Does a swimming pool add value to your home?

A swimming pool can provide endless hours of exercise, fun and refreshment to your life. But does it add value to your home?

Pools are certainly popular, and recent research suggests that adding an in-ground pool can boost your home’s worth by around 7 percent. But the cost of pool installation and ongoing maintenance expenses may outweigh the potential value increase.

In other words, it’s complicated — more so than other exterior home-improvement projects. If you’re thinking about installing a pool, let’s look at the pros, cons and factors influencing the issue.

When does a pool increase the value of your home?

First off, let’s define our terms. When we say swimming pool, we mean an in-ground pool — the permanent kind that requires a large hole to be dug in your yard, not the above-ground type that resembles a big tank. “In many markets, in-ground pools are preferred and above-ground pools do not increase the value of a home,” Melissa Zavala, a broker with Broadpoint Properties in San Diego, says.

Many experts say having a well-kept pool can boost your resale value. “If you search for real estate, you will most certainly see a higher cost for homes with ready-made backyards that include pools,” says Ralph DiBugnara, founder of New York City-headquartered Home Qualified, a digital resource for homebuyers, sellers and Realtors.

Here are some instances where a pool might increase your home’s value or make it more marketable when you sell.

• Pools are the norm for your neighborhood
• Climate allows for the pool to be used in all seasons
• Pool blends nicely with your yard, but still leaves space
• Targeted homebuyers are affluent, either childless or with older kids (not starter-home types)

Pools are particularly coveted in regions where they can be used year-round. “If you live in a warmer climate like Florida or Texas, it can increase your property value and make it more likely to sell your home,” notes Tom Casey, vice president of sales at Anthony & Sylvan Pools in Doylestown, Penn. “Coastal or resort communities with vacation home rentals allow owners with swimming pool properties to command higher rental rates than nearby properties without them. And higher-end neighborhoods are also more amenable to pools that increase a home’s resale value.”

In fact, if most of your neighbors have pools but you don’t, it could decrease your home’s worth on the market.  “But if you live in a typical community where some houses have pools but most do not, having a pool built will probably not have any impact on the value of your home,” cautions Robert Taylor, owner of The Real Estate Solutions Guy, a Sacramento, Calif. home-buying and flipping company.

How much value does a pool add to a home?

Adding an in-ground pool can increase your home’s value as much 7 percent — that’s the number that’s often cited by residential real estate authorities like HouseLogic, Today’s Homeowner and HomeAdvisor. But the actual amount of value it brings can vary by market.

For instance, in a warm-weather market like Los Angeles, homes with pools sell for about $95,000 more than comparable ones without, per a recent report by real estate brokerage Berkshire Hathaway HomeServices California Properties. Given that the median LA home price is around $909,000, that’s a 10 percent increase. But in other parts of the state, the report notes, the pool offers less of a bump — anywhere from $20,000 to $45,000 more — which worlds out to a more modest 3 to 7 percent increase, even with the lower home prices in those areas.

As is true of virtually any facet of real estate, location, location, location makes a big difference. “In towns with a below-average amount of pools, a homeowner with a pool could see a large increase in value because of their unique selling proposition,” DiBugnara explains. “Also, neighborhoods that are heavily populated with school-age children will likely see the greatest increase in the need for pools.”

Be forewarned, however: The mere presence of a pool isn’t enough to raise your likelihood of higher resale value. Its condition counts, too. “A poorly maintained pool in need of repair or maintenance could drag your home value down and deter buyers,” cautions DiBugnara.

Other considerations for adding a pool to a home

Understanding what sort of value a pool can add is important, because adding and maintaining a pool is not an inexpensive proposition. Ongoing pool maintenance, repair and insurance costs can add up, and these costs could be off-putting to some prospective buyers. So they’re also important factors to consider if and when you plan to sell your home down the line.

Pool installation costs

According to HomeAdvisor, the average cost to build an in-ground pool, including labor and materials, ranges from $45,000 to $85,000 for a fiberglass pool and $55,000 to $100,000 for one made from gunite or concrete.

