Inflation, high interest rates and a weird housing market are drowning the pool business.
said last weekIf the market continues to weaken further, there could be fewer new pools built than the 54,000 that were constructed in the Great Recession year of 2009, following a spectacular nationwide housing bust.Higher-end pools that have fancy waterfalls or decorative tiling are selling fine. It's demand for low-end pools that is slowing.
One reason: High-end pool buyers tend to pay in cash. Lower-end pools are more likely to be financed, and high interest rates have made that less palatable.consumers are strapped and out of gas," Ryan Merkel, who follows the pool market for William Blair, tells Axios.Rate-locked homeowners have seen their home prices rise in value, but tapping that equity for, say, a pool installation looks very expensive.
On top of that, the sluggish housing market means there is "not as much competition for upper-middle housing stock, where a pool is a differentiating amenity," according to Rick Webb, the CFO of pool-building company Viridian Pools.Normally, new home construction is correlated with new pool construction. That's not the case anymore.The average pool cost went from roughly $40,000 pre-pandemic to somewhere north of $65,000, estimates Garik Shmois, an analyst at Loop Capital.
Discounts, at least for some companies, are making a comeback. Pool equipment provider Hayward says promotional activity is back to pre-pandemic trends.The pandemic caused a one-off surge in pool demand: stuck-at-home were inclined to lean into upgrades, even as they were forced to forgo vacations. "We are seeing record travel. That shows people are choosing to go back to summer vacations, spending their discretionary budgets on activities as opposed to reinvesting in their backyards," Shmois says.Share on facebook Share on email
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