Boat Prices: Has the world changed????

mvweebles said:

Sometimes its hard, but not always. Sure, experts got it wrong at the beginning of the Pandemic, but within a month or so, trends were figured out and we were off and running for close to 2-years.



Peter

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My point, lost in my rambling, is bank deposits soared when covid struck. But you are absolutely right, that's now behind us. But some sort of fear is keeping those deposits and hoarding behavior high. We can all make our own guesses on what that might be.

FWT said:

My point, lost in my rambling, is bank deposits soared when covid struck. But you are absolutely right, that's now behind us. But some sort of fear is keeping those deposits and hoarding behavior high. We can all make our own guesses on what that might be.

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It may not be fear, could be anything from savvy money management to getting ready to by real things versus stocks as Warren Buffet said a few days ago.

psneeld said:

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Sounds a lot like what I have been reading. I guess with all the programs to wipe out debt eliminates a lot of fear in way more people than I think it should.
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Are there programs other than the not-enacted one for student loan debt?

Enquiring minds want to know.

When I said programs, maybe I should have used "ways" such as the credit debt legal action business......

BandB is right. There is a lot of denial going on. Buyers for everything are starting to drop out but it’s at the low end of the scale. An entry level house that used to sell in a bidding war the day it was listed is now taking 3 days to find a buyer. This is a small change but it is a change. Real estate brokers are finding the bottom 10% dropping out because they don’t qualify anymore but there are still plenty of buyers. This reminds me of the last recession. Every one says it hit in 2009. No, it hit in 2008 but it wasn’t until 2009 that people ran out of money and dumped assets.

Now, I am seeing some similar issues but nothing like 2009. Personal debt is way down and many people tripled their net worth over the last 10 years. When prices go down I expect it will be quick and I expect they will bounce back quick. Leaving little time to game the market.

I have always been very good at seeing when the market is overheated or when it has fallen too far. I am not very good at telling you when the rest of the world will see it and react.

In the end I say stick to your long range plan. If it’s time to buy a boat and you can afford it then do it. If you try to sell a boat or buy a boat to game the market you will probably loose.

FWT said:

My point, lost in my rambling, is bank deposits soared when covid struck. But you are absolutely right, that's now behind us. But some sort of fear is keeping those deposits and hoarding behavior high. We can all make our own guesses on what that might be.

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Of course bank/saving accounts soared. In the end, about $5-trillion in stimulus payments was pumped into the US economy. A lot of it was saved and funded moves and quitting jobs. A lot of it went to Amazon purchases.

Given the one-time events that uniquely effected demand for stay-cation boats/RVs are now behind us, and there are economic headwinds that, if laws of supply/demand hold true, will dampen demand going forward, hard to imagine a scenario where a strong sellers market persists past about 6-months, the amount of time to declutter the market of current sellers/buyers conditioned to the past 2 years or so.

Time will tell. If I were a buyer, I'd be much more patient and selective. That said, if I were a buyer, RT Firefly's Cheoy Lee 46 would have been under contract a week ago at $130k. Strikes me as a solid deal in any market (I have zero connection to RTF or the boat)

Peter

Pretty sure boat prices here have peaked. Much like real estate. People will be cutting back to be sure they can service mortgages as rates rise. Such a blunt instrument. In our last recession,housing loan rates hit 17%, now people whine at the possibility of 5-7%.

Lots of people are cashed up after the last 2-3 years, you couldn`t spend it. We`d have had 3 trips to Europe if it was safe and possible, that money has to be sitting somewhere.

FWT said:

Joke of the day: "My home mortgage self-identifies as student debt."

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OMG, now that is funny!

tiltrider1 said:

Personal debt is way down and many people tripled their net worth over the last 10 years.

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Not so much.....

https://ycharts.com/indicators/us_total_debt

Thread drift.

Student debt is a major issue. My daughter came out of college with no debt whatsoever. She then decided to go to medical school and is now a practicing pediatrician. She did it all on student loans. She never spent the money on anything other than medical school expenses. She loves her work but hates her $400K debt. There is a growing shortage of doctors. I wonder why.

BruceK said:

Pretty sure boat prices here have peaked. Much like real estate. People will be cutting back to be sure they can service mortgages as rates rise. Such a blunt instrument. In our last recession,housing loan rates hit 17%, now people whine at the possibility of 5-7%.

