When Will Boat Prices Drop?

[JLD]

I think we can all acknowledge that the current economic scenario is not the same as 2008. In 2008, it wasn't only the lack or credit, but there were legitimate fears that there would be a collapse in the financial markets.

I think we need to remember that the boat market is comprised on many, many niches. No two niches will necessarily react the same way during a recession.

In reality, the sale of any boat is a one-on-one deal between the seller and the buyer. If the seller of a boat (or the bank if a repo.) wants/needs to sell a boat the opportunity to do so will be prefaced by the price that potential owners want to pay. IF these do not sync up, there will be no sale.

Repossessed boats are not always just the crap boats. In the latter part of the mid-1980's my dad bought a 2 1/2 year old Hunter 28.5 sailboat from the bank. The original owner bought the boat at the Houston boat show, took delivery and lightly sailed her for 1 1/2 seasons. When the Texas oil bust happened in late 1986, the owner stopped making payments and the bank took back the boat and Dad purchased it for 1/2 the price of a new boat.

I think the biggest price changes will be in 5 - 20 year old production (relatively large volume for a specific model) boats. There are several niches of both powerboats and sailboats that I have been watching. I have already begun to see some changes (10%) in 'asking' prices for some of these boats, something that I don't usually see this time of year. Interestingly, the changes so far, have mainly been with the production sailboats (which generally hold there value better than production powerboats.)

Jim

 

[JLD]

I was thinking the same thing. In fact, I have a car I was going to sell in March but instead just put it in the garage because I can't really see how a private-party used car (or boat or RV) can be sold "contactless."

I am in the same situation with my small, trailerable sailboat. I was going to put her up for sale in April, but with the Maryland stay-at-home order, she is safely tuck away in storage. I'll probably put her on the market in June.

Jim

 

[Rusalka]

There are two competing forces..recession forces caused by unemployment and business losses, offset by inflation caused by the historically large monetary and fiscal stimulus. Hard to tell which force will win. My biggest fear is what is called stagflation....slow economy with high inflation. Very possible that prices for older boats in good condition could rise as boat manufacturers close down because sales fall below break even volume.

This is imo the smartest thing anyone has said on this thread and I have read every single post.

My predictions is that we will first see collapse in asset prices and that will be followed by inflation. The increase in money supply all over the world and lack of supply of used boats due to drop in new boat sales coupled with some manufacturers going BK will put a lot of pressure on good condition used boats long term.

If you wait long enough (2 - 4 years) to sell, you will get a higher price I think than what you would today. But ofcourse, adjusted for inflation, you'll still take a hit.

 

[OldDan1943]

This is imo the smartest thing anyone has said on this thread and I have read every single post.

My predictions is that we will first see collapse in asset prices and that will be followed by inflation. The increase in money supply all over the world and lack of supply of used boats due to drop in new boat sales coupled with some manufacturers going BK will put a lot of pressure on good condition used boats long term.

If you wait long enough (2 - 4 years) to sell, you will get a higher price I think than what you would today. But ofcourse, adjusted for inflation, you'll still take a hit.

If you take this opportunity to order a new boat and willing to wait those same 2-3 years, you must find a buyer for your boat.

 

[ksanders]

I remember back in 2008 when my bank put a freeze on my home equity loan. If you have a balance it is frozen and you cannot get more, if you have no balance your loan is cancelled. This happened to millions of American home owners. This is the sign I will be looking for now. Credit extension IS their business. Freezing or cancelling loans is like closing up business for a lender.

It is my guess that credit is going to get very much tighter sometime between July and October. It will happen after the people who are propping up the market right now get their money out and the market falls considerably. Then it will be the long slog back to something better which will take 2-10 years depending on elections, more debt, and global emergencies.

The ability we have had to kick the can down the road for the last 50 years is now going away. Chickens are coming home to roost whether we like it or not. Like rising water and carbon we ignore it because it happens slowly and we think it won't effect us. Look at Corona versus flu, the flu happens slowly so we don't react. Corona was on us in a big way and all hell breaks loose. Same thing with drunk driving, crime, and many other causes of death- if it happens slowly we become numb to it. Our selfishness is more tolerable in small doses.

