It’s been freaking hot lately, so pools are on my mind. Can you relate? I don’t actually have a pool at my house though, so I’m stuck writing about them instead. Haha. Today, I have some interesting pool perspective to share, and I hope it resonates with you too. I’d love to hear your take in the comments.
UPCOMING SPEAKING GIGS:
6/26/24 Lyon Real Estate
7/9/24 Future Homes Q&A (private I think)
7/11/24 She Invests – REI Networking Group 6pm (register here)
7/23/24 Matt Gouge Private Event
9/17/24 Downtown Regional MLS Meeting Q&A 9am
9/20/24 How to Think Like an Appraiser class (details TBA)
10/18/24 Prime Real Estate (private)
10/29/24 Orangevale MLS Meeting
WITH AND WITHOUT POOLS (BIG DIFFERENCE):
There’s a huge difference in the stats when we compare homes with and without pools. The properties with pools are larger in square footage and lot size, higher in price, and they’ve taken slightly less time to sell too.
WHAT IS A POOL WORTH?
The chart above compares homes with and without pools, and if we took the price difference at face value, it suggests a massive number. The problem though is homes with pools on average are about 600 square feet larger, so this would be a terrible way to try to extract value. My advice? Try to find similar homes with and without pools. What is the price difference? Line up a few examples to try to discern what buyers are willing to pay. It’s okay to look at older sales too. You might not use old sales as comps, but you can use them as research. Also, remember that cost and value are not the same thing.
MORE POOLS AT HIGHER PRICES
In short, the higher the price, the greater chance there is a pool. This likely has to do with the cost of building a pool, cost of maintaining a pool, and even larger parcels at higher ranges – not to mention buyers at higher price points expecting a pool more often. By the way, I welcome real estate friends to use some of these visuals in posts and reels.
WHEN DO POOLS SELL THE MOST?
The rhythm of pool sales basically follows the pattern we see in the entire market. More sales as the year unfolds, and they typically peak around June. Some smaller areas could be slightly different.
POOLS AREN’T EVERYWHERE:
Pools are more common in some areas and price ranges. Of course, looking at sales isn’t the perfect way to show the number of pools, but it’s good enough to get the job done. Remember, sometimes pools aren’t common simply because of lot size (Downtown Sacramento has tiny lots).
SERIOUSLY THOUGH, WHAT IS A POOL WORTH?
It depends. Different price points and locations come with different expectations. There isn’t a one-size-fits-all answer for the value of a pool. In other words, we can’t just apply one figure to a property because that number isn’t going to make sense everywhere. This is where we have to study the comps. With that said, my observation is pool adjustments have generally gone up since the pandemic as buyers are more in tune with the importance of a backyard. Have you seen that also?
I hope this was interesting or helpful.
Questions: What stands out to you about the stats? Would you buy a house with a pool? Why or why not? I’d love to hear your take.
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So good! Thanks for sharing this info!
Sure thing. Thanks Jenica. Good to see you last week too. Hope all is well.
Great post Ryan. This is an every day adjustment in South Florida. Plus I get this question all the time from agents. I have seen a pool worth $0 by the market and in the higher end neighborhoods the market adjustment for a pool / spa / outdoor kitchen is in the 100-200k range.
Excellent commentary. I think it’s wild to think about the value of a pool anywhere between $0 and $200K. I think that’s a good conversation piece for contributory value and why things work this way. Thanks Dan.
I’m in Coeur d’Alene, Idaho, where we have a whole two (maybe three) months of pool weather in a year. I have definitely seen the price of pools go up from having nearly no contributory value (and sometimes even negative contributory value) prior to 2020. However, I believe that the driving factor in my market area is not necessarily the importance of backyard amenities, but the high number of Californians moving to the area who place more value on a pool when purchasing a home than the typical buyer would have prior to the boom in 2020. I can’t help but wonder if these buyers have totally thought through the pros and cons of owning a pool in this climate, and am curious to see if pool values will go back down in a few years after the new wears off.
Fascinating. Thank you so much J.D. Yeah, I wonder too if it’s California buyers not really thinking things through. If there aren’t many pools, there is probably a reason for that. By the way, congrats to Idaho for getting the first In-N-Out burger recently (speaking of California). Thanks again.
“How much is a pool worth?” – is the most frequent question I’ve been asked over the years. That is a good and thorough explanation, Ryan.
I’ve also found that in markets with a lot of rentals, homes with pools tend to sell for less than in areas with few rentals.
Thanks Bill. Something to watch. I think I was taught to just give a standard pool adjustment, but maybe there really isn’t a positive adjustment sometimes. An investor may not want a pool at all. Interestingly enough, a short-term rental investor I know locally does well on his properties with pools. Go figure. I wonder how much more the insurance costs.
Pools, hmmmmm seems to me almost one of the first questions I get asked if presenting to an office or board. You said it correctly, it depends, location, size of home and other things. Heck I ran into a situation where a large tract home over 4,000sf had a hard time selling because it was on a small lot under, 6,100sf and there was very little room to install a pool and not fall in as you went out the sliding glass door from kitchen. So do your homework and as Ryan said, big time key to make sure you are comparing similar size homes and lots in order to get a rough order of magnitude on what the buyers are willing to pay.
one last note in late 2020, 2021 and first quarter 2022, pools down in my neck of the woods were showing value added over 20% which was nuts for a tract home on a standard lot. it was almost 2.5 – 3 times higher than what a pool brought in 2018 / 2019. So be aware of the current market you are in and the type of home you are working with. If all else fails, CALL RYAN
Love the commentary. And I say people should just call you, Brad. 🙂 My observation locally is sometimes the lack of a pool can be a big deal. A flipper I talked to last year was struggling to sell, and on of the issues is the competitive properties moving quickly were single story homes with pools. He had a two-story without a pool in a location where the majority of units have pools.
