suppliers. There are many years to plan for this eventuality, but now is the time to plan ahead. - rather than let others countries become the winners like the Japanese automobile manufacturers became when the domestic manufacturers refused to build fuel efficient cars. (IKEA stands to become the go to cabinet manufacturer because they already know how to do this.)

We know that Washington needs more revenue, and whether and how fast this shift will happen, depends on who has the deeper pockets for lobbying to keep the tax write-offs for themselves and their customers.

It just IS!

In a recent article in the NY Times: When Creativity Diminishes Along With the Cash Nicolai Ouroussoff worries that the new diminished plans for the Parrish Art Museum on LI "suggest the possibility of a worrying new development in our time of financial insecurity. It is a creeping conservatism — and aversion to risk — that leaves little room for creative invention."

Yes, conservatism and a return to the familiar is no surprise and quite common in insecure economic times. There will always be trends, but the current "trend" is to look back to iconic products that have stood the test of time and do not scream: "I brought this in the 2nd half of 2009" as we saw during the recent boom-boom times. It is simply a fact of life.

Added 8/14: Saw an ad on TV last night (am clueless who it was for) that said - and I am paraphrasing: "We are going from trends to tradition." The perfect sentiment for the times.

The New Defined Edge

In the new era of frugality, creativity will appear in new guises...not that the Libeskind pre-fab house on the right is frugal.(The house is energy-efficient, manufactured in Germany and can be shipped anywhere in the world for $2.8-4.2M.)

It is the new "edge" aesthetic that is more in tune with the times than all those swooping curves and undulations that we have seen recently in both architecture and furniture. Exemplifying simplicity in the best sense of the word, the exquisite table with eased edges on the right is called "gorge" and is made from a single piece of powder-coated steel. Designed by Korean designer Ramei Keum, it is - at once elegant and child-like.

Magenta - For a Reason or a Season?

I painted my house door magenta for a reason - I had absolutely no trend in mind. When the beach roses are in full bloom, there is simply no other choice. A recent Wall Street Journal article tells us that "magenta" is "suddenly haute" in everything from fashion to architecture for just this season in an article entitled: Hot Pink? Call it 'Mangenta.' They have it right when they explain: "The fuchsia phenomenon might not age really well. Yet that's precisely the point -- fuchsia is so very here today because tomorrow is so scary to think about. The color of hothouse flowers and glorious summer landscapes speaks to our bruised psyches. Brown is bleak. Fuchsia is anything but." I guess the concept of optimism would explain Bill Clinton's pink tie on the cover of the 5/31 New York Times Magazine, but it still does not explain all that pepto bismal pink coming out of the European design community on everything from furnishings to finishes.

The Truth about Luxury

For years now, marketers have thrown around the concept that "the middle is gone." I almost came to believe it, but was never really convinced. Certainly, the "illusion of luxury" kept winning the day, but things are different today. You could never call the Ralph Lauren paint line "luxury," but it wore the mantle of high fashion, and so the "mantle of luxury" strengthened the successful middle. (Yes, the middle was there all along.) When seeing this spring's fashion ads, I kept thinking that for the first time ever, the Ralph Lauren ads were tone deaf. The Wall Street Journal notes that the branded store sales of this bellwether luxury retailer have fallen 12.4% this year. The company's total numbers still look respectable due to international sales and a strong 5% increase in wholesale sales due to the (drum roll for that missing middle) American Living line for J.C. Penney which does not even carry the Ralph Lauren name.

The above image is one of my slides from a recent presentation at Coverings, the annual tile trade show. I mentioned that Hermes was offering to put their customers purchases in plain brown wrappers. (Luxury = porn??) In today's email, Knowledge@Wharton has an article titled: The New High-end Consumer: 'Please Put My Bottega Veneta Wallet in a Plain Bag.' The article mentions mark-downs of as high as 70%. I believe that would qualify as "the middle."

The American Affluence Research Center surveys wealthy Americans (Average annual income $290,000 and net worth of 3.1M) twice a year. They surmise that much of the hype of "luxury" was fed by the media- as most of the affluent have solidly middle class values. Luxury made for more interesting stories, and no doubt brought in the luxury advertisers. Their survey found that remodeling plans are less than 1/2 of what they were a year ago. The 17 categories surveyed established historic lows, and by a very substantial margin in most cases. For example, 10% of those surveyed plan to increase their spending on furniture and home furnishings, while 43% plan to reduce their spending, while the rest plan to spend the same as last year. The survey offers an outlook for the next 12 months.