It will be the scientists who save or tank us with this epidemic. I am proud of the science so far. Why do we never listen to the people who study facts?
Answer: Selfishness. The greatest of human flaws.

I do not agree that credit is going to get tight for credit worthy individuals.

In 2008 credit lines in both the commercial and consumer markets were cancelled, not because of any issue with the “borrowers” but because banks had no money to loan.

Banks didn’t just cancel individuals credit lines, they cancelled whole credit line programs.

Right now the fed is making sure there is plenty of money to loan out, and at great interest rates.

 

[sunchaser]

I do not agree that credit is going to get tight for credit worthy individuals.

In 2008 credit lines in both the commercial and consumer markets were cancelled, not because of any issue with the “borrowers” but because banks had no money to loan.

Banks didn’t just cancel individuals credit lines, they cancelled whole credit line programs.

Right now the fed is making sure there is plenty of money to loan out, and at great interest rates.

Yes. Avoiding a liquidity crisis is a prime and well stated goal by the Fed and Treasury. Have a SIL who owns a re-financing company, strong business at this time.

 

[ksanders]

Yes. Avoiding a liquidity crisis is a prime and well stated goal by the Fed and Treasury. Have a SIL who owns a re-financing company, strong business at this time.

And that refinancing to pul out cash, or drawing from 401-k accounts will be the saving grace for many of the credit worthy, probably better off unemployed or business owners in shut down industries right now.

 

[mvweebles]

Realtors are the last people you should ask about the real estate market

CNBC had a piece where they interviewed Danielle Hale, chief economist for Realtor.com. Many sellers have pulled their listing, which are down by almost half (47%). As a result, selling price is barely up by about 1.5%. There appears to currently be some flight from urban to suburban areas - NYC to NJ was cited but she did not expect these to be long term broad based trends. She expected a shift--right in sales with summer serving as the traditional spring sales season, albeit at reduced volume and price.

Overall, not sure there are patterns to home purchase and ownership that serve as templates for boats especially since people need a place to live and don't need a boat and few expect a boat to be an appreciating asset. But those are informed opinions and observations on the current residential housing market

 

[catalinajack]

Oh boy, here we go again, the inflation boogyman. Same story we have heard in the past. Inflation occurs when demand exceeds supply. With so many folks out of work and a long, slow recovery due to so many businesses that will disappear, overall demand will not recover to previous levels for a long, long time. No demand, no inflation. So, let's see, you predict a collapse in asset prices. Isn't that the exact opposite of inflation which is price increase? The increase in the money supply is irrelevant.

This is imo the smartest thing anyone has said on this thread and I have read every single post.

My predictions is that we will first see collapse in asset prices and that will be followed by inflation. The increase in money supply all over the world and lack of supply of used boats due to drop in new boat sales coupled with some manufacturers going BK will put a lot of pressure on good condition used boats long term.

If you wait long enough (2 - 4 years) to sell, you will get a higher price I think than what you would today. But ofcourse, adjusted for inflation, you'll still take a hit.

 

[stroutmail]

A strength and weakness of humanity is our ability and preference for oversimplification of complicated scenarios.

Inflation is a very complicated scenario. Supply and demand affect price in an economy with a fixed quantity of money and a fixed velocity of that money. But, prices are also affected by changes in money supply and velocity. You can have falling demand and rising money supply without a drop in price. You can have a rising money supply with a falling velocity without inflation. The Fed has control of money supply but not velocity. Velocity is affected by people's "willingness" to hold or spend money---that is something in the aggregate nobody knows how to measure or predict.

While the money supply has been increasing, the velocity of money has been declining. That is why interest rates and inflation are/is low.

We know demand will probably decline and the Fed will probably offset this with increased money supply. What we don't know is how velocity will change. Will people continue to hold excess cash at low interest rates, or will they spend or invest it by buying assets? If you know the answer, you can become a billionaire.

