Add A Pool, Lower Your Home’s Value

July 14, 2007

Adding a pool to a property in Palo Alto or Menlo Park, CA can actually decrease the value of your homeA recent thread over at Trulia Voices* pondered the question of the ROI of adding a pool to a property.  The answer will almost certainly vary depending on geography and price point, but here in the Menlo Park / Palo Alto / Los Altos area and surroundings, a pool is usually a negative ROI investment.

Easily 70% of my buy-side clients, and 90% of my buy-side clients with kids, are very clear that they want a home without a pool.  There appear to be several reasons:

  1. Safety:  Parents in this area tend to be hyper-protective of their kids, and even with an elaborate fence around the pool, parents just don’t feel comfortable.
  2. Cost:  It costs easily $200/month or more to maintain a pool if you consider all the expenses, including putting aside a reserve each month to cover large periodic expenses.  Most home buyers, especially first-timers, are stretched to the limit financially simply with the purchase of the home, and the last thing they want is another expense, especially a non-tax-deductible one.
  3. Space:  With the common 5000-6000 sq foot lots around here, a pool simply eats up too much of the yard.  Los Altos tends to have much larger lots, so it’s not as much of an issue there.
  4. Weather:  Silicon Valley’s mid-Peninsula tends to have relatively mild summers.  Sure, we get 90 degree days, but we certainly don’t get many 100+ degree days as do our friends only 20-30 miles further inland.  And while our winters are also relatively mild, there are easily 6 months per year when an unheated outdoor pool is simply too cold to enjoy.

In our still-hot market, the key to maximizing sales price is to attract the largest number of buyers, and pools quite simply scare away a large number of buyers.

Having said that, if you’re considering building a pool in this area, will be living in your home for a number of years, and will enjoy having a pool, then by all means go ahead and do so.  Just don’t build a pool as a way of necessarily increasing its value.

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* Full disclosure:  I and my friend and colleague Pat Kitano of Transparentre.com have launched a consulting company, and Trulia is one of our clients.

Picture courtesy of Microsoft Clip Art gallery.

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Written by Kevin · Filed Under * Type of Content, Consumer, Industry, Menlo Park, Palo Alto, Real estate, Trulia 

Comments

6 Responses to “Add A Pool, Lower Your Home’s Value”

  1. The Feed Bag on July 14th, 2007 2:55 pm

    [...] Kevin Boer explains why the Emperor has no clothes in Add a Pool, Lower Your Home’s Value  Required Reading. [...]

  2. Lani on July 14th, 2007 3:48 pm

    I would add that the comps’ pool statuses should be looked at. If I was the only one in the neighborhood without a pool, wouldn’t you say it could be a good idea to install one for the resale value?

    Great article- most people think that if you add a shiny bell or whistle you are guaranteed a return on it when in SOME cases it could slow the sale of a house!

  3. Jay Thompson on July 14th, 2007 5:24 pm

    Geography certainly is a factor, but even in my area (Phoenix) where private pools abound, a pool is pretty much a net zero addition. Personally I couldn’t tolerate Phoenix summers without one, but even here many people don’t want one in their back yard.

  4. The Feed Bad - Refried and Served Again on July 15th, 2007 6:14 am

    [...] Kevin Boer explains why the Emperor has no clothes in Add a Pool, Lower Your Home’s Value  [...]

  5. Rob Beland on July 15th, 2007 5:08 pm

    Kevin you bring up a good point and one that unfortunately sellers don’t typically accept or want to hear when they have the high end pool in their backyard with the waterfall and then go to sell their home.

    The fact is a pool is something that if you want one, you can find a house with a pool or you can find a house with a big yard and install one but if you don’t want a pool, you would never consider buying a house just to fill in the pool.

    I did a CMA for a potential client a while back and they had a nice pool with a cabana and the whole nine yards. I did my research and determined that the pool brought no value to the property at all. The seller basically told me I was an idiot and went with another broker. Needless to say this other broker priced the house about $20K higher than what I had valued the house and last time I checked; the house was still on the market and at a reduced price almost to where I would have priced it.

    If you want a pool, my advice is to install it and spend all the money you want on it because it’s what you want. Enjoy it while you have it and get all your money’s worth and the return on your investment will be the smile on your kid’s faces and the great times you have with family and friends. When you go to sell your house, forget about what the pool cost you because you’ll never get the money back…

  6. Chris Iverson on July 16th, 2007 8:39 am

    We should all keep in mind that pools cost about $25K to fill in. This is only a few percent of the cost of the house here in Silicon Valley, so a pool shouldn’t keep a home off of a Buyer’s shopping list if the home meets their other criteria.
    Plus, it may be an opportunity for “a deal” since many other potential buyers will be turned off by the pool.
    As a bonus, it’s a great excuse to put in some new landscaping!

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