The Texas pool and spa market — once an area of relative strength — has seen new construction drop or even evaporate since the financial crisis began in late summer.
“All of Texas is softening up,” said David Cook, group vice president at distributor PoolCorp, based in Covington, La. “I think Texas is extremely cautious now, with the election, the economy and the things that we’re all getting pounded into our heads.
“Now that oil prices have started falling, you can see a little bit of pull-back.”
Though some areas of the Lone Star State had seen little of the slowdown experienced across most of the nation, the game may have changed.
“Our lead flow is pretty good, but a lot of people are not moving forward,” said Sandy Vollentine, president of Ocean Quest Pools, a Pool & Spa News Top Builder in Austin. “They’re not committing to anything.”
Neither new housing development nor financing has been cut as drastically as in the rest of the country. But banks are tightening their lending qualifications enough to edge certain customers out of the market. Homeowners must have more equity and may receive lower loan-to-value ratios than before. In some markets, even upper-income families that have high credit scores won’t qualify without the equity. Many of these traditionally dependable clients are becoming rattled and have adopted a wait-and-see approach.
“In new construction, I’m really not getting calls right now,” said Tom Driscoll, president of Houston-based Cabana Pools Aquatech Inc., a builder primarily serving the high-end market. “For one client, I’d been designing and engineering a project for several months. As soon as the stock market started tumbling, he said they have the cash, but they just wanted to hold off.”
Builders also report that the flow of renovation jobs is steady, but the ticket value of each has gone down. “We’re doing tile, coping, plaster, new equipment and some new decks,” Driscoll said. “But no changing the shape of the pool or adding a huge waterfeature. Instead of spending $50,000, they’re spending $20,000 to $30,000.”
In terms of new-pool construction, market conditions vary, with the Dallas/Fort Worth metroplex slowing down.
“During the home-building rush from, say, 2002 through 2006, Dallas/Fort Worth was just at a higher rate of expansion,” Cook said. “Now people have pulled that back.”
Some firms have reported revenue drops of up to 50 percent.
While businesses aren’t closing by leaps and bounds, some are streamlining and shutting down individual branches.
Border towns also are struggling, said Paul Walter, an SCP regional manager located in San Antonio. These are populated by some of the lowest-income families in the state, and financing is rare.
Conversely, oil drilling towns in the west, such as Midland, Odessa and San Angelo, are thriving and have seen little downturn thus far.
In Houston, where a lot of refining takes place, business conditions are a little less strong, but still healthy. Bob Tomlinson, president of Houston-based consulting firm Tomlinson and Associates, has observed an 8 percent to 10 percent drop.
The Austin area isn’t linked to oil, but pool builders there also report healthy year-to-date numbers. Still, they saw an abrupt slowdown in new-pool sales after the financial crisis surfaced.
Across the state, companies are preparing to hunker down. Many are cutting costs and putting expansion plans on hold, and plan to begin traveling farther for business.