y all accounts, 2002 is shaping to be a banner year for the pool and spa industry. Some manufacturers say portable spa sales have leapt 70 percent. Builders across the country report having more work than they can handle. And retailers say business has been brisk.
All this is occurring despite a shaky economy and sliding stock market.
Many experts have attributed the good times to a post 9/11 cocooning effect. But the business boom may be rooted in a more basic — and lasting — phenomenon: the home mortgage-refinancing craze.
Historically, most refinancing money goes to remodeling the home, says Donna Reichle, media relations director at the National Association of Home Builders. But anecdotal information from the pool and spa industry shows that many homeowners also are using that extra cash to put in that pool they’ve always wanted.
“Obviously, 9/11 reinforced that decade-old psychology of cocooning. That fueled the desire. But what made it possible was the tens of billions of dollars that surfaced through refinancing,” says Bruce Conn, vice president of marketing at California Pools & Spas, in Rancho Santa Margarita, Calif.
In 2000, 2.4 million people refinanced their homes. That number jumped to 7.8 million in 2001. Translated into dollars, that’s nearly $152 billion in extra cash that homeowners had to spend, says Orawin Velz, an economist at Fannie Mae Financial Services. “We’ll probably see something rival to that in 2002,” she adds.
This, of course, is all thanks to a loan interest rate of 6.22 percent at its lowest so far in the end of August.
Conn was first tipped off to refinancing’s role when “a number of customers came to the table, money in hand. That’s where we learned where it was coming from.” And, he adds, the refinancing boom has been “universal. It’s across the board, in all sizes and places; it’s refinancing for all.”
In fact, he estimates about one-third of his new sales this season were paid for through refinancing. “Clients put $40,000 in a bank account, and they will spend it,” Conn says.
The money not only goes to new pools, but also to high-end add-ons, says Ghassan Madkour, general manager of Nejame & Sons, a Danby, Conn., pool builder. “One guy was tapped out after we put in his inground. He didn’t have enough for the cover,” Madkour says; so the client turned to refinancing for that alone.
Like Conn, Madkour estimates 30 percent of this year’s sales are from refinancing, up somewhere between 8 percent to15 percent from last year.
How long will the refi boom continue? It’s difficult to tell whether the rate will stay steady long, or go lower still, luring even more people to the banks, says Velz. But her forecast is that the rate “will stay below 6.5 through end of the year. Then expect it to pop up when the economy gets stronger in the second quarter of 2003.”
