The economy and the country as a whole are adjusting as we move into the post-Covid era. And ultimately, that is great for society.

Nevertheless, the economy is still in a bit of limbo, with inflation at decades-long highs and uncertainty surrounding oil, gas and other resources with the ongoing war in Ukraine.

How does this affect the swimming pool and backyard-living market? Well, the comforting thing to note is that, since 2020, there has been a spike in demand for pools, which has yet to come back down to pre-Covid levels. This high demand has persisted even as prices have gone up 20-, 30- and more than 40% for some builders. During the past two years and moving forward, as pool prices stay at all-time highs, financing will become an even more important part of the industry’s success story.

As of mid-August 2022, we are in a technical recession, with negative GDP growth in two consecutive quarters. There’s no question that interest rates have gone up. Whereas 15 months ago you could lock a 2.75% fixed-rate 30-year mortgage, in today’s market that same loan will cost around 6%. The Fed recently raised rates numerous times at a historic clip in an effort to cut down on inflation. Its goal, of course, is to drive the cost of all consumer goods lower by making the cost of borrowing for consumers and business owners more expensive through higher rates.

Currently, 75% of all equity in U.S. residential homes are tied up in sub-4% mortgages. As long as that is the case, consumers’ home equity will be quite difficult to tap into as they look for ways to fund their expenses, namely, home improvements.

But I don’t believe any of the above will greatly hamper your ability to sell home improvements to your customer base.

I don’t anticipate these points to negatively affect the pool industry as much as it will new homes. We are still seeing a move towards renovating and improving existing homes in favor of selling existing homes and upgrading. However, the housing market is a completely different one.

Overall, the economy is still very healthy, with employment at the highest it’s ever been — and unemployment dipping lower than it has in a long time. This means disposable income is still available. You’re still going to have people who want to explore opportunities with pools.

The demand for financing for all types of home improvements is at all-time highs. As prices continue to rise, homeowners are demanding more effective loan products and services.

How financing fits in

While the economy remains healthy, we’re still facing price increases and shortages of products and materials.

This means that not everybody will be able to write a check for their pools, even if their jobs are secure and they have savings. So the more that you can offer financing, and make things simple, the more it can enhance your business, whether you’re one of the top builders in the U.S. or a small Mom-and-Pop establishment. The easier you can make it for the consumer to make their purchase, the more business you’re going to do. So it’s important that pool builders know how to discuss this with their customers.

The average consumer has no idea what a pool costs or how to purchase one. They’ll find that this is likely the second or third most significant purchase they’ll ever make. And it can pose a shock for homeowners. Armed with this information, you can bring value to prospective customers by serving as a trusted source and one-stop shop if they want or need financing.

How many times do builders consult with prospects, only to never hear back from them? This can often happen because the customer was blindsided. They had no clue it was going to be $85,000, $100,000 or $150,000. While those numbers may give them heartburn, $799 per month might be something they can manage. But without broaching the topic of financing, you may never know. The goal of financing should be to reduce hurdles the customer needs to leap over in order to say “yes” to you and your products/services.

Our job is to inform so contractors and consumers can make educated decisions as to the right financing options for them.

Helpful strategies

Understandably, your clients will want to be sure in their purchase, so it helps to frame things in simple terms.

Builders should offer financing to every single customer, and the conversation should begin at your very first meeting. Ask, “What is an acceptable monthly payment for your pool project?” Unless they insist they will pay cash, you know that they may want or need financing. Customers often are either too embarrassed to ask about financing or unaware that you may have access to better financing than they do. Your job is to ask, engage, and inform.

When discussing monthly payments, ask clients how much they spend on other, seemingly insubstantial costs. It always amazes me how many times per week people eat out. If you put that in perspective for them and ask how many times they go to Starbucks each week, for instance, you might find they go five times a week, at $10 each visit. That’s $50 per week, $200 per month. If they cut that in half, that would give them an extra $100 to utilize toward a pool payment.

When asking what monthly payment they can afford, you might find they can purchase more features than they’d expected. Maybe now they can have a spa, furniture or an outdoor kitchen, or additional landscaping, decking or fencing.

As I mentioned before, it’s best to offer and discuss financing even with people who expect to pay cash. They may want to consider keeping their savings and investments in place. If they plan to pull from their investments, why do that if they’re earning 14% but a loan might be 7%? They may plan to use their savings, but it may make more sense to keep their nest egg in place in case of an emergency or another opportunity. If they put their savings in the pool project, they might be left scrambling if they need money quickly.

The future has never been brighter for the swimming pool and, really, the home improvement industry. Armed with the right tools, information and strategies surrounding financing and a customer’s ability to pay can not only make sales easier, but it can make sales more profitable.