Pool maintenance

Pool upkeep and repair isn’t cheap, either. HomeAdvisor reports that the average cost for basic pool maintenance annually is $500 to $4,000. Throw in utility costs (like water and, if you use a pool heater, fuel) and the combined yearly total can be up to $10,000.

Upkeep will require buying and adding chemicals to maintain proper pH levels and prevent algae growth, having the pool vacuumed and cleaned regularly during swimming season, and purchasing accessories like telescoping poles and attachable brushes and leaf skimmers.

If you plan to stay in your home a while, you’ll also need to consider bigger repair or upgrade projects. For instance, concrete pools may need to be resurfaced eventually, which can cost between $2,250-$15,000, according to HomeAdvisor.

These ongoing costs have traditionally been one of the things that have dampened pools as a selling point. However, “homeowners can significantly lower their costs by doing some of the maintenance themselves instead of hiring a pool service,” suggests Casey.

Some recent tech innovations have helped, too. For example, “your costs can be lower if you invest in a saltwater pool rather than a chlorine pool,” Casey says.

Homeowners insurance increases

Another cost to factor in is the price to insure your home — your homeowners insurance premiums will likely be higher when you have a pool. Not only will your homeowners insurance increase, but if you sell your home in the future, your buyers will likely pay higher insurance rates as well.

Lev Barinskiy, co-founder and CEO of SmartFinancial Insurance in Costa Mesa, Calif., says most policies usually cover up to 10 percent of the cost to replace external structures or fixtures like a pool, and also at least partially cover most swimming pool accidents.

“But even though the liability portion of your homeowners insurance covers pool accidents if a guest is injured or dies, you can still be legally held accountable if you were not providing a safe swimming environment when you allowed guests to use your pool,” Barinskiy says.

“If your insurer considers the pool an external structure, you need to list it as one on your policy,” adds Barinskiy, noting that most policies (and local laws) require that you have a fence installed around the pool and eliminate any diving board.

It may also be smart to pay for a personal umbrella policy that gives liability protection beyond the limits of your homeowners policy.

How to finance a pool

Eager to build a pool? Chances are you may need to borrow money for that purchase. You have several pool financing options:

Cash-out refinance

A cash-out refinance involves ​​tapping your home’s equity and taking extra cash out at closing that you can devote to the pool. It could make sense to do a cash-out refinance if you can access a lower interest rate, though it may not be the best choice in a high-rate environment.

Home equity loan

When you take out a home equity loan, you borrow against your ownership stake. Generally, you’ll need 15-20 percent equity in your home to be eligible for this form of lump-sum financing, similar to a second mortgage.

Home equity line of credit (HELOC)

A home equity line of credit (HELOC) offers a sum you can draw from when needed, up to a pre-approved limit. You’re charged interest only on what you actually borrow, at a variable interest rate. Similar to a home equity loan, your home is used as collateral for a HELOC.

Personal loan

A personal loan is an unsecured loan that doesn’t require collateral or tap into your home’s equity, but may come with a higher interest rate than a home equity loan or HELOC.

Credit card

Credit cards can be a viable alternative if you don’t qualify for any of the above — provided you have or can get a big enough credit limit, of course. Ideally, you would be approved for a zero- to low-rate card that you can pay off before the introductory rate expires and higher rates kick in. Or it’s one of those cards that rewards you for a big spend in the first few months.

Final word on pools adding value to a home

Know what you’re getting into before committing to a swimming pool.  Of course, it can provide a lot of enjoyment, but as an investment, it’s an iffy proposition. Maintenance, repairs and insurance coverage can be costly. There’s no guarantee that your home will sell for more down the road because of the pool or that it’ll even recoup the cost to install it.

You also should give thought to how you’ll need to prep and market your swimming pool when it’s time to sell. “The pool will need to be repaired and cleaned, and you’ll want to nicely stage your outdoor retreat,” recommends Casey. Also, “you need to cater to the right buyer and employ good marketing tactics. Higher-end house-hunters, as well as families with kids or teens, are the most likely buyer candidates, he notes.

Finally, if you got it, flaunt it. “If you’re in a colder climate, you should wait to sell when the weather is nice and your pool will be open,” Casey says. If you’re selling in the spring, perhaps open it early. The sun sparkling on a newly unveiled pool offers a lot of curb appeal.