I’m in the Portland area. We don’t see nearly as many pools in our market, but we do see similar trends with regard to higher priced properties having pools. Paired sales on pools can also be tricky because it’s hard to isolate just the pool value. Homes with pools often have more amenities for entertaining along with the pool that complicate the analysis. With pools we often see extensive patios, solar, decks, landscaping, outdoor living or kitchens, etc…
Good point, Gary. It’s not just about the pool. There is more. It’s wild to me that you don’t have as many pools, but that’s the nature of the climate. Pools are definitely common here.
In my experience, pool buyers are a different demographic from non-pool buyers and price point isn’t the driving force.
For example, I’ve seen beautiful yards with a pool being purchased by young homeowners who then fill in and level the yard for a play structure for their children.
This group of people buy their “near perfect” home in the “right” neighborhood, with the good schools, and convenient commute etc but absolutely do not want a pool.
As a pool lover, this is heart breaking to me because I consider a pool to be an aesthetically pleasing landscape feature and would want one even if I never actually swam. In fact, I had a pool for over 30 years until I moved to the coastal redwoods and rarely swam.
When choosing to install a pool, homeowners should decide what it’s worth to them and how long they will enjoy it and not what its resale value will be. As your numbers demonstrate, its a nominal difference.
I would love to see a similar study written by you on the value of solar. I learned when selling my home that everyone wants solar but they are certainly not willing to pay for it. However, if all things are equal including price, most buyers choose the solar option over no solar. In other words, it increased the curb appeal but not the price point.
Thanks for your perspective, Wendy. It is wild how buyers can be so different. Some people really don’t want a pool at all, so it’s a negative. That’s what makes it tricky with adjustments. What is the market willing to pay? That’s always the question. Funny you should mention solar. I just did something for a client, and the value difference was pretty minor when considering the cost of the system. One thing I always consider with solar is its a marathon asset, and buyers aren’t likely to pay for a marathon when sprinting to the market.
I recall an appraiser in the early 90’s giving an increase in value for a pool of $8,000. This was a nice pool but in a $130,000 neighborhood at the time. The seller had paid $30,000 to put in the pool, which was a lot at that time, but the value adjustment was only 26% of the cost. The costs of getting a pool put in today has gone through the roof, plus the time and hassle. I have found buyers are paying in excess of 50% or more, especially if the lot is oversized for the neighborhood as well. A recent sale in Antelope closed at $625,000 with a large lot and a pool. A very similar home on 5500 sf lot would sell between $535-$540,000. That is an enormous boost in value.
I appreciate your take as always. Thank you George. It seems like the house with the ultimate backyard can really command a premium too. So, it’s not always just a pool, but everything else with the pool. I’m not saying there was more to the situation in your example. I just wanted to share that as I was thinking about it. Appreciate you.
In certain market segments and neighborhoods i can prove with perfect paired sales 4 pairs actually… that pools are worth ZERO dollars.
In other segments(generally higher priced) that pools are worth full retail. As in-people with more disposable income are too lazy to wait for a pool to be built and will pay full install retail MORE for a house with a pool so they dont have to hassle with a new install.
in other words-it depends.
Very interesting. Thanks. This is where we want to be objective. It’s easy to say stuff like, “Pools are always worth X amount,” or “Pools could never be worth the cost.”
By the way, I’m not sure why comments are being held for moderation. That bugs me. It’s a WordPress issue that I need to solve. It’s even holding my comments back to people for moderation. I like to simply hear what people think without moderation. Here’s how I should work: The first comment is held, and otherwise people can post freely unless they share a link.
Anyway, not that this matters, but I don’t like what it subtly communicates to people who take time to comment. I do trust you. I just don’t know what WordPress is doing right now.
Deep pools are now restricted, at least in our area. Only shallow pools (5 feet deep I think) are allowed to be built. If you have an older (well maintained) pool where you can jump into and be safe, keep it. Its a bygone era gem.
Thanks Camelia. And say goodbye to diving boards with shallow pools. Five feet though in your area? That is wild.
I am now a rural appraiser in the Hill Country of Texas, northwest of San Antonio.
Most of the ranches I appraiser have pools of various sizes and shapes as well as amenities. The motivation is two-fold: The 100-degree heat for month upon month, of course. But equally important, many owners try to classify the pool as a “water storage device for livestock,” which the IRS has accepted several times. This qualifies the owner to deduct the cost of the pool as a ranch expense.
One other interesting thing – I have personally appraised 3 properties with ABOVE GROUND pools that I classified as in-ground pools. How and why? In these 3 properties the bedrock was 7 to 13 inches below a soil level. To dig out a pool would require explosives and be extremely costly. The solution was to build a traditional concrete pool above ground with ladders to both enter and exit the pool. These pools were all 6 to 7 feet deep with stone quarried from the ranch covering the outside walls. This subject actually had a pipe from the drain into the cattle pen – it really was a water source for the cows.
Wow, that is fascinating. Classic move on the IRS categorization. The cows like to drink water with chlorine… 🙂 I don’t think I’ve ever seen a pool built “above ground” like that. Thanks for the comment. This is what makes appraising interesting. It’s not the same everywhere.
Hey Ryan, good post and conversation. I’ve seen pool adjustments going up during the pandemic but adjusted less the last couple of times.
Thanks Joe. Something to keep on the radar.