Joe Ahlersmeyer: Yeah. That makes sense. I guess I just — I am curious the call out of it being typical, maybe that was a directional comment and not so much on the magnitude, but we can take that one offline as well. The other question I have was related to the first answer. There was a particularly pointed comment there that new pools more would be built if, frankly, they were more affordable, I think, to paraphrase. Interest rates seem to be what you are calling out as the main bad guy there, but if I am thinking about the other side, certainly, there’s just the price and cost of the pool. And I am just wondering, what is sort of the probability you would assess to the chance that we just have gone too far on pricing, and 10 years from now, when we say that the pool industry typically gets 1% to 2% pricing year except for 2024, when the industry did have to experience a reset. Is there probability you would assess to that?
Peter Arvan: Yeah. I would tell you the probability of that is really low. Let me expand a little upon my comment about the affordability. As I mentioned, I believe on the second quarter call. What we — where we are seeing the biggest headwind on swimming pool construction in terms of units is in the entry level pools, right? The smaller pools, the cheaper pools, which the builders will tell you that the conversation takes place at the kitchen table to close that deal. Prior to the run-up in interest rates. So for the previous couple of years, when interest rates were very low, a pool could be had for $750 a month to $800 a month and homeowners were signing deals based on that as their monthly payment. But with a significant increase in interest rates, and frankly, less lending in that area in the last 12 months to 18 months, it has driven up the cost — of borrowing cost and availability of that — of those funds to build a swimming pool.
So that has really taken a chunk out of the lower end pools. As it relates to the higher end pools, which are paid for, as we have mentioned many times in cash, those tend — those — the demand for those pools is good. Now it was good before and the builders are telling me that the outlook for that is still strong. So that really is the comment as it relates to affordability of new pools. Now remember, the inflation that we are seeing. So Melanie is talking about, she had mentioned that prices could be up 3% to 4% this year. So 3% to 4% on the rest of the industry on something that is non-discretionary in nature doesn’t really change the demand curve. So if — and frankly, if the price of a swimming pool, if you said that an equipment set for swimming pool is in the $15,000 range now, if the equipment set came down 5%, which we are not suggesting and I don’t think that’s going to happen at all.
In fact, I think, there’s virtually zero chance of that, in my opinion. But if it were, that really isn’t going to change the homeowner’s decision on whether they should start building pool, because in the grand scheme of things, material makes up 25% of the project. So it just isn’t enough to move the needle. It’s really everything else that factors in. And on non-discretionary items, it doesn’t really — if there was a decline from the manufacturers, which we have had zero indication of, if there were, it wouldn’t change the demand curve for the non-discretionary purchases, because nobody buys any of those items until such time as they need them.
