A small ray of light may be breaking through in the Golden State as industry members there report a slight increase in business.
The numbers certainly aren’t monumental, but when comparing the first quarter of this year with the same in 2009, some saw increases as high as 15 percent.
Many areas remain flat, though.
“We feel like 2010 is going to be no worse than last year,” said Ryder Steimle, CEO of California Pools, based in West Covina, a Los Angeles suburb. “That is a change because we were in this free fall for years [and] it’s nice to know that at least we’ve flattened out and are beginning to come back up the other side.”
When distinguishing stronger markets from weaker ones, professionals divide the Golden State in two ways. The first is coastal vs. inland, with areas near the water tending to be more affluent and thus constituting healthier pool markets.
Next, experts look at newer communities vs. established ones, where homeowners are more likely to have paid down their mortgages and thus have more equity available.
Los Angeles and Orange counties, along with the entire San Francisco Bay area, are stronger performers because they meet the coastal and the well-established criteria.
Some higher-end desert communities, particularly around Palm Springs, also are doing well.
But there are exceptions to every rule. Sacramento now is on an upswing, with some builders reporting increases as high as 15- or even 20 percent. The city isn’t particularly affluent and much of the housing is relatively new, but the area was hit first and hardest by the recession, which may place it on the front end of a recovery.
And whereas many would have expected San Diego to be on the rise, reports are conflicting. Some say the numbers are flat for now; others report that pool sales in the city itself are on a slight increase, while the suburbs remain inactive.
Not surprisingly, newly developed inland areas continue to struggle as foreclosure rates remain high, and many homeowners are upside down on their mortgages. These include San Bernardino and Riverside counties in the south, and Bakersfield, Modesto and Fresno in the central area.
“In those markets, there’s no equity in the homes, and they tend to be more entry level,” Steimle said.
Despite the uptick, no one is celebrating just yet. Initially, many pool professionals had hoped for a V-shaped recession, where a sharp slide downward is complemented by an equally quick recovery. However, with the continuing credit crunch and sluggish home construction, experts expect 2010 to be difficult.
Media reports and forecasts seem to back that up. While housing prices rose mildly in certain areas, California unemployment remains disproportionately high at 12.5 percent compared with the national average of 10.4 percent, and it is continuing to increase. The UCLA Anderson Forecast Unit expects the rates to remain in the double digits until at least 2012.
As if the economy wasn’t bad enough, homeowners also are proving to be a challenge. Sensing their advantage, many — regardless of neighborhood or income — have an aggressive, bargain-hunting mentality that has drastically slimmed profits.
Price competition remains fierce statewide, especially among builders trying to sell more basic pools. “Although we may be up in the number of sales this year, the margins are kind of offsetting that,” said Mike Geremia, president of Geremia Pools in Sacramento.
This is exacerbated by the substantial number of customers who just purchased foreclosed properties. Having bought homes at discount prices, they now expect the same from swimming pools.
“The big switch in the business has been foreclosures,” said Paul Porter, CEO of Premier Pools in Rancho Cordova, Calif. “In 2005, 2006, we never did work for people buying foreclosures. Now it seems like 50 percent of our business.”
But at the end of the day, industry members are relieved to see any movement upward.
“We don’t need a 20 percent gain,” said Robert Rankin, general manager of PoolCorp’s Southern California operations. “We could get 4- to 6 percent, and it would be a huge improvement. Everybody has cut expenses so far that a 5 percent gain would probably equate to a 20 percent increase [during the boom], when everybody had so much overhead.”
Linda G. Green contributed to this story.