This is one of the questions I get asked a lot. Like most questions dealing with real estate values, the answer is … it depends. Certainly, no one can deny that in the Pleasanton/Dublin/San Ramon area, a sparkling pool on a hot sunny day is hard to beat. But pools can also be a detraction from a home’s value. There are many factors that go into the impact of a pool on a home’s value. Here are some to think about:

1. Lot size. In general, the smaller the lot, the more likely it is that the pool will not add any value, and may in fact detract from the value of the home. With families with small children, or who are planning on starting a family soon, pools are often a negative. Part of this stems from every parent’s concern for the safety of their kids, which is certainly a strong emotion. The other issue with smaller lots for buyers with kids is that often the pool takes up a good portion of the yard, which does not leave much room for grass, a playground, or space for kids to play sports, etc. And since buyers with children make up a sizable portion of the buyers today, if you have a small yard, a home with a pool may sell for less than a comparable home without a pool. Of course, there are always exceptions. I have seen homes with very small lots that have gorgeous tropical pools with palm trees, waterfall, and spa, and in those cases the pool definitely adds to the appeal of the home. But if the deep end of the pool is two steps from the family room slider, a pool will often detract from the value of the home.

2. Age of the pool. A gorgeous “Sunset Magazine” free form pool with a pebble tech surface, waterfall, spa, and desinger pool decking will often add value to a home. In this case, a pool can have strong emotional appeal, and it becomes a lifestyle issue. Bonus points here if the seller can hire young, healthy, tanned models to lounge by the pool when buyers are touring the home. Conversely, a older pool with fading plaster, cracked coping, and the Brady Bunch era sparkling pool decking can be a turn off to most buyers, especially if there is a rusted out diving board or a rickety old slide to compliment it.

3. Maintenance. Some buyers avoid pools because they do not want the hassle or expense of maintaining it. And again, if it is an older pool, the maintenance issue tends to be more pronounced. Equipment leaks, lights burn out, and parts break. And who hasn’t tangled with a seemingly demonic pool sweep that squirts water at you every time you turn around? Even solar panels, which save money on electricity, add to the maintenance of a pool, as there can be leaks in the panels or pipes. And the cost of running the pumps is not insignificant.

4. Placement. Where the pool is placed in the yard can have an impact on the value of the home as well. A large pool placed in the middle of a small lot can again leave little room for other amenities like patios, decks, gardens, and lawns. Conversely, a smaller pool carefully placed to maximize the left over yard area is more likely to be attractive to potential buyers.

5. Design elements. Again, modern designer pools with spas, waterfalls, and other amenities are more likely to add value than stand alone pools with dated finishes. Things like LED lighting and infinity edges can enhance the appeal of the pool, and the attractiveness to buyers. And no, above ground pools are not popular with today’s buyers.

5. Price range. The impact of a pool on a modest tract home is somewhat questionable. But on more expensive high end tract homes and luxury homes and estates, a pool is much more in demand. These homes usually have a large enough yard to facilitate a pool, with plenty of yard left over for other amenities. And buyers for these high end homes are purchasing more than just a home… they are looking for a certain lifestyle, and a swimming pool is normally associated with this. In these cases, not only do pools typically add value, but the lack of a pool can detract from the value of the home. Yes, I know, buyers can always put a pool in, but most buyers do not want to deal with the expense, the hassle, and the chaos of living with heavy construction for 4 or 5 months.

At the end of the day, whether or not a pool adds value depends on what the buyers want. But even buyers who want a pool might balk at a poorly designed or maintained pool, in which case it is likely to detract from the value of the home. And modern, well designed pools can definitely add to the appeal and the sales price of a home.

We’re all guilty of it. We read all the doom and gloom headlines about the national and California real estate markets, and automatically project it into our own market. The truth is that while overall the market is sluggish, some markets are much weaker than others. The Central Valley and the distant reaches of Contra Costa County are much worse than the Tri-Valley, Silicon Valley, and the Peninsula (when is the Peninsula market ever bad?). What are the factors that determine whether a given market is performing well, or is mired in a severe real estate recession? In my opinion, there are 5 main factors that determine the stability of a suburban real estate market.

1. Schools. Many buyers select communities based on the quality of the public schools. The better the schools, the more likely buyers will choose that community, even if they don’t have school age kids. Certainly, it is easy to see that the communities with the best schools are faring the best in the current market. Pleasanton, San Ramon, Danville, Palo Alto, Los Altos, Lafayette, Moraga, and Orinda, for example, all have top quality schools, and all are outperforming the rest of the state in terms of the health of the real estate market. Similarly, Tracy, Stockton, Antioch, and other cities with less attractive public schools are struggling right now.

