Boat Prices: Has the world changed????

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Truth is what's so.
Beliefs are interpretations of what is so.

Wisdom is knowing both and being able to tell the two apart.
 
Greetings,
Mr. MV. As has been mentioned, COVID, Putin and worldwide economic conflicts involving numerous countries has played havoc with any sort of traditional trend analysis. I'm NOT suggesting "...rosy and the glory days..." are occurring or continuing.


It's a new ball game with 25 players in the outfield, three batters up and 6 umpires.


Edit: ONE thing I interpreted from the survey is the continuing polarization being experienced in the US. NOT getting into politics PERIOD!!!!!!!
 
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The only guarantee with the economy is that it's cyclical. Markets go up, then they go down. And back again. It's been this way since there's been a 'market' (for pick your favorite item - equities, consumer goods, commodities, raw materials, etc.). The only question is not if, but when, and for how long.

Markets go up until macroeconomic forces make them stop, and vice versa. Increasing numbers of far wiser economic minds than mine are predicting a recession/market decline sometime later this year. If for no other reason, the Fed will make it happen by raising interest rates as they did in the 1970's to put the brakes on a runaway market and cool down inflation.

The used boat market is harder to predict. It will continue to remain a sellers market for as long as buyers are willing to throw crazy money at boats. I thought (and a number of brokers have suggested to me) that it should have 'cooled off' by now. Between boating newbies who bought during the pandemic and then realized boats need a lot of expensive maintenance and care and no longer want to do that, and the astronomical rise in fuel prices, I'd have thought it would have started slowing down.

FWIW, anecdotally I've noticed what seem to be a somewhat greater number of boats coming on the market on yachtworld. But the demand for desirable models, new-ish, and in good condition, still seems very strong (at least as of this week), with nice boats getting multiple offers (some over asking) within hours of being listed.

Consumer markets can be slow to respond. Some buyers, frustrated by the market of the past couple of years, are still throwing crazy money at boats. Several brokers, offering to represent me as a buyer's broker, have said they would put in offers on multiple boats at the same time, just to lock them up until I'd have a chance to see them, and then decline the ones I don't want. Several selling brokers have told me they've been on the receiving end of this as well. But sellers have dollar signs in their eyes and many want to squeeze the last nickel out of a sale and jump on over-asking offers, even though some seem to dissolve later.

At some point the tide will turn (no pun intended). If there is a sense that the economy really is starting to decline into recession, or the reality that fuel prices will remain high for some time sets in, the number of boats offered will start to increase. Then other sellers, some of whom might be waiting on the sidelines to try and time the market and sell for the highest price possible, will jump in to not miss out (one of the most powerful economic forces is not wanting to miss out; it's what drives people to pay too much, and to sell if they sense things are going pear shaped). At the same time some buyers might start to feel nervous about economic conditions (or the values of their stock portfolios) and pull back. Then a domino effect cascades, and prices could start declining noticeably.

Sometimes a 'stairstep' effect happens. Buyers are used to prices as 10, see them drop to 8 and think it's a bargain, and bid them up to 9. Then they decline to 7, again being perceived as a relative bargain, and are bid back up to 8. And so on, until a new equilibrium is reached.

The problem with trying to time the market is you never know when you're at the peak when you're there. There's no light that goes off and says, 'today is the absolute peak.' The only way to recognize a peak is after it's happened and you're looking back at it from a lower point.
 
Nick14 said:
The problem with trying to time the market is you never know when you're at the peak when you're there. There's no light that goes off and says, 'today is the absolute peak.' The only way to recognize a peak is after it's happened and you're looking back at it from a lower point.
Click to expand...

This is generally true. One exception might be the Superbowl ad rule <cough...crypto...cough> which seems to be a pretty good indicator at least of an initial high water mark for a new asset class.
 
Someone posted earlier a comment on retail being down. Well, for first quarter, Home Depot up slightly and Lowes down slightly. But all compared to a record year. Department stores, Dillard's had a great quarter, especially apparel. Target and Walmart hit a bit by transportation but still comparing to record years. I have to laugh at all franchisees disappointed Ace Hardware was only up 8.9%. They overlook two year growth of over 50%. Ironically, the 200 retail stores owned by Ace actually declined.

