Almost everyone would love to have a swimming pool in their backyard; I know I always wanted one as a kid. A warm sunny day, eating some watermelon, relaxing under the sun, what could be better? But is a pool an investment or is it simply a luxury? Let's break it down.
According to homeadvisor.com a pool costs between $16,000 and $44,000 on average. Costs can also well exceed $44,000 the more customizable and the more features you want your pool to have. According to houselogic.com a pool can potentially add 7% to your home value but only under certain circumstances. Here are the circumstances and there are a lot!
If you live in a high end neighbourhood and most of your neighbours have pools
If you live in a warm climate
Your pool doesn't take up your entire lot. You have room for a pool, an area around the pool, gardening, etc.
Is the pool well maintained?
How old is the pool? If the pool is 15 years old don't expect to see much money back
What couples are interested in your home? Are they young families? Perhaps a pool can deter them.
There are a lot of circumstances to increase your home value by 7% and we still haven't dived into some of the expenses. Along with a pool comes a lot of expenses.
Building costs
Filtration and heating
Maintenance
Insurance costs
Let's crunch some numbers shall we. Let's be conservative and say the building costs of the pool will be $35,000. $35,000 will get you a pretty basic, low end pool.
According to homeadvisor.com you'll need between $2,000 and $8,000 allocated to heating and filtration. So let's put it at $5000.
Maintenance isn't cheap on a swimming pool. According to homeadvisor.com maintenance ranges between $500 and $4000. The more high end your pool is the more expensive the maintenance. Let's be conservative again and put maintenance at $2000.
Next up we have our insurance friends. Having a pool will add liability to your home but surprisingly enough this cost isn't too hefty. All it takes is a slight upgrade to your insurance plan. Experts recommend increasing your liability from $100,000 to $500,000 which should cost about $30.
So when we break down our numbers we have upfront costs of building, heating and filtration which we have at $40,000. Next we have annual costs of maintenance plus insurance which we have at $2030.
Let's run a hypothetical situation. Say for instance you bought your home for $500,000. You decide to install an in-ground pool almost immediately and it cost you $40,000 for the building, heating and filtration.
15 years later you want to sell your house. Let's see how much you put into your pool. So you paid $40,000 plus $2030 annually (times 15 years). In total the pool ended up costing you $70,450.
Let's throw a number out a say over the 15 years your home appreciates on average 4% per year. So 4% compounded annually over 15 years with a present value of $500,000 yields $900,471.75. 7% (the percentage that the pool can increase your home by) of $900,471.75 is $63,033. So even with a solid capital appreciation of your home you did not recoup your initial investment of $70,450 on the pool.
Let's sum it up. If you're looking to build a pool to have a good time with family and friends and you have some disposable income to do so then do so by all means. If you see a pool as an investment however and think it will add value to your home than you might want to think again. We want to save you from drowning in pain from an unworthy investment.
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