 

[catalinajack]

Stoutmail, finally, finally, you are someone who understands the dynamics and interrelationships of supply, demand, and money supply. My comments were meant to impart a sense of the situation in a more basic way, that is, no demand, no inflation. There are, of course, as you say, other forces that impact the overall.

A strength and weakness of humanity is our ability and preference for oversimplification of complicated scenarios.

Inflation is a very complicated scenario. Supply and demand affect price in an economy with a fixed quantity of money and a fixed velocity of that money. But, prices are also affected by changes in money supply and velocity. You can have falling demand and rising money supply without a drop in price. You can have a rising money supply with a falling velocity without inflation. The Fed has control of money supply but not velocity. Velocity is affected by people's "willingness" to hold or spend money---that is something in the aggregate nobody knows how to measure or predict.

While the money supply has been increasing, the velocity of money has been declining. That is why interest rates and inflation are/is low.

We know demand will probably decline and the Fed will probably offset this with increased money supply. What we don't know is how velocity will change. Will people continue to hold excess cash at low interest rates, or will they spend or invest it by buying assets? If you know the answer, you can become a billionaire.

 

[catalinajack]

As for the velocity of money, that is another factor that I think is going to have a significant impact on the recovery of the economy. For those who don't know what that means, the velocity of money is a measure of the number of times that the average unit of currency is used to purchase goods and services within a given time period.*it is not a fixed number. I believe the velocity will be less than before the pandemic. Why? The citizenry is frightened. Spending habits have already been changed and are likely to not go back perhaps for at least a generation. Think, for a moment, how the spending patterns of our parants and grandparents were forever colored by the experience of growing up in the Great Depression. Just last week in a conversation with my 34yo son, a Chief Petty Officer in the Navy, he was saying that he has been amazed about how much more money he has in his bank account - no restaraunts, no trips to who-knows-where without thinking of the cost, etc, etc. He and his wife are learning that they can cook great meals at home as have millions of Americans (bad for the future of restaraunts). How likely is is that he will go back to his old habits? Try to find flour or yeast in a grocery. No sir, spending habits have already changed, more or less, permanently. Economists two years from now will find that the velocity of money has decreased which translates into decreased demand don't you think?

A strength and weakness of humanity is our ability and preference for oversimplification of complicated scenarios.

Inflation is a very complicated scenario. Supply and demand affect price in an economy with a fixed quantity of money and a fixed velocity of that money. But, prices are also affected by changes in money supply and velocity. You can have falling demand and rising money supply without a drop in price. You can have a rising money supply with a falling velocity without inflation. The Fed has control of money supply but not velocity. Velocity is affected by people's "willingness" to hold or spend money---that is something in the aggregate nobody knows how to measure or predict.

While the money supply has been increasing, the velocity of money has been declining. That is why interest rates and inflation are/is low.

We know demand will probably decline and the Fed will probably offset this with increased money supply. What we don't know is how velocity will change. Will people continue to hold excess cash at low interest rates, or will they spend or invest it by buying assets? If you know the answer, you can become a billionaire.

 

[Cartouche]

My initial thoughts were similar to others re many large recreational purchases.
I saw a video by a multi- dealer motorhome dealership across the US that presented an interesting and though provoking position. His contention is that there will be a significant shift in travel & recreation habits and that international / long distance travel & destination vacations will be largely replaced by RVs - where owners can still travel (various distances in N America) and enjoy the safety of their own travel, eating and sleeping accommodations under their own control.
Obviously, if this does happen, it won't be immediate but the current owners may not be compelled to bail out immediately either.
I'm wondering if there isn't a similar situation with boats providing an opportunity for couples and families to vacation together without risking and relying on transportation, vendors and destinations to ensure their safety at "common use" facilities.
I'm sure the market environment will certainly impact large new purchases and those underwater (pun intended) on their discretionary / recreational assets.