Affordable, Energy-efficient, Attractive? Modular Home

The press has, of late, been enamored with contemporary modular homes. As I mentioned in a previous post, they will become interesting when they become affordable. Clayton Homes recently introduced their affordable, energy efficient "i-home" (will Apple be suing? No, because "i" stands for "innovation, inspiration, intelligence and integration.") at the Berkshire Hathaway annual meeting. (Available in two packages: $74,900 for the 723-square-foot and $93,300 for the 1,023-square-foot unit.) The interior is every bit as attractive as some of the expensive homes, but the outside still looks like temporary restrooms in an urban highway rest stop. (While the good looking one is under construction) We are in the 21st century, why the continued reliance on the cold and foreboding 50's modern idioms?

After affordability, I would include emotional livability as a requirement for the success of this concept. We may use rest stop restrooms and loved the original MickieD's as iconic, but we don't want to live in either one. (Even Walter Gropius's house is a museum, not a home.)

Forbes shows us the Money

Throughout my entire career I have witnessed companies ignore the needs and desires of the masses - aesthetic and otherwise. The excuse was always that it would cannibalize the high end products, and all the pundits even had me believing the most recent excuse that "there is no middle." It was the rising tide that kept everyone in the gravy, meanwhile those catering to the masses were shoveling in the money with little competition. All you have to do is take a look at the Forbes Wealthiest List. You will find the founder of IKEA at #7, the (Trader Joe's) Aldi brothers at #10 and #16, and the WalMart family at #26, 27, and 29. If their father were alive today, he would top out with Warren Buffett and give the USA 4 billionaires in the top 25 instead of just the 3 there are in the most recent list.

Bernard Arnault alone represents the luxury business at #16, his diverse LVMH group held up surprising well in 2008 given the amount of competition in that segment. What is most obvious about this list is how few Americans are on the list - anyone who tries to put the brakes on free trade will quickly discover exactly where the power/money lies. In this Olympics of Billionaires, Forbes list shows that the USA is no longer the dominant financial power.

Creativity and the Role of the Leader

An article of interest to those responsible for new product development of all kinds titled "Creativity and the Role of the Leader," in October's Harvard Business Review, shares insights from a recent two-day colloquium at Harvard Business School on the topic. My favorite quote from the article:" 'If there is one device that has destroyed more innovation than any other, it is Six Sigma,' stated Mark Fishman, MD, president of the Novartis Institutes for BioMedical Research." This fact would be obvious to creative types but must have required verbalizing to the management types at the colloquium. The article offers interesting reading on providing the proper setting and challenges for "managing" creativity on the path to building and maintaining a strong and profitable business.

"Project Runway" Tenor of the Times

2007 BC (before chaos-financial ) Style over Substance wins
2008 AD (after demise-of Wall Street) Talent and hard work win

More than any other "Reality TV" 2008 Project Runway has captured the times in which we live and is a hopeful guidepost to the future. Only in hindsight do we realize that 2007 Project Runway's winner did the same; the winner's "style over substance" captured the immediate times. Did the darkness of the collection foresee what was in store, just a year later? The numbers of viewers of the presidential debate may have eclipsed the viewers of the 2008 Project Runway finale, but we can only hope that these lessons are as prescient as those of 2007 - this would not be the first time that fashion portends the future. And did Leanne's use of sustainable fabrics cinch the deal for her? If Leanne's win of the 2008 Project Runway with talent and hard work - without even a speck of attitude and posturing speaks to the future - bring it on sooner rather than later.

2008 State of the Nation’s Housing Report Released

The nation is in the throes of a housing downturn that is shaping up to be the worst in a generation, finds The State of the Nation’s Housing report issued today by the Joint Center for Housing Studies of Harvard University. While the falloff in housing starts, new home sales, and existing home sales already rivals the worst downturns in the post World War II era, home price declines and mortgage defaults are the worst on records that date back to the 1960s and 1970s.

This is a critical time for those in the building material industries to be creative in all aspects of their business.