The swimming pool contracting industry is poised for significant growth, shaped by various market forces and consumer trends. This growth trajectory is expected to be driven by two primary sectors: the residential market and the commercial sector. Each offers unique opportunities and challenges that will define the landscape for swimming pool contractors in the coming years.
The Residential Market: A Hub of Opportunity
The onset of the forecast period sees high mortgage rates, but this is unlikely to dampen the enthusiasm in the residential market. Swimming pool contractors are expected to witness a surge in demand as the scenario evolves favorably. With a predicted decrease in interest rates and easing inflation, housing starts are set to rise. This upswing in new housing developments will undoubtedly benefit the swimming pool industry.
Furthermore, an increase in private spending on home improvements is anticipated. Homeowners are likely to invest more in enhancing their properties, including adding or renovating swimming pools. This trend is bolstered by rising disposable incomes, particularly among households earning over $100,000 annually. These affluent consumers are increasingly interested in leveraging favorable interest rates to invest in homes that include swimming pools, further stimulating growth in the residential sector.
Commercial Sector: A Returning Force
The commercial market is expected to make a strong comeback, presenting another avenue of growth for swimming pool contractors. Rising values in nonresidential real estate will encourage investments in swimming pools by entities such as hotels, private clubs, and sports facilities. This sector, which had previously been stymied by the low-interest rate environment and lockdown-related revenue dips, is now ready to engage in more significant expenditures.
While initial growth in swimming pool construction may be moderate due to persistently high interest rates, a projected decrease in these rates will lead to a resurgence in commercial demand. This renewed interest from commercial customers promises to bolster the overall demand for swimming pool construction.
Profit Growth: A Modest Outlook with Positive Signals
Despite these optimistic growth prospects, swimming pool contractors face the challenge of rising input costs. The price of essential materials like concrete is expected to continue climbing, influenced by the steady rise in housing starts. This could put a strain on profits in the short term.
However, the return to growth in the commercial sector offers a silver lining. Commercial projects typically yield higher profits than residential jobs, suggesting that contractors can anticipate an increase in profitability as this market rebounds. Additionally, the easing of labor shortages, a remnant of the 'great resignation', is likely to reduce wage costs, providing some relief to profit margins.
In conclusion, the swimming pool contracting industry stands at the cusp of a dynamic period. Driven by the dual engines of residential and commercial sector growth, and navigating the challenges of material costs and labor dynamics, contractors in this field can look forward to a period of robust development and moderate profit growth.