I think you are spot on Don I know I feel allot more comfortable being on our own boat rather than travelling it makes sense that Road warriors will buy RV's and Those that want to try the water they will turn to boats, However I think only ones that survey well and show well, will fall into this category, as Potential buyers will decrease in the short term

 

[OldDan1943]

LOL I remember the discussion mom and dad had about buying a RV.
Mom basically said, 'You want to buy an RV so I will continue cooking and cleaning. That's not going to happen!!!'
Dad had no idea how to cook nor run the washing and dryer. LOL
AND he changed only one diaper in his life, on one of his grand children. Mom and mother were not around.

 

[Leatherneck]

I too have seen huge lots of RVs as I drive down I-95. Always wondered how they stay in business. Saw an interview this morning with a large RV dealer. They are getting a large increase in sales and attribute it to people seeing it as a safe way to enjoy travel without worrying about close contact with others. Probably some similarities in the boat market.

 

[Pete Meisinger]

OK, I admit it, I was wrong. Although I did not start this thread I feel I am sort of responsible for it being created. I made a comment on another thread "Boat prices are crashing"

I now don't think prices are crashing, I think they are stable. They might have taken a "Dip" at the start of this crisis but now have rebounded.

I know eBay is kind of a crazy, high priced selling platform but I have a few "Saved Searches" which I just checked. One is "Trawlers" there are generally dozens of trawlers listed for sale. Anywhere from hundreds of thousands of dollars down to fixer uppers for several thousand. Right now, today, there are THREE trawlers listed! Not particularly cheap but not particularly expensive but a choice of only three!

I also follow "Chris Crafts" for sale. Again, very slim pickings! Prices seem stable but the selection is very poor.

By this time I had expected to see "For Sale" signs on toys up and down the highway, boats, four wheelers, motorcycles, hot rods,campers, trailers, etc. Very little, around here anyway.

As one of the other posters pointed out. In my little town there is a "for sale by owner" used car lot in town. It has only one or two items (Both overpriced).

Go Figure! is all I can say..

pete

 

[stroutmail]

Only time will tell how this mess plays out. No doubt that large segments of the economy are damaged and will take time to heal. No doubt there will be some almost permanent changes in human behavior. (And that may depend a great deal on new medicines.) No doubt, those that can are likely to save more and spend a bit less. Velocity of money may decrease for those reasons, but what we don't know is how much money the federal government will spend to offset.

And, we have no historical experience with such large injections of liquidity and such large deficit spending other than perhaps during times of war.

Best advice is to accept the uncertainty in the same way as we accept uncertaintly about weather--enjoy the sunshine and expect there will be some storms. Be prepared for one of several outcomes.

 

[JLD]

I think you are spot on Don I know I feel allot more comfortable being on our own boat rather than travelling it makes sense that Road warriors will buy RV's and Those that want to try the water they will turn to boats, However I think only ones that survey well and show well, will fall into this category, as Potential buyers will decrease in the short term

LOL, you gentlemen must live in nicer neighborhoods than I!

I don't foresee my neighbors spending 75 - 100K+ on motorhomes and cruisers just to get away this Summer (if they didn't already have an interest before Covid-19), or the 10K a year to keep a motorhome or cruiser.

I suspect that many of my neighbors instead or flying somewhere, renting a car, and booking a hotel, will instead do more local travel. This would involve hopping in their car, and driving somewhere and renting an Airbnb or hotel for a week.

On the other hand, I could see where a few folks might have an interest in trailerable boats and small recreational trailers.

 

[kthoennes]

...Just last week in a conversation with my 34yo son, a Chief Petty Officer in the Navy, he was saying that he has been amazed about how much more money he has in his bank account - no restaraunts, no trips to who-knows-where without thinking of the cost, etc, etc. ...

Yep, good observation. We've noticed the same thing. I meticulously track our spending in Excel, but I never bothered to total restaurant expenses. (I ran a total on all related boat spending one year and never wanted to do it again.) Restaurants, laser tag with the boys (never cheap), movies with $15 popcorn, almost all gone for the moment and I'm not even in a tightly locked down state. Now it's state parks and picnics. Groceries aren't free either but it's made a huge difference. Even if we did want to spend a chunk -- well, for example we've been casually looking for property on Prudence Island in Narragansett Bay for years. Two parcels for sale now but we're certainly not going to buy them sight-unseen, and RI has a two week quarantine in place for non-residents, set to expire soon but will likely be renewed. And now I don't really trust Rhode Island in general and the property wouldn't have been available as the sanctuary we always anticipated anyway, so why bother? I'd switch our real estate browsing to Alaska but my former state is even worse with a $25,000 penalty for violation of the health orders. That's the thing, whether you're a "shelter in place" person or a "get back to normal yesterday" person, this has profoundly shifted spending patterns and attitudes.

