Where do our customers get the money for our products? Mostly through home equity. Even when it’s not the source of the actual funds, that sense of wealth we get from the margin between what we owe and what we’re pretty sure we can get for our house is what makes us comfortable with a big recreational water purchase, whether it’s a pool or a spa.
So I’m constantly looking at housing prices, housing starts and mortgage rates for a clue as to where the pool and spa industry is headed.
This past year offered good and bad news. As a general statement, housing prices nationally recovered some lost ground, but that’s a broad pronouncement encompassing areas that roared past 2007 levels and others where prices hardly moved at all or even fell. Often, these wildly disparate recovery zones were packed side-by-side in the same metropolis. In short, the housing recovery has been uneven, and based on the three traditional drivers of home sales (they all start with an “L”).
Still, if left alone to heal, home valuations should continue to recoup their losses (and help us with pool and spa sales), perhaps even building on 2007’s highs. The big worry now is rising interest rates. This morning when I checked the Bank of America website, 30-year loans were offered at 4.5 percent.
That’s up from 3.5 percent in the spring of 2013, and potential buyers seemed to notice the bump. Sales of existing single-family homes slipped a little bit every month from July to the end of 2013, as did their median price, according to the National Association of Realtors. They were weighed down by a surge in borrowing costs.
That trade group’s chief economist, Lawrence Yun, expects the 30-year rate to hit 5.5 percent by the end of 2014. My hope is the effect on our industry will be more than offset by better employment numbers and all the consequences of an expanding economy.
