In light of the recent 2 week’s financial news I have been a little preoccupied with reading the news blogs and playing fake day-trader on updown.com and have not found many articles to write about. That being said, I would like to write an extra special post detailing how an economic collapse, or at least a shaky market, will affect the architecture world as we know it. Unfortunately I do not have the knowledge or research to make any grand predictions or explanations. Instead, i will just make my own observations.
Here goes the list of things that we might see happen due to recent economic events:
- Due to a decrease in speculative lending, new construction loans will become harder to get, and many private commercial projects will be tabled.
- Because of the economic slow down there will be less capital and therefore less commercial growth, so the drop in commercial projects will be compounded by their being less demand. This may be beneficial to the projects that do seek financing, because there will be less fingers in the pie
- Less commercial growth, in turns creates less personal disposable income and reimbursable business expenses. This can translate to a slow down in hospitality construction and restaurant and entertainment interiors jobs.
- Less commerce, means less jobs, and in turn that means less of a likelihood of a turnaround in the housing market, because there will be fewer buyers with enough savings to qualify for the new restrictive loans. This will hurt the multifamily and mixed use development architects.
- A smaller housing market and lower property values mean that municipalities will have a lower tax revenue stream and public use building contracts may start to dry up.
- With 401(k)s and IRA’s and housing prices in the toilet, baby boomers may need to wait to retire. This means the assisted living and retirement community developers will be hit hard. On the other hand, with a graying population staying home, the suburbs will need to be retrofit to accommodate the newly elderly and infirm. Couple this with a drop in housing prices and more people finding ways to make their current houses work for their needs, and this means architects who focus on home renovations probably will see a rise in productivity.
- In addition to retirement savings, college savings accounts may be hit hard. This may mean smaller enrollment numbers for private universities and larger applicant pools for state schools. In addition, tightening of purse strings equates to less donations for private universities. Together this may mean less collegiate jobs on the table, and those that are available will be for state institutions who need to expand capacity on a shoestring budget
- I do think we will see growth in two other sectors beyond home renovation, they are sustainable and environmentally conscious design and institutional (prison and health care). Sustainable design will be a necessity as people look at ways to decrease their monthly expenditures. This will work in cooperation to the home renovation boom; people will replace windows for more efficient glazing, switch to tankless water heaters and solar hot water, and look at domestic energy production as ways of increasing their property value and decreasing their quotidian expenses.
- Prison construction and hospital construction and/or repair and renovation will increase for two reasons. First, with recessions come crime waves (the need for more correctional facilities) and a greater demand on the health care infrastructure. With more unemployed workers, there will be less people with health care. These individuals may not seek medical treatment until an issue becomes an emergency. In addition, the stress of a recession could cause emotional trauma – depression and mental health disorders. All of this will stress the existing system. Secondly, the government may look for ways to provide labor for the unemployed, a la the WPA, and, transportation infrastructure aside, hospitals, prisons, and other larger public use projects are the best use of these funds.
Again, this is just what I see when I look at the tangled web of finance and its relationship to the profession of architecture. I am sure other people will be glad to point at the ways i am wrong.
