As the economy in parts of California and Arizona shows signs of softening, some builders question if 2006 pool sales will be as robust as years past.
In Sacramento, Calif., for instance, housing starts are down 40 percent in the first half of 2006. That concerns builders such as Paul Porter.
“Our business is not down much, but that’s because we’re capturing more market share,” said Porter, CEO of Premier Pools & Spas Inc., a Pool & Spa News Top Builder in Rancho Cordova, Calif. “The pool industry in Sacramento is seeing leads down in excess of 40 percent. It’s the worst I’ve seen in years.”
Truth be told, the softening seemed to have begun in the fourth quarter of 2005 and has continued into the current swim season, builders report. That is certainly the case in Phoenix, the nation’s leading pool-building market for much of the past five years.
“In November of last year, professional investors in Phoenix dumped their real estate, and the standing housing inventory went from about 3,500 homes for sale to 35,000 in a 30-day period,” said Rex Richard, president of Build Your Own Pool Inc., a Pool & Spa News Top Builder in Mesa, Ariz. “The projected increase in dumping over a seven-month period is 148 percent. It’s the largest increase in inventory, and the largest slowdown, in the country.”
That has translated into less-than-stellar pool sales for the area. As of June 30, 2006, the number of new pool permits dropped in that vast market, falling 7 percent from the same period in 2005.
“Leads this year are down; the overall market in Phoenix is down,” Richard continued. “The last few years, Phoenix was one of the fastest-growing housing markets in the nation. It’s in a little hurt right now. I think it’s going to clear up, but the pool industry is going to suffer this year.”
The situation doesn’t look as grim for other areas of the Southwest, however. Certain pockets are experiencing better-than-average growth. Riverside County, Calif., is up nearly 150 percent in permits pulled so far this year. New permits in Tucson, Ariz., have more than quadrupled since the same period last year. “Tucson has got good appreciation. They also didn’t have the investor influx, so they have a fairly stable market,” Richard said.
Despite this, builders have to cope with the loss of business in some of the industry’s larger markets. Many are expanding into new regions. Porter acquired a company in Arizona earlier this year and put effort into growing his California offices in Modesto and Lodi, reaching out beyond his Sacramento base.
“We’re well-positioned to handle a soft economy. It’s a tough market out there, but we’re expanding,” he said.
Richard is looking into expanding beyond Arizona’s borders, too. He’s eyeing Texas strongholds such as Austin and San Antonio. “We took a look at housing growth markets. Our business expansion model follows housing growth,” he said.
States such as Texas and Nevada report similar ups and downs. In Las Vegas, some home builders saw housing development drop by as much as 50 percent, according to manufacturers. “Texas has been generally down overall for the last few years, but Houston is doing some interesting things because they had the influx of all the Katrina victims,” said R’nelle Lazlo, vice president of national marketing at Blue Haven Pools & Spas.
The Pool & Spa News Top Builder, which operates nationwide from its San Diego base, believes that despite a softening market in certain regions, growth is still possible. Blue Haven is looking at expansion opportunities in the Midwest and Northeast.
“It is much softer this year,” Lazlo said, “but I absolutely don’t think it’s going to be terrible.”
