Summer heat drives pool industry’s exceptional year

by jason_cramp | March 30, 2017 9:00 am

By Jason Cramp

[1]

After a number of ebb and flow seasons, the Canadian pool industry had a breakthrough year in 2016. In fact, the total number of swimming pool building permits registered last year was the third most in the last five decades. In terms of historical data, one would need to look to 1988, an anomaly maybe, but 19,695 pools were installed. Prior to this, the bar was set in 1979 when 13,200 permits were registered. Similar to 2012, the last time there was a spike in pool permit registrations, economic uncertainties are still a concern. However, thanks to low interest rates, “Canadian consumers have been a steady source of economic growth, particularly through the housing sector[2].”

Despite the variability of the housing market, which saw real estate prices soar in 2016, consumers have shown no fear with respect to their spending habits. In fact, according to the Bank of Canada, household spending on big-ticket items in 2016 was strong. Combine this with one of the hottest summers on record—especially in Eastern Canada, which is arguably the industry’s largest market—pool installations were all the rage.

A sweltering summer

The weather experienced last year can easily be described by one word: hot. According to the Canadian Meteorological and Oceanographic Society (CMOS-SCMO), it was the fourth warmest in 70 years of record-keeping. British Columbia experienced its warmest year ever, while for the Prairies it was the second warmest. Those in Ontario and Quebec were not spared, as these regions endured the third warmest year ever.

What did this mean for the pool industry? Well, the installation season started on a good note as 161 more permits were issued in the first quarter alone, resulting in a 23.5 per cent increase over 2015. This trend continued as permit registrations increased in the second, third, and fourth quarters as well, representing an overall increase of 22 per cent, from 10,698 permits in 2015 to 13,054 in 2016. Of note, the number of permits issued between the second and third quarters in 2016 surpassed the total number of those issued in all of 2015. Permit registrations in census metropolitan areas (CMAs) increased by 25 per cent in 2016, representing a total of 1894 more registered permits than the year prior.

“For us, the first three quarters of 2016 were fairly typical in terms of custom concrete pool sales, exhibiting neither a major sales boom nor drought at any point. However, this all changed in the last quarter,” says BonaVista Pools’ vice-president, Peter Brown. “The number of new clients and established custom-home builders that started calling in late fall for pools, hot tubs, and water features increased exponentially. In speaking with other industry colleagues, they seemed to have experienced the same situation.”

To put things into perspective, the economy certainly plays a factor in the number of pools installed in any given year; however, the weather is just as significant. Consider this, an average of 9595 permits were issued in the ’90s, 9045 during the 2000s, and another 11,247 permits over the last seven years. In each of these decades a recession has occurred. One constant, however, has been warmer temperatures. In fact, 2016 was the 38^th consecutive year with above-normal temperatures and the warmest year since observations began 135 years ago[3].

Therefore, in addition to disposable income, the weather plays a large role in how a family decides to spend their discretionary dollars and, for the most part, in 2016, many were interested in creating their own backyard destination.

When breaking up last season into three categories: start of year/early spring (January to April), mid-spring/late summer (May to August), and fall/winter (September to December), pool permit registrations were up considerably in each. The only month showing fewer permit registrations last year was December, which was down 23 per cent. That said, between March and August—the industry’s prime season—10,592 permits were issued, representing an 18 per cent increase. As the construction period has seemingly become longer for many builders, with many projects continuing late into the year, September, October, and even November have become a second season. Forty per cent more permits were issued during this period in 2016 than the year prior.

Regional activity

A simple comparison of the total number of pool permit registrations from Statistics Canada shows a dramatic increase year-over-year. However, when looking at the regional break down of these statistics one can clearly see the industry in Eastern Canada was booming, while Western Canada struggled to some degree. It also highlights the teeter-totter effect which occurred over the course of the 2015 and 2016 seasons.

For instance, whereas six out of 10 CMAs in Manitoba, Saskatchewan, Alberta, and British Columbia reported increases in pool permit registrations in 2015, only two showed growth in 2016. On the other hand, nine CMAs in Ontario, Quebec, New Brunswick, Nova Scotia, Prince Edward Island, and Newfoundland reported increases in 2015, while 21 experienced growth last season.

Every CMA in the Prairies reported losses; however, areas such as Hamilton, Guelph, and Quebec had a stellar year. (See the chart ‘Building Permits Issued for Swimming Pools in Major Urban Centres (2012-2016) below for details on specific municipalities.)