The point is that for every down, there's an up, and right now none of us really know. We hear and read about supply chain shortages, but many of us have just increased inventories to protect. I know sometime there will be fewer shoppers. First, fewer than last year, then fewer than 2019 perhaps. I have no idea when that will hit. I don't plan for it directly, just a contingency plan, because if I plan on a drop, I guarantee it.

I think boat prices will drop and sales will drop, but if you have a boat for sale or you're a builder, you can't react as if it's already happened. How long do you hold firm on prices? Until they fail to move. You just have to be ready to react.

Now, as a boat buyer, you only need to convince one seller that the sky is falling. Most are not convinced yet.
 
I think Nick summed it up well.

Boats in our area are still selling like hot cakes, but we all know many of these people are going to eventually tap out when they realize the time and money required, and/or they get bored with their latest toy and tap out. IE, better used boats on the market.

The last few months and today in particular mark a definite turning point. Two of the largest retailers on earth are guiding for lower earnings in Q2. They are also saying consumer tickets are similar, but they are spending less in general and looking for cheaper alternatives such as food brands. The stock prices of these two companies over the past 2 days reflect this.

IE, things are slowing down which J Powell and company are very happy about in regards to the demand vs. supply equation and inflation.

Consumption (goods and services) makes up a large percentage of our economy so if the consumer cools off the ripple affect for stocks, assets, and boats will also feel it.

No easy answers and no crystal balls.
 
socalrider said:
This is generally true. One exception might be the Superbowl ad rule <cough...crypto...cough> which seems to be a pretty good indicator at least of an initial high water mark for a new asset class.
Click to expand...

:lol:

You're absolutely right! I forgot about the 'Super Bowl' effect!!!
 
kthoennes said:
I'm no PhD in economics, but I used to think I had a general sense of how things tend to work and flow. Not anymore. In a separate thread -- on the pretty shocking escalation in fuel prices -- I mentioned how they're rolling out the 2023 Cadillac Escalade for $149,000, and doubtless terrible fuel mileage. Meanwhile I keep wondering how lower income families are paying $5 for gas, and $5 for milk (in some places). But boat and RV prices haven't declined as far as I can tell. Interest rates are climbing, but houses are still ridiculously expensive. The slips at our marina are still full, even though they're beginning to charge Palm Beach rates for a small lake on the Prairie. We just got a couple estimates for relatively minor repair jobs on the house and we got burst-out-laughing astronomical quotes, but I don't think the contractors care if we hire them or not. Then six people have decided to quit or retire at the office in the last couple months, because they don't have to work full time anymore. Maybe it's a lag, inertia, and inflation has happened so fast that the markets and consumer behavior haven't had time to catch up, or we don't see it yet. The dissonance -- the illogical contrasts everywhere -- make no sense to me.
Click to expand...

Totally agree with you. But I have noticed (at least in SW Ohio) boat dealer lots are full again. They have plenty of boats to sell but I doubt many will buy. My guess is that we will see a drastic decline in recreational vehicle prices towards the end of summer if not sooner. Inflation is here to stay and the recession is here but most don't know it is here. Most folks just don't know how bad things are at the moment. But they will soon find out. Without a change in economic strategy by the current administration and congress, we are in for a rough ride.
 
Some real estate data out today says home sales at the lower end is softening. Not so much at the higher end.

On the assumption, a big and not especially good assumption, that this carries into boats, we could begin to see lower end boat sales soften. Such as inexpensive fishing boats.

And from there begin to see headlines and articles making the broad general statement boat sales are softening.
 
Housing was the next shoe to drop and the Fed is probably happy to see that start to cool off as well.

I look mostly at fundamentals, but the technical analysts think we have another 10 plus percent to go on the downside for stock prices before capitulation occurs and a good bottom is in.

The diminishing “wealth effect” over the past few months as we are watching our 401K’s and stock accounts go down, along with a decrease in housing prices will cause people to think more about buying a boat when more supply is likely to come on line and better deals can be had later.