2. Commute Accessibility. The closer the community is to major job centers, the better the demand is. Given a choice, buyers will generally opt for a shorter commute when all things are equal. In fact, they are typically willing to pay more for a shorter commute. Conversely, a community with a long commute will have to be less expensive to compete. It is a trade off: Time and commute expense vs. a bigger, newer house. The problem is that gas is approaching $4 per gallon, and some commuters are finding out that there are other costs to commuting that they downplayed, including time away from family or loved ones, stress, frustration, wear and tear, and fatigue. It makes sense that communities closer to job centers typically fare better than outlying communities with longer commutes. Palo Alto, Los Gatos, Orinda, Lafayette, Cupertino, Los Altos, Burlingame, and San Rafael all offer excellent commute accessibility, and are relatively stable markets. Tracy, Antioch, Stockton, Manteca… well, you get the idea.

3. Jobs. Suburban cities that have a strong corporate presence and an abundance of higher paying jobs also perform better. When a community has an abundance high paying jobs, then the average income in the city tends to be higher, the demand for housing stronger, and the schools tend to be better. San Ramon, Pleasanton, Cupertino, Palo Alto, and others have many major employers in the city limits, and this helps create demand. Oakley, Byron, Brentwood, Manetca, etc are not considered major corporate job centers, and the market in these communities is bordering on abysmal.

4. Supply Limits. When cities have limited land availability, they tend to have a stronger real estate market. There can be natural barriers to supply (the Bay, mountains, city limits, geography), and there can be man made impediments to supply (slow growth politics, lack of water or sewer resources, exorbitant fees). But the fact remains, when there is an abundance of buildable land, the market tends to be more volatile, as any uptick in prices will invite home builders to build more homes. And any reversal in the market typically gets amplified as well, as ample land means aggressive builders will often be saddled with unsold inventory, which puts pressure on the builder to cut prices and/or offer incentives to get their homes sold. This is a major part of the reason the Central Valley real estate market is having such a difficult time right now… there is a huge number of unsold new homes available, and in a motivation contest, a builder will win every time. Builders will do whatever it takes to sell their inventory, and this further depresses the prices of resale homes.

5. Income. Cities with higher median income typically fare better than markets with lower median income. Simply put, people of higher means usually have more financial resources to weather any storm, and often have more equity in their homes. First time buyers and moderate income buyers tend to gravitate towards the less expensive markets where they can get a decent home for less money. Again, this is a big factor in the disastrous markets in the Central Valley, where many buyers got in for little or no money down, and do not have the resources to wait out the market. The foreclosure rates in cities like Stockton, Antioch, Tracy, and Mountain House are significantly higher than the high income areas of Pleasanton, Danville, Alamo, Lafayette, Palo Alto, etc. Cities with high foreclosure rates experience a much more severe decline in prices, as distressed sales drive down prices.

In summary, how a community scores on these 5 factors will go a long way towards determining how stable the real estate market is. Of course, everyone would love to live in Palo Alto or Pleasanton. But the reality is the most stable real estate markets usually tend to be the most expensive, so at the end of the day buyers have to balance this equation with what they can afford.

Okay, we all know the Pleasanton/Dublin/San Ramon real estate market is struggling overall, but sometimes it is helpful to gain some perspective by looking at how good we have it, relative to some other markets. I have a realtor friend who has a listing in Antioch right now, and her story certainly helps us understand that our market is hot compared to some of the outlying markets in the central valley.

First, some background. Pleasanton currently has 186 detached homes on the market, Antioch has 1069. Antioch had 59 pending sales in October, and Pleasanton had 45.

This particular house in Antioch is just over 2000 sq ft, with 4 bedrooms, 2 baths, and a 3 car garage. It is a relatively new home (6 years old) in a desirable area by a good builder.

In May, the house across the street from this home sold for $745,000. It was a larger home, with over 2500 sq ft. The subject home was listed in May for $649,000, which seemed like a good price. However, after 2 1/2 months on the market with no offers, the owners lowered the price to $599,000. Still no offers, and very slow activity. The owners have a mortgage balance of about $530,000 on the home, so they did not have much equity. After a couple of months at $599,000, the wife lost her job, and they became extremely motivated to sell. They lowered the price to $449,000, which is far below their loan balance. So it is now a short sale situation, where the bank will hopefully agree to take less of a loan payoff as an alternative to taking the house back in foreclosure. The agent has basically given up, and does not even list a price on the home flyer… instead, she put “call for price”.

The Antioch market is a disaster. By some counts, as much as 40% of the homes for sale are distressed sales, either foreclosures or short sales. On top of this, you have builders with unsold inventory who are willing to give away whatever is necessary to sell their glut of unsold homes. Now this is a tough market.

Compared to this situation, the Pleasanton and Tri-Valley market is doing very well. Our inventory is relatively stable, and although sales levels are down from the summer, there is activity, and some homes are even selling in less than a week, often close to asking price. The intent here is not to rejoice in other people’s problems, but rather to help appreciate how good we really have it here.