Building Permits Issued For Swimming Pools in Census Metropolitan Areas (2012-2016)
Region	2012	2013	2014	2015	2016
Canada	12517	12052	10154	10698	13054
Abbotsford	13	14	10	6	10
Barrie	280	211	170	163	248
Brantford	70	77	31	59	30
Calgary	48	37	36	36	31
Chicoutimi-Jonquiere	—	—	—	—	—
Edmonton	64	25	31	38	31
Guelph	64	82	59	42	245
Halifax	35	32	38	29	36
Hamilton	481	436	283	187	414
Kelowna	118	150	140	243	180
Kingston	51	62	42	36	51
Kitchener/ Cambridge/ Waterloo	250	171	146	86	127
London	223	205	153	144	256
Moncton	29	25	20	13	25
Montreal	4783	4546	3763	4175	4730
Oshawa	—	—	—	—	—
Ottawa/Hull/ Gatineau	165	186	15	170	367
Peterborough	81	66	46	46	52
Quebec	396	542	447	463	598
Regina	6	9	12	11	5
Saguenay	48	45	84	67	56
St. Catharines/ Niagara	209	201	192	179	221
Saint John	10	22	17	15	18
Saint John’s	12	21	22	23	97
Saskatoon	15	10	10	11	9
Sherbrooke	435	406	397	386	481
Sudbury	192	150	107	89	159
Thunder Bay	—	—	—	—	—
Toronto	693	458	228	279	311
Trois-Rivières	128	147	117	134	181
Vancouver	155	129	161	171	226
Victoria	13	10	6	13	9
Windsor	100	96	105	106	134
Winnipeg	178	125	106	125	101
Total Major Urban Area Permits	9345	8696	6994	7545	9439
The installation of residential swimming pools does not require a building permit in every municipality. Some areas issue permits for inground pools only. These figures are therefore conservative. Statistics Canada combined the Ottawa/Hull/Gatineau statistic. Source: Statistics Canada

Atlantic

Winter was not kind to Atlantic Canada as the region was pummeled with snow; those hit hardest were Saint John, Halifax, and Sydney. This was followed by a horrible April that saw torrential rain in Nova Scotia and New Brunswick and heavy snow in St. John’s, Nfld.[4] As a result, similar to the 2015 season, the first three months of the year was a write-off, as only six permits were issued during this period compared to five the year prior.

Strangely enough, despite the poor start to spring, this region had a resurgence of sorts between April and June with a 207 per cent increase in pool permit registrations. Ninety-one permits were registered in June in St. John’s alone despite 830 mm (33 in.) of snow that fell in the region just two months prior. It should be noted, this was the only CMA in Atlantic Canada to record an increase in permits in 2015.

Further, while other CMAs in the region such as Moncton (92 per cent) and Halifax (24 per cent) saw permit increases, Prince Edward Island continued its two-year downward spiral with a 40 per cent decrease.

Although more severe weather hit this region sporadically through the summer with winter returning come November, pool permit registrations held their own for the remainder of the year (July through December) and were up 144 per cent, respectively. After a 17.4 per cent year-over-year decrease in 2015, pool permits, were up in Atlantic Canada by 168 per cent in 2016. This region represents 1.9 per cent of the total number of building permits issued in Canadian CMAs, which is an increase of 0.7 per cent in comparison to 2015.

Top five major urban centres with increased building permit registration in 2016
Region	2015	2016	(+) Change
Montreal	4175	4730	555
Hamilton	187	414	227
Guelph	42	245	203
Ottawa/Hull/Gatineau	170	367	197
Quebec	463	598	135

Quebec

Winter is relentless in La Belle Province as once again it was blasted with rain, snow, and ice storms early in the year, resulting in power outages and damage to infrastructure. For the third consecutive year, project starts were delayed and homeowners moved the thought of a pool installation to the backburner. As a result, 2016 pool permit trends between January and March were registered roughly at the same pace as the year prior, increasing slightly by 2.5 per cent.