 

[Mako]

And have you noticed how much healthier we generally are these days during lockdown? No more fattening dinners out. Daily walks around the neighborhood. Lots of jogging to keep busy.

 

[JLD]

And have you noticed how much healthier we generally are these days during lockdown? No more fattening dinners out. Daily walks around the neighborhood. Lots of jogging to keep busy.

You are probably doing much better than my wife and I.

I would guess that we have probably put on 5 - 10 pounds in the last 6 weeks!

Jim

 

[Shrew]

You are probably doing much better than my wife and I.

I would guess that we have probably put on 5 - 10 pounds in the last 6 weeks!

From the anecdotal discussions I've had with friends and family, this seems to be more the norm. A lot of folks are jokingly calling it:

The Covid 15

OR

Corona Lack-o-Tona

 

[Northern Spy]

And have you noticed how much healthier we generally are these days during lockdown? No more fattening dinners out. Daily walks around the neighborhood. Lots of jogging to keep busy.

I used to hit the gym every morning from 5-6 before I did an active 12 hour work day with a fair amount of physical work, (walking around a large industrial facility and climbing equipment ladders), and mental challenges (coming up with solutions to problems). I'd do that for a week and then take a week off and be physically active at home.

Now I sit in my basement office for 8-12 hours a day, 5 days a week, staring at computer screens. I have no idea how people can sit at a desk all day long.

This working from home absolutely sucks. It is taking a toll on my physical as well as mental health.

I feel like I am back in grade school again, longingly looking out of a window on a beautiful day. If I wasn't adult ADHD before, I certainly am now.



Rant off.

I am truly grateful to be employed and still have a paycheck and hope this is only a temporary inconvenience that I will teach me new skills and patience. But if this is the new normal and my job moves to working remotely, I'm out. I'll be a traveling shower curtain ring salesman before I do this.

 

[Frosty]

I have a few [eBay] "Saved Searches" which I just checked. One is "Trawlers" there are generally dozens of trawlers listed for sale. Anywhere from hundreds of thousands of dollars down to fixer uppers for several thousand. Right now, today, there are THREE trawlers listed! Not particularly cheap but not particularly expensive but a choice of only three!

By this time I had expected to see "For Sale" signs on toys up and down the highway
...As one of the other posters pointed out. In my little town there is a "for sale by owner" used car lot in town. It has only one or two items (Both overpriced).

I don't think that directly reflects that people don't want to sell things though. I was about to sell an extra car in February. I am now not doing that because I don't want to interface with random people and I don't see how you can sell a car or boat (private party) without doing so. eBay is the same for something large such as a car or boat.

Hence my sale is on hold, and my car is not on eBay, Craigslist, or the local gravel lot along the highway.

 

[kthoennes]

Oh I'm definitely much less healthy lately. Like a poster above I've heard lots of jokes too about the "19" in COVID 19 stands for the pounds we all gain stuck at home. I've developed a bourbon hobby, that's not good. I should have lots of time to get things done at home but instead I sit around like a slug. I'm not working from home thankfully, but that idea, apparently so loved by so many, is horrifying to me. Dragging my messy, high-pressure work home to my family and my peaceful sanctuary, ugh, that's a revolting idea. I'm crabbier -- the neighbor next door started whacking the shrubs on our property line and I went marching out there and got all irate. We did go out to dinner for the first time in weeks last Sunday, one restaurant timidly opened a few tables on an outside patio and we grabbed a reservation. It was incredibly rich, couldn't even finish it, had to be five billion calories (Italian, pasta dish). If anybody sees me shopping for vegetables at Whole Foods next week somebody shoot me in the head.

