Flipping Home Equity Into a Swimming Pool

The relationship that consumers have with their homes has changed in the face of the Covid-19 pandemic. The average homeowner has doubled their home equity since 2020. Homeowners gained $3.2 trillion in equity in 2021 alone. Across the nation, folks were eager to use that equity to finance backyard improvements.

With a housing market shortage, the prices for homes have skyrocketed to the point that many believe their investment will pay off down the road. Consumers are investing in outdoor home improvements like a pool, calculating that improving the backyard will ultimately increase the value of their home. This is a strategy that may pay off, especially as swimming pools become more expensive to build in 2022.

Supply chain shortages and a tight labor market have plagued the pool construction industry over the past two years. Pool equipment shortages came seemingly out of nowhere. Basic materials were in short supply. Concrete prices have continued to soar. Consequently, the price of an inground pool has gone up substantially since 2020.

Most pool construction companies rely on a healthy subcontractor base. Today, the number of masonry crews that were available before the pandemic is roughly half of what it was in 2020 and ranks 4th in severity amongst labor shortages in the trades. Among the subs that are still operating, many are working with a skeleton crew with half the number of workers they had prior to Covid. The prevailing labor shortage problem in itself is why it’s taking longer to build swimming pools.

Those with the foresight to know when to strike while the iron is hot may not get a better deal by ‘waiting it out’. Prices for inground pools are expected to climb again in 2023, waiting to build may not be the smartest option if it winds up costing thousands extra.

Using Home Equity To Buy a Pool

For Donna Sanchez of Folsom, CA, the choice was a clear one. She spoke with Pool Magazine about the challenges of building her dream backyard. “When our community swimming pool was shut down due to Covid, my mind was made up – we were building a pool.” Her husband was working remotely from home and having the kids around taking their lessons online meant a full house for Sanchez. Building a swimming pool in the backyard meant an answer to a variety of problems.

Financing backyard improvements like building a pool meant refinancing her home and flipping her home equity into an inground pool. “As easy as the financing process was for us, the building process was the complete opposite,” said Sanchez.

Everything Was More Expensive

Plagued with a series of delays due to weather, permitting, and construction, Sanchez said her pool was finished by mid-2021, roughly 3 months behind schedule. “Everything about the project was more expensive than we initially anticipated. During construction, the price for materials just went absolutely crazy.”

Prior to the pandemic, the Sanchez family had considered building a swimming pool but had put off the idea for concerns it would lower the resale price of their home. Traditionally, this line of thinking may have been true. Homes with swimming pools tended to take longer to sell as they would need to appeal to a particular buyer who wanted one in their backyard. The additional costs of maintenance and insurance were considerations that could turn away many buyers.

“Waiting Cost Us $30K”

“The pandemic changed everything,” said Sanchez, “if I had a crystal ball and knew the price for a pool would shoot up the way it did, we would have built back in ’19. Waiting wound up costing us probably an additional $30,000 to build our pool.”

“The hardest part of building a pool was competing against everyone else who wanted one at the same time. The initial builder we wanted to build with was booked solid, and so was our second choice,” explained Sanchez, who said that quite often communication with her builder was lacking throughout the entire process. She claims he was inundated with other projects they were building simultaneously with hers.

By the end of 2021 and the beginning of 2022, it had become increasingly desirable to purchase a home that included a swimming pool, if only to save the hassle of installing one. Rather than dealing with the difficulty of building, buying a home that was “ready to swim” has been what many consumers have opted for. “We’re seeing homes with a swimming pool go for a premium,” said Yuba City realtor, Michelle Lightle, “consumers who don’t wait to wait for two years to get their swimming pool built are snapping up homes that already have a pool.”