The fear of a delayed spring was put to rest thanks to a super El Niño weather system, however. According to CMOS-SCMO, despite a frigid and snowy April, along with a cold snap in mid-May, Quebecers were surprisingly welcomed with spring/summer weather by the first long weekend of the year. The prompt turnaround in the weather was also embraced by pool builders, especially after the province recovered in 2015 after a slow 2014 season. That said, between April and June pool permits increased by 11.3 per cent and by another 22 per cent between July and September. The final three months of the year were not disappointing either, as an additional 577 permits were registered.

Examining the statistics further, one will find the province truly has rebounded from the dismal numbers that were recorded only two years ago. Whereas four of the province’s CMAs recorded permit increases in 2015, five had positive growth last year. Leading the way was Ottawa-Gatineau with a 118 per cent increase in permit registrations, while Québec, Sherbrooke, and Trois-Rivières all had growth larger than 20 per cent. Montréal had a 13.3 per cent increase in permits and represents 74 per cent of all permit registrations in the province. In fact, this CMA retained its position as the top producer of pool permits in the country for the second year in a row.

Although Saguenay reported permit increases in 2014, this CMA unfortunately experienced its second consecutive season of decline. After pool permits fell in this region by 20 per cent in 2015, the 2016 season was much the same with a further decrease of 16.4 per cent. Overall, the province saw 1014 more pool permits registered in 2016.

Quebec represents 67.8 per cent of the total number of pool building permits issued in the country’s CMAs, which is a decrease of 3.5 per cent in comparison to 2015.

Ontario

It would seem the gradual change in seasons is a thing of the past and weather extremes are now the norm. In February, similar to Quebec, this region saw cold artic air bring extreme wind chills (between -30 to -50 C [-22 to -58 F])—one day the temperature dropped to -26.3 (-15.3 F), the lowest at any time in 22 years. In fact, areas such as Welland, Hamilton, Oshawa, and Kitchener all experienced the coldest Valentine’s Day on record. March was no different as 150 to 300 mm (6 to 12 in.) of snow fell across most of southern Ontario, followed by an ice storm which disrupted power for many in this region over the Easter weekend[5].

In what has become the norm, builders were kept on standby as to when they could start installing pools for their customers. However, backyard aficionados in Ontario showed they have had enough and were not going to let the weather dictate their desire for a pool. Flashback, permit registrations between January and April fell 23 per cent in 2013, an additional 30.5 per cent in 2014, and another 12 per cent in 2015. However, the number of pool permit registrations during this same period in 2016 helped to erase this three-year deficit. In fact, 146 more permits were registered in 2016 than the previous year representing a 60 per cent increase, respectively.

While the downward trend continued throughout each of the 2013, 2014, and 2015 seasons, this was definitely not the case last year. That said, one would be safe to say the weather played a huge role in the revival of the backyard escape as once the Victoria Day weekend arrived, so too did summer.

According to CMOS-SCMO, between May and November it was consistently hot, humid, and dry. For instance, Toronto typically has 14 days where temperatures reach above 30 C (86 F). Last year there were 39, more than the previous three summers combined. Heat alerts were also being issue at record-pace.

Taking this into consideration, 1575 pool permits (582 more than the 2015 season) were registered between May and September, representing a 59 per cent increase. Another trend that can be attributed to Mother Nature is the longevity of the pool installation season. The fourth quarter (October, November, and December) was the lone bright spot for this region in 2015 and, in 2016, it continued to get better, as an additional 294 permits were recorded, representing a 58 per cent increase, respectively.

Of 15 reporting CMAs in the province, two showed no change (Oshawa and Thunder Bay), while permit registrations increased in 12 and decreased in one.

Although Toronto, the largest city in this region, had an 11.5 per cent increase in pool permit registrations year-over-year, it was bumped from the list of top five CMAs in terms of increased building permit registrations thanks to the likes of Guelph (483 per cent increase) and Hamilton (121 per cent increase).

Ontario represents 23.9 per cent of the total number of building permits issued in Canadian CMAs, representing an increase of five per cent.

Top five major urban centres with decreased building permit registration in 2016
Region	2015	2016	(-) Change
Kelowna	243	180	63
Brantford	59	30	29
Winnipeg	125	101	24
Saguenay	67	56	11
Edmonton	38	31	7

Prairies

While the industry in Eastern Canada benefitted from the weather, this was certainly not the case for the Prairies (Manitoba, Saskatchewan, and Alberta). This region was battered by multiple weather extremes from the driest, warmest winter/spring on record to supercell storms, high winds, hail, flooding, and tornadoes. The former, according to CMOS-SCMO, were the prime conditions for the Ft. McMurray fire that started on May 1 and was not declared under control until July. Thousands of homes were destroyed as the fire spread across northern Alberta and into Saskatchewan, resulting in the most expensive disaster in Canadian history.