 

[EngNate]

The key to getting a low boat price is the desire to sell, and the key to a high price is the desire to buy.

 

[Mako]

I used to hit the gym every morning from 5-6 before I did an active 12 hour work day with a fair amount of physical work...

Now I sit in my basement office for 8-12 hours a day, 5 days a week, staring at computer screens. I have no idea how people can sit at a desk all day long.

This working from home absolutely sucks. It is taking a toll on my physical as well as mental health.

I am truly grateful to be employed and still have a paycheck and hope this is only a temporary inconvenience that I will teach me new skills and patience.

Not good to hear. Everyone has to find a sustainable way to cope with the current situation, which could continue for months longer. I'm working from my home office also, which is three feet away from my bed.

What I found most helpful to me is to keep my "normal" routine and to keep strict discipline about it. I wake up every day at 5:00, have my coffee and read the headlines. 6:00 am jogging two miles around my neighborhood. Shower, then I goto "work" by a little after 7. Work a solid 8 hours then "go home" (ie- leave the bedroom and join my family) by 3pm latest. Never, ever touch the work computer after that. Repeat this 5X a week. Keeping the weight off, staying healthy and honestly I could do this for another year if needed.

Everyone has to find their own routine for their particular situation, but I hope N.Spy that you find yours. Stay healthy, bud.

 

[BandB]

Not good to hear. Everyone has to find a sustainable way to cope with the current situation, which could continue for months longer. I'm working from my home office also, which is three feet away from my bed.

What I found most helpful to me is to keep my "normal" routine and to keep strict discipline about it. I wake up every day at 5:00, have my coffee and read the headlines. 6:00 am jogging two miles around my neighborhood. Shower, then I goto "work" by a little after 7. Work a solid 8 hours then "go home" (ie- leave the bedroom and join my family) by 3pm latest. Never, ever touch the work computer after that. Repeat this 5X a week. Keeping the weight off, staying healthy and honestly I could do this for another year if needed.

Everyone has to find their own routine for their particular situation, but I hope N.Spy that you find yours. Stay healthy, bud.

We've been working and normally don't, but breakfast every weekday morning at 8:00. Several of us working out in our workout room before, others doing so at night. Start work at 9:00, work until 5:00. Between computers and phones, we've all been busy, especially planning ahead.

At night we either use treadmills or other equipment or swim every day. We understand that we can't sit around during this time. I think one benefit we had was when we shut down in mid March, we assumed we'd be down until at least mid June and it could be until August, so we didn't think of it as short term. Now, opening up too soon, we anticipate another shut down may come later so planning to handle it better.

Then weekend is still weekend. We're so fortunate this weekend as seas only 1-2' so we'll make another trip to nowhere, then return.

 

[catalinajack]

Okay now, please no one accuse me of slinging bull poop. I am 70 years old, 6", 1" tall. My weight has been virtually the same for the last 40 years, 165 lbs. It goes up a few pounds around the holidays but has never gone over 170, never below 160. I take no drugs, none, never have. I never did run or exercise in any way other than leading an active life, skiing, full-court basketball for 40 years, softball (fast pitch and slow pitch), golf. Now that we are full time live aboards my activity is limited to golf. My food intake is relatively prodigious. I eat anything I want paying no attention to whether it is red meat, bread (am addicted to piizza), in other words I do everything wrong. Beer and bourbon, too. I know, it's all gonna catch up with me. I've been hearing that for forty years. I recently underwent extensive heart testing, no blockages, not even close. I have no explanation but I do enjoy being able to eat and drink anything I like. Soft drinks do not appeal to me.

 

[mvweebles]

YouTube interview with PassageMaker Mag publisher and Jeff Merrill, trawler yacht broker who is pretty active in the genre. PMM is trying to drum up interest with what they are calling a "Virtual Boat Show" thus the interview. Effects of Covid are discussed, and to my ears, the explanations and observations offered by Jeff are credible without excess optimism.

https://www.passagemaker.com/virtual-boat-show/jeff-merrill-trawler-specialist