Design brands like to pick colors of the year. If you had to pick a number of the year for the design industry, it would be eight. As in: 8 percent interest on a 30-year fixed-rate mortgage—a level not seen since the 1990s. That was the peak of a dizzying rise in home borrowing costs in 2023, dragging down everything from RH’s stock price to the number of new leads landing in designers’ inboxes.
Thankfully, it’s a new year, and there are signs of a thaw in what has been a historically frozen housing market (mortgages have crept down to 6 percent). There are other big forces at work too, ranging from the rise of AI to a reckoning with long-delayed sustainability goals. To take stock of this moment, Business of Home zoomed in on the stats, dollar signs and figures that matter most. They paint a picture of an industry moving, in fits and starts, toward a new normal.
Pieces of Mitchell Gold + Bob Williams furniture purchased out of bankruptcy.
Last year, the abrupt collapse of Mitchell Gold + Bob Williams left tens of thousands of pieces of furniture stranded in bankruptcy limbo. Roughly 80,000 of them were ultimately purchased en masse by Virginia-based outlet chain The Dump. That’s a lot, but it’s only a fraction of the total volume of inventory caught up, one way or another, in the post-pandemic home crash. If the last two years have seen a lot of gloom and doom in parts of the furniture industry, this period has also proven to be a boom time for the liquidators and off-price retailers who specialize in quickly turning furniture into cash. One person’s famine is another’s feast.
Rooms created with Wayfair’s AI tool, Decorify.
Last year, Wayfair quietly unveiled an AI-powered interior design tool called Decorify. Like many artificial intelligence design engines, it allows users to upload a picture of a room and receive a stylized rendering—shoppable links included. Decorify is far from perfect, but last October, Wayfair said users had put it to work “designing” 70,000 rooms. The number, surely higher by now, is a testament to the curiosity about—and maybe someday the demand for—AI-powered interior design.
The percentage of designers who say they actually use AI.
The design industry has long been skeptical of buzzy tech disruption, but AI is difficult to ignore. Over the span of a year, generative tools like Midjourney and ChatGPT have dazzled with their ability to create pixel-perfect room renders and shockingly good text. Still, a recent survey conducted by 1stDibs found that only a modest 9 percent of interior designers regularly use AI tools. There are two ways to look at that number. One is that AI is overhyped and won’t really change the way designers work. The other is that it represents 900 percent growth—after all, how many designers were using AI in 2022?
RH’s first loss in years.
For the past few years, it’s become almost a routine: RH Chairman and CEO Gary Friedman hops on quarterly earnings calls with investors and announces jaw-dropping profits for the company formerly known as Restoration Hardware. In December, there was a surprise: RH was in the red, to the tune of just over $2 million. Prior to that, the company hadn’t lost money (a brief early-Covid dip excepted) since 2018. There are plenty of reasons for the miss, ranging from a frozen housing market to the expense of a well-publicized international expansion. Still, the loss shows that Friedman’s quest to take RH up the “luxury mountain” is not always a smooth climb.
Google Trends ranking of searches for “boucle.”
It’s no secret that boucle—cream-colored boucle, to be more specific—has taken over the world, showing up everywhere from Gwyneth Paltrow’s house to Target throw pillows. But while trend-savvy designers are already moving on to other textures (and boucle in darker hues), a quick browse of any retail catalog shows that consumers are still craving the fabric. Google Trends—a tool that measures search queries over time—pegs the current interest in boucle at 100 out of 100. In other words, peak popularity.
The number of high-profile home world IPOs since 2021.
This number is striking for being a repeat. Last year, BOH noted that no big U.S. home companies had debuted on the stock market in 2022. A year later, we’re still at zero. Whether it’s the crash of the home boom, high interest rates, broader market conditions or some high-profile industry collapses, no one seems eager to take a home brand public. Long-rumored debutantes like Serena & Lily and Houzz are still waiting in the wings.
The percentage growth in luxury listings.
After a flurry of activity during the peak Covid era, the housing market has slowed down a lot, and the upper tier is no exception. By the summer of 2023, luxury sales volume had dropped by double-digit percentage points (Miami was down 40 percent) compared to the prior year. It goes without saying, but a frozen market for high-end homes is bad news for designers. If there’s a bright spot, it’s that we may have already hit bottom—the numbers from the third quarter of 2023 show luxury home listings inching up 3 percent. It’s a tiny increase, but after months of decline, any upward movement is a good sign.
The value of residential construction projects in November.
Mortgage rates are high, home prices are high, and nobody wants to move—we know this. But with a frozen market for existing homes comes opportunity for homebuilders. For some stretches of 2023, new builds made up one-third of home sales, far above the norm of 10 to 20 percent. Recent numbers show that the value of residential construction projects is going up: The monthly total is inching toward a historic high of $1 trillion. Meanwhile, housing starts jumped 15 percent in November, and the S&P Homebuilders Select Industry Index—a fund that aggregates homebuilder stocks—is trading near its own all-time highs. New is in.
Surveys consistently point to the fact that consumers increasingly expect ethical practices and sustainability from the brands they shop, but it’s often hard to zero in on what exactly that means. Enter B Lab, a nonprofit that awards the B Corp certification to companies that meet a rigorous set of environmental, social and governance standards. The B Corp phenomenon has been embraced by companies in general—the overall count has jumped from 3,735 in 2020 to more than 8,000 today—and by home brands in particular. A fast-growing list includes Minna Home, Fireclay Tile, Goodee, East Fork, House of Hackney and Armadillo Rugs.
Wood blocks to make one Zuber print.
Most big acquisition stories of the past 12 months have been rescue jobs. One stands out for being more than just opportunistic: Pierre Frey’s purchase of iconic 230-year-old French wallpaper maker Zuber. The fabric house is already known as a steward of historical names like Braquenié, and this acquisition feels like a natural next step into the past. In an age when anyone can buy anything and everything looks good online, authentic heritage is a rare and valuable commodity. Whatever chairman Patrick Frey paid for Zuber’s factory, archive and collection of 130,000 ancient wood blocks (it takes 800 to 2,000 of them to hand-print one pattern), it was a bargain.