So, in Baton Rouge’s largest subdivision, Shenandoah Estates, how much is a swimming pool worth?
Or, how much extra value does a pool add?
My late and long-time friend and REALTOR, Pat Guttery, said a pool is an investment in family fun, not necessarily an a monetary investment where homeowners should expect a decent return on cost because pools are not necessarily investments.
Shenandoah Estates is so large with perhaps 2800 homes, Google Maps labels it a city or town and provides a large enough sample of sales to derive interesting data on home features. When describing “pool”, I’m talking about inground liner pools as there would be few expensive gunite pools within Shenandoah Estates. One important aspect of home appraisals locals need to understand is Appraisers don’t “give value” to a pool or other extras. Appraisers research sales, try to interpret what buyers paid for extras and then apply the adjustment.
Shenandoah Estates home sales analyzed since 06/01/2016 resulted in 129 total sales where 111 sales did not have pools, 18 or 14 percent had pools. When only 14 percent of homes had inground pools, the desire for an inground pool is not necessarily that strong.
Performing a simple search revealed:
111 sales with no pool had median sales prices of $215,000 and $106 per sq ft
18 sales with pools had median sales prices of $237,000 and $109/sf.
The result is either $22,000 more or only $3 more per sq ft.
Using Pivot Tables in Google Docs to illustrate this, see chart below.
It’s important to remember, we’re dealing with a wide sales price range from $142,000 to $360,000.
If choosing $3/sf extra, then a median home size sold of 2108sf x $3 = an extra $6,300. $6300 sounds too low and $22,000 is extremely high for these older homes in maturity life cycle (41-50 years old). However, the Allocation Method of 129 sales shows $7,500 value. I arrived at $8,000 to $10,000, some $12,000 to $14,000 less than Pivot Tables.
Of course, the data was SKEWED as larger more expensive homes had IG Pools….but so did some of the lower priced homes.
Out of 129 sales, sales with IG Pools sold at the top range of sales prices. And, a pool could add more than just $8,000 to $10,000, especially if the home is in the $360,000 range whereas a home in the $150,000 would have less pool value.
A gunite pool could support more value and this would require a more in-depth study. It would depend on how extensive the pool, quality, does it have an adjoining spa, condition of pool, etc.. The answer is, it depends. Local Appraiser Eric Hartzog concurs and would apply more for higher quality gunite pools.
My point it: Appraisers don’t just throw out numbers or apply adjustments off their hip. Appraisers research buyer reactions within sales data to arrive at supportable adjustments.
A 1,500sf $142,000 to $160,000 Shenandoah Estates home with an inground liner pool, which is perhaps an over-improvement, will probably result in a lower pool value versus a 2,800sf $300,000 Shenandoah home with inground pool.
In any event, inground pools will generally add about 25% to 33% of cost and over time, pools lose value.
CAUTIONS WHEN USING EXCEL PIVOT TABLES TO SUPPORT ADJUSTMENTS OR BUYER REACTIONS TO FEATURES
Based on the $22,000 result in Pivot Tables, my advice when using Pivot Tables is to also back up the results with common sense, regression and/or allocation.
Some observations of inground pools I’ve observed over 25 years of appraising homes:
Not ALL buyers want a pool or to have to maintain one.
In older subdivisions, like Broadmoor 70815, where the neighborhood life cycle is at maturity or beyond, some homeowners fill in pools.
Support for a living area size adjustment appears to be in the $55/sf range and Extraction Method supports $57/sf.
Source: 6/1/2016 to 2/13/2018 GBRAR REALTORS / MLS Data