Alot of Brokers and others think elevated boat prices are here to stay. I don't buy it and think normalization will occur over the next year, and could steeply decline in 23 and 24’ if past cycles repeat. But, I was dead wrong about boat sales during Covid, so I could be off on this as well. TBD.
 
FWT said:
Some real estate data out today says home sales at the lower end is softening. Not so much at the higher end.

On the assumption, a big and not especially good assumption, that this carries into boats, we could begin to see lower end boat sales soften. Such as inexpensive fishing boats.

And from there begin to see headlines and articles making the broad general statement boat sales are softening.
Click to expand...

FWIW, another report on beginnings of a softening in the housing market:

https://www.theatlantic.com/newslet...housing-market-slowing-down-recession/629901/

Given the inexorably cyclical nature of all markets, it's inevitable that the boat market will soften at some point as well. It's an easy bet to make the prediction that it will happen, but impossible to say when.

Maybe boats will follow housing? The lower end of markets often softens first, the buyers who have the least cushion. The decisions of higher end buyers aren't fundamentally affected by modest fluctuations.

I've been thinking the stock market has been overvalued for a few years and due for a correction, and it's only happening now.
 
So many simultaneous things happening right now it's craziness. I live in what's quickly become a very high-end neighborhood. Yesterday it was a little above average, now it's red hot and houses are ridiculously priced. Like yesterday it was normal, today it's San Francisco. A house next door just hit the market about a month ago and they're asking an astronomical price. Hasn't moved in 45 days, which is unheard of lately -- the previous house sale in the neighborhood got an offer the morning of the first open house. But I think now homeowners think the market is red hot, so let's set an asking price at San Francisco levels and see what happens. Some boat owners might be inclined to do the same. After all, you don't want to leave money on the table. I get it, but when you over-shoot a vigorous market, that's not necessarily the sign of a softening market, it's just -- well, not greediness necessarily, ask whatever you want -- but there's a ton of goofy market behavior going on now. Even if market stats were accurate, I'm still not sure I'd rely on anything right now.
 
Kthoennes:

Yep.

Two things just tick people off. A seller asking some crazy high price, thinking that will drag in higher offers and they can cut price and still get top dollar. Too high just smells like crazy and people just don't bother. And then you have the buyer that offers some crazy low price, and that just ticks off the seller who just wants them gone from view.

There was an ultra high end house in the news recently out in the Beverly Hills area. It started on the market at something just under $100 million, two years ago. Sitting on it caused the seller to go bankrupt. It went to auction and brought $45 million. Or maybe it was $47.5 million. In any event, under the $50 million reserve price. The ending would have been better with a high but reasonable asking price.
 
Three houses ago when I went to sell I thought my broker priced an asking price right. At a good fair but high-ish price plus a few percent to negotiate down. The market wasn't all that red hot but I got a call for a showing the day after listing it. And that night the broker called to relay an offer. Something like 30% below asking price and well below market. I laughed at it. The broker then says what's your counter-offer? My response was that when they make a serious offer I'll make a serious counter-offer, but until then the asking price is the asking price. The broker begged me to take a different stance. I relented and said OK, just for you, I'll come down $1,000 but frankly I don't expect a sale out of this. What came back was a contract at my counter offer down $1,000. The broker was astonished. Turns out the buyer's agent was the one advocating game playing. The buyer was a decent couple moving to town and my house was the house they wanted to buy, so they bought it. The obvious moral of the story is, if the price is in the ball park of reasonable a sale can happen. Don't put up with unreasonable high, or put up with sellers offering unreasonably low.
 
Nick:

I quite agree.

One caveat I've been meaning to look up though, when I get a minute.

Demographics.

The best example I've heard of is sales of Harleys. The demographic of their biggest buyer pool is professional men aged something like 45-55, to ride on weekends. When there is a demographic bulge of men hitting that age, sales do well. When the bulge becomes a drought, sales do poorly. Pretty much regardless of the economy. I don't know what the current state of demographics might say about boat sales.
 
FWT said:
Nick:

I quite agree.