Needless to say, these accounts, along with the uncertainties of the region’s resource-based economy, took their toll on the pool industry in 2016. Despite many destructive storms during the 2015 season when only one of five CMAs recorded fewer pool permit registrations, all six were down in 2016.

When looking at the individual CMAs, Winnipeg was hit hardest as pool permit registrations fell by 19 per cent after a near 60 per cent increase in 2015. This CMA was also fifth on the list of top five major urban centres with increased building permits in 2015 and now sits third on the list of total number of decreased permits. Pool installations were down 36 per cent in Saskatchewan and 16 per cent in Alberta.

On a positive note, pool permits were up last year by 31.5 per cent during October, November, and December. Alberta led the way with a 41.6 per cent upturn, which may be a good sign heading into the current season.

This region, one of the most stable markets in terms of fluctuation in 2015, was down by 20 per cent last season. Overall, the Prairies makes up 1.9 per cent of the total number of building permits issued in Canadian CMAs, representing a 1.1 per cent decrease year-over-year.

British Columbia

It goes without saying, any extreme weather and/or economic downturn experienced in the Prairies would also affect this British Columbia. For instance, parts of this province experienced above-normal winter and spring temperatures and in May, a large number of the province’s groundwater wells were below seasonal levels[6]. For the second year in a row, unseasonably dry and hot weather saw various regions in the province enforce level-four drought conditions which prevented homeowners from filling their pools.

Although pool permits increased by almost 50 per cent in 2015 despite many of the same conditions, the market showed it could not sustain this growth in 2016. Although last year’s pool permit registrations between January and June kept pace with the previous season, the bottom fell out during the second half of the season, dropping 63 per cent year-over-year.

Despite the calamities suffered in this region, Vancouver grew by 32 per cent after a slight increase in 2015. In fact, this CMA held strong throughout the year, with permit increases in three of four quarters.

The only other CMA in this province to record an increase in permits was Abbotsford-Mission. Unfortunately, after the market turned around in Kelowna in 2015 by 73.5 per cent (243 permits), pool installations in this CMA fell by 26 per cent last year. As a result, Kelowna moved from first on the list of top five major urban centres with increased building permits in 2015 to first on the list of total number of decreased permits in 2016. However, this CMA is still performing 29 per cent better than its average between 2008 and 2014. Overall, the province experienced a 1.8 per cent decrease in pool installations in 2016.

British Columbia represents 4.5 per cent of the total number of building permits issued in the country’s CMAs, which is a decrease of 1.2 per cent over 2015.

An optimistic outlook

In 2016, growth in the industry, as measured by the permits for residential pools, was significant—not just in a year-over-year comparison, but also when looking back at the past 25 years. There is always concern about discretionary spending by homeowners, whether the economy is ‘booming’ or ‘sagging.’ Those who have the money and have planned to install a pool will get one… it is the weather that will determine their decision as to when it will happen.

“The outlook for 2017 is fundamentally optimistic,” says the Pool & Hot Tub Council of Canada’s (PHTCC’s) executive director, Robert Wood. “During the latter half of 2016, many builders reported success in lining up new orders for the coming spring.”

Another positive sign is the country’s consumer confidence index, which rose nine points in February 110.6—the largest increase since March 2015[8], and the index’s highest level in more than seven years.

“Although we saw some fluctuation with the Canadian dollar against U.S. currency early in 2016, the Canadian dollar continued to stabilize,” says Teresa Ellul, the marketing manager for Hayward Pool Products Canada. “There was an increase in inground pool construction versus 2015 and the mild weather paved the way for an early start to the season, which continued strong into the fall. The 2017 season is looking favourable as well. With the stability of the Canadian dollar and mild weather we are again experiencing, there is anticipation of another early start for pool construction and a strong season overall.”

This report and all of the figures contained herein are copyright to Kenilworth Media Inc. No use may be made of this or any part of the data or reproduction of charts or graphs without the express written permission of Kenilworth Media Inc. © 2017

Source URL: https://www.poolspamarketing.com/trade/summer-heat-drives-pool-industrys-exceptional-year/

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