Apartment builders have a constrained optimization problem whereby they balance building different amenities to attract tenants with varying preferences. Recently when searching for apartments I noticed that every single apartment seemed to have a pool. I feel like many people would prefer a small decrease in rent and open space, more parking, a larger fitness center, ect to a pool. Apartments have many other variances in terms of parking, landscaping, price, ect, yet the pool seemed to be a universal. Does this simply reflect that the apartment market cannot be perfectly competitive or that preferences for pools is near universal? Is there an economic explanation or cognitive bias that would explain this kind of convergence?

PS: I will not be offended if this is closed. I'm not sure if this type of question is not on topic for this site.

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    $\begingroup$ I think it's an interesting question, though the answer is likely to be very case specific, hence it may be closed for not being a good resource to others. My guess: I do not know how many apartments you searched for and how random your sampling of the apartment market was but it could be that the apartments meeting your criteria were all built by development companies that specialize in building generic middle class homes. $\endgroup$
    – Giskard
    Jun 4 '15 at 16:34
  • $\begingroup$ I would suggest that maybe the cost of having and maintaining a pool increases in the cost of water and land. The utility people derive from having access to a pool is increasing in temperature and number of days of sunshine. And, for whatever reason, perhaps Albuquerque has that ideal combination of cheap water, cheap land, high temperatures and high frequency of sunny days. There's at least a testable theory (any of the above statements could be falsified). $\endgroup$
    – Shane
    Jun 4 '15 at 16:40
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    $\begingroup$ I believe your statement is dubius/wrong: city-data.com/forum/albuquerque/… $\endgroup$
    – VicAche
    Jun 4 '15 at 21:01
  • $\begingroup$ @VicAche I think the points about sampling bias probably do have some merit. To better clarify my argument. at appartments.com looking at apartments over $700 on a big map then checking an unchecking pool as a required amenity significant chunks of town on the edges remain completely unchanged indicating that every listed apartment has a pool. If you narrow the search to 1 bedrooms above 700, all but one apartment has a pool. The question is a bit silly I admit. $\endgroup$
    – lazarusL
    Jun 4 '15 at 21:33
  • $\begingroup$ @lazarusL the right answer lies bellow. But it makes your question blatantly uninteresting. It would be much more interesting if you could come up with another town in a similar situation but with much less pools, but as it is.. $\endgroup$
    – VicAche
    Jun 4 '15 at 21:36

In most places, it's probably more efficient to invest in more houses than to put pools for the same value in the houses you own. In some place, having a pool might even decrease the renting value of your house: the maintenance cost compensate the rent increase. In Albuquerque, it is possible that it's more relevant to invest in pools than in houses, hence all landowners invest in pools, hence, no more houses to rent without a pool.

With $P$ the cost of a pool, $H$ the cost of an house, $r_H$ the revenue you get for renting a naked house and $r_P$ the revenue you get for renting a house with a pool and $c$ the upkeep of a pool, every house owner is going to build a pool before renting or selling if $$(r_p - c)/P > r_H/H$$

If this isn't true (and it isn't in most places), some people we choose to build a pool for other reasons but not all houses will have pools.

  • $\begingroup$ You are basically saying: They do so because it is more relevant to do so. $\endgroup$ Jun 4 '15 at 20:41
  • $\begingroup$ @TheAlmightyBob Yes. That's actually the right answer. $\endgroup$
    – VicAche
    Jun 4 '15 at 20:41
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    $\begingroup$ OK, I just wanted to check. I hope you don't mind my downvote :-) $\endgroup$ Jun 4 '15 at 20:43
  • $\begingroup$ @TheAlmightyBob given the fact that building pools cost very little in comparison to buying houses, I firmly believe this is the right microeconomic explanation. $(r_p−c)/P>r_H/H$ $\endgroup$
    – VicAche
    Jun 4 '15 at 20:49

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