One caveat I've been meaning to look up though, when I get a minute.

Demographics.

The best example I've heard of is sales of Harleys. The demographic of their biggest buyer pool is professional men aged something like 45-55, to ride on weekends. When there is a demographic bulge of men hitting that age, sales do well. When the bulge becomes a drought, sales do poorly. Pretty much regardless of the economy. I don't know what the current state of demographics might say about boat sales.
Click to expand...

FWT, that's a great point. It would be interesting to look at the demographics of boat buyers.

I'd suspect buyers of larger and more expensive boats are older, but not 'old' (since people seem to generally age out of boating sometime in their 70's when it becomes too physically demanding to handle with an aging and deteriorating body). I'd also suspect smaller boats (fishing boats, PWCs, etc.) might be more often bought by 'younger' buyers.

For myself, it got to the point where I don't even bother anymore to inquire about used boats that popped up on yachtworld. My experiences this year have been that anything that looked good to me, a desirable model in seemingly good condition with reasonable hours, would get multiple offers over asking within an hour of hitting the internet. I got tired of calling brokers only to hear 'we already have 5 offers, 3 are over asking, do you want to get in on the bidding?' For me the answer to that question is always, no. Add to that all the other myriad frustrations and sleazy games (I might start a separate thread on that!), and it's just not worth it anymore.

I don't want my first memory of a boat to be that I had to bend over, grab my ankles, and submit to being ripped off to get it. I would feel like a sucker every time I looked at it. It sucks all the fun out of it for me.
 
Nick:

I think we are about to begin seeing articles making generalizations about the "boating market". My personal wild guess is there are a lot of different demographics for different kinds of boats and boating. Small open fishing boats can be let's say 30 up to whatever. Ski boats probably younger. The pontoon and party boats different. Weekend cruisers featuring some speed I'd guess starts at 40-45 and up to retirement. Old enough to afford them, young enough to want the weekend warrier features. Trawlers like most of us have is probably a 50-plus demographic, and maybe starting older. Just guessing.
 
FWT,

I think you’re right about boat buyer demographics. I’d bet most ‘trawler’ buyers (and people on this forum) are over 50.

I might have been a bit of an exception. I bought my first trawler at 42 (a depressingly long time ago). The dealer commented that I was the youngest person to have bought one of those models.

FWIW, the stock market is now down 20%, officially putting it in ‘bear market’ territory (for whatever that means). This might put a damper in some buyer’s plans, both because of declining net worths, and the psychological impacts of a looming recession.

https://www.cnbc.com/amp/2022/05/20...-sp-500-falls-into-bear-market-territory.html

But, as always, it won’t affect the highest end of the market. Even a 20% decline to uber-rich billionaires still leaves plenty of money for toys like boats. Must be a nice problem to have.
 
FWT said:
FWIW, this piece popped up this morning

https://finance.yahoo.com/news/boat-industry-inflation-bear-market-and-recession-fears-104547131.html?fr=sycsrp_catchall
Click to expand...

They mention Boston Whaler and Sea Ray and say sold out into 2023. Oh but those sales are so soft. I think they will see many of those buyers back out. Most finance and those rates will be up. Others will just have second thoughts. I don't grasp why any industry or any business thinks booms will go on forever. Our wholesale operation has all availability 100% sold into 2023. We had that entering 2020 too and look what happened. We hope it holds, but we keep our eyes on out contingency play of a 20% drop at all times. For new boat builders, 20% shortfall would be mild as 40-50% has hit in the past. Customers cancel orders. I would be shocked if 2023 is a good year for the industry.

Let's add a reason Boston Whaler and Sea Ray are sold out too. They can't get the outboards. That's the hold up. That also gives every customer waiting an escape.

At the start of this year, the warning was out for apparel. Instead it's up, but what is down is home furnishings. Target is way off and this could really hurt Bed, Bath and Beyond. Ultimately every product has had a surge and every product will drop, just don't know when.
 
FWT said:
FWIW, this piece popped up this morning

https://finance.yahoo.com/news/boat-industry-inflation-bear-market-and-recession-fears-104547131.html?fr=sycsrp_catchall
Click to expand...

Very interesting. But also now ancient history, based on May. The world is different in June, with the stock market now down over 20%, most economic analysts predicting a coming recession, and diesel fuel prices over $6/gal and likely to stay that way for a while.

My own purely subjective and personal barometers suggest changes are happening.

First, the number of new listings appearing on yachtworld is up. With the specs I was looking for, for most of the past year and a half the number of new daily listings was single digits. 3-6, some days none.

In the past few weeks that increased to 20-30/ day. This week every day has been over 40. Plus multiple boats I’d been watching have had price cuts, some more than one.

Another personal observation has been the calls I’ve been getting from brokers. In the past two weeks I’ve had several calls from brokers on boats I’d inquired about a few months ago. Back then I was brushed off with arrogant comments along the lines of ‘I’ve got more offers over asking than I can count.’ Now I’ve gotten several calls telling me the ‘deal fell through’ and the boat is still available.

The most interesting call was a broker saying the owner was willing to sell for the ‘best offer.’ The broker was also something I haven’t heard in two years - contrite - after being brusque with me a few months ago and saying he expected the boat to sell that weekend for the full asking price (it’s since had two price cuts).

There are no doubt still buyers out there willing to bend over, grab their ankles, and take out their wallets and say ‘help yourself.’ I wasn’t willing to do that.

I’ll joyfully wait for my new boat to be built, and will enjoy watching the broker squirming likely to increase in coming months.
 
To me, the only thing that is predictable is that demand will ebb and flow.

When? How much? Unpredictable.
 
I often keep CNBC running in the background in the mornings (old habit from working on Wall Street). Phil Lebeau, CNBCs auto-industry expert, has been reporting that the auto sector is still very strong, mostly due to supply shortages and demand overhang. He does not see an end in sight.

However.....

Housing on the other hand has already been hit with cascading effects to builders. A good friend who is a successful realtor tells me she's super busy as buyers are trying to lock-in before it gets worse, and (thankfully) sellers are listing to get tail end of the market. There is also some overhang of traditional buyers who were beat-out by cash-buyers. However, that portends a change in the price trajectory to at least flattening if not reversing altogether. Even at the higher end of the market - while rich people can afford it, they also have a strong sense to 'keep their powder dry.' Realtor.com reports number of available houses at the highest rate since mid 2019, pending home sales have declined for six straight months. Clearly, the market is starting to clear, and 30-year mortgage rate at around 6% can only accelerate. Jobless claims are creeping up, and the worker hubris that fueld the Great Resignation has evaporated.

There is a lot of bad financial news out right now, and not many reasons to optimistic in the near term. The Wealth Effect is erroding fast, though if Jaime Dimen is correct, the huge pandemic stimulus injected into the economy that fueled purchasing power won't subside until late this year.

It's just hard to imagine a scenario where boats (and RVs) sales do anything but contract. It will take some time for sellers to shake-off the lofty selling prices from recent times so I'd guess a disconnect in the market, and inventories will increase. But at some point in approx 6-months, unless something really changes, the boat market will likely stall. Let's not forget that buying a boat also means financing for many. And there's always the hurdles of finding a slip and getting insurance.

I would sure hate to be a seller right now. Over the last couple years I've written the oft-repeated sentiment that life is short, why wait to buy? But if I were a buyer right now, I wouldn't be in any hurry. Sure is nice to be on the sidelines....

Peter
 
I think there's significant inertia in the boat market, more than a lot of other sectors. That makes sense to me, boaters have to (generally) have higher incomes, so that means bigger personal financial cushions, a longer glide path down. My informal personal indicators aren't showing any decline yet. I watch RV markets and related activity here, still crazy busy, and boat listings on ebay, and our marina expansion is still going great guns and the new slips are full as fast as they build them -- but inflation is so bad now that I'm beginning to think it's only a matter of time before the boat market starts sliding too.

Our marina is cranking up prices so badly I made some calls to marinas next door in Iowa (Okoboji/Spirit Lake over in Iowa). The slips are still packed full or else the marinas ignore me and never return calls. Our local boat dealer still lists a 23' pontoon (and a pretty basic model at that) at $100,000, which is still insane to me. The boat market might fall off a cliff, but hasn't yet as far as I can tell.
 
most boat builders have orders going out 2-3 years, with deposits.
 
mvweebles said:
I often keep CNBC running in the background in the mornings (old habit from working on Wall Street). Phil Lebeau, CNBCs auto-industry expert, has been reporting that the auto sector is still very strong, mostly due to supply shortages and demand overhang. He does not see an end in sight.

However.....

Housing on the other hand has already been hit with cascading effects to builders. A good friend who is a successful realtor tells me she's super busy as buyers are trying to lock-in before it gets worse, and (thankfully) sellers are listing to get tail end of the market. There is also some overhang of traditional buyers who were beat-out by cash-buyers. However, that portends a change in the price trajectory to at least flattening if not reversing altogether. Even at the higher end of the market - while rich people can afford it, they also have a strong sense to 'keep their powder dry.' Realtor.com reports number of available houses at the highest rate since mid 2019, pending home sales have declined for six straight months. Clearly, the market is starting to clear, and 30-year mortgage rate at around 6% can only accelerate. Jobless claims are creeping up, and the worker hubris that fueld the Great Resignation has evaporated.

There is a lot of bad financial news out right now, and not many reasons to optimistic in the near term. The Wealth Effect is erroding fast, though if Jaime Dimen is correct, the huge pandemic stimulus injected into the economy that fueled purchasing power won't subside until late this year.

It's just hard to imagine a scenario where boats (and RVs) sales do anything but contract. It will take some time for sellers to shake-off the lofty selling prices from recent times so I'd guess a disconnect in the market, and inventories will increase. But at some point in approx 6-months, unless something really changes, the boat market will likely stall. Let's not forget that buying a boat also means financing for many. And there's always the hurdles of finding a slip and getting insurance.

I would sure hate to be a seller right now. Over the last couple years I've written the oft-repeated sentiment that life is short, why wait to buy? But if I were a buyer right now, I wouldn't be in any hurry. Sure is nice to be on the sidelines....

Peter
Click to expand...

I think Peter has accurately summarized the current economic situation. I agree with him completely. New car orders are already slipping. Fuel prices, interest rates, lost wealth…. If I was a buyer with sufficient discretionary wealth, I’d still buy now given the time value of usage, especially new, if I found the right boat. I wouldn’t compromise. In hindsight, I believe I will have paid a premium price but I’d do it again under the circumstances, as long as it is exactly what you want now.
 
For us, there is no way we could afford new. But used is an interesting concept even if you don't love boats. Given you have housing, it's a vacation home (cabin) maybe, but I've priced cabins in the sierra and they're not cheap. RV's are not cheap either. I think we've got about 650 sq-ft of space, certainly livable. Slip rent $400/mo. A home away from home. TV, stereo, air conditioning, stove, fridge, microwave, sinks, showers, all the comforts of home. I put bidets on the heads - :)

If you don't have housing, it's your home (or could be) and somewhat isolated during these covid times. Hang out a fishline and supper could be free. A really good supper too as the best fish is one that was swimming the day you ate it.

I dunno. This little project will probably come in at an eighth mill after I bought it for 93K, still have to do the haul and bottom paint, but a floating vacation home that is comfy and we can move it to San Diego if we want?

Once you get to the "livability" level all things change.
 
bowball said:
If I was a buyer with sufficient discretionary wealth, I’d still buy now given the time value of usage
Click to expand...

"Time value of usage" - I love that framing - may borrow it if you don't mind! Delaying a purchase might cause you to miss a cruising season - what's the value of that? Particularly because you never know what might happen. Parents falling ill, an injury, some other obligation - it might have been your last chance to get out on the water while your kids were still young. You can never get it back.

But yeah, the first part ("sufficient discretionary wealth") is super important too!

Delta Riverat said:
Once you get to the "livability" level all things change.
Click to expand...

Totally agree. I also framed our purchase as a movable vacation cottage.
 
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