Lots of people are cashed up after the last 2-3 years, you couldn`t spend it. We`d have had 3 trips to Europe if it was safe and possible, that money has to be sitting somewhere.

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When I tried to buy my first house, I could not afford the payment because the interest rates were 10-12%. Which was better than what my parents had gotten on their house at 18%. It was unreal.

When I finally did buy a house, almost a decade later, I think the rate was 8% and I could not believe how lucky I was to get a rate that low. A family I knew who had bought a house in the 70's had a 6% rate. I never thought I would see rates that low, but eventually, I did a refinance and got a 6% rate.

On our current house, we just refinanced and pretty much got the lowest rate possible around 3.5%. I just could not believe low the rates went. Last time I checked, a 30 year mortgage was around 5.6%. The rates are going up quickly and have almost doubled in six months. The rates have no where to go but up.

In real estate it is all location, location, and location. My area is a growth area due to jobs and companies moving to this part of the state. Manufacturing is coming back after being offshored, at least at some level, and high tech jobs, which have been a big part of the local economy, are expanding as more companies move to the area. Like many places, there is a shortage of workers at all levels.

The housing market here is insane simply because there is high demand as people move to the area for jobs. Areas in the local cities that were depressed at various levels, are bouncing back to a level I am not sure ever existed. Office buildings are causing apartments buildings to be built in the down town areas which is begetting restaurants, breweries, clubs, stores, etc. Some of this has been going on for decades but in the last five years or so, it has rapidly expanded.

The reality for many counties is an aging working force, which is now moving to retirement, and declining birth rates are lowering the number of people working. This is causing wage inflation and I really don't see it ending. This issue has been building for decades and is not going away unless robots really become functional. A recession would only put a dent in our local employment which impacts real estate prices. Even during the 2008 meltdown, while our local real estate prices were hit, it was nothing like other places.

The economy going forward is going to be unlike the past due to changing demographics, government energy policy that is leading to high prices in many areas of the economy, and in some places, power outages, not to mention the lingering affects the of the pandemic and the world wide impact of Putin's War. Food shortages and price increases are hitting us all and will really impact the poorer countries causing more angst. China is also having food production issues....

We were supposed to go to the NL in April of 2020. That obviously did not happen and I don't see us getting there until 2023. <sigh>

Later,
Dan

The most recent inflationary spiral in the U.S. economy was ca. 1976-1981, when I just happened to be trying to scratch out a living in the real estate business. It was a memorably tough experience. My takeaways:

1) Inflation is bad for cash, because a dollar will be worth less tomorrow than it is today.

2) Inflation is good for durable assets, such as homes, because their value adapts to market demand.

3) Adjusting expenditures to follow the curve of inflation (such as wages, salaries and social security payments) doesn't slow inflation - it accelerates it.

4) The only medicine that's proven to puncture an inflationary cycle is increasing interest rates. Former Fed Chair Paul Volcker proved that in the early 1980s, making himself mighty unpopular with a lot of folks in the process, including me. Try selling houses when mortgage interests rates are in the 16% to 18% range. The current Fed chair seems to have read his history though, so that's what we're in for.

What that means for the prices of boats probably depends on the number of buyers entering the market with cash. In the age demographic of our TF community, that requires a healthy market for medium to upper market homes, enabling folks selling those homes to cash out and plow that money into another asset, particularly one that they feel healthy and capable enough to enjoy.

A friend of my wife just sold this 3 million dollar home here in the central valley in 5 days for cash.

Yeah, still a lot of dough out there.

Stay tuned for big changes in used boat prices

Look at the market crash of 2008 if you want a preview of what happens to prices of used big boats, airplanes, and luxury RV's. In the first six months after that crash all used prices dropped 50-70%. A lot of it was people unloading stuff that needed a ton of work, but hidden in the mix were some very nice boats. Save your cash right now and wait for the next market crash to go shopping. I personally witnessed business owners going under who sold assets at 2-3 cents on the dollar and the new buyers walked away happy with great equipment.
Think your moral position prevents you from taking advantage of someone else's misfortune? Ever heard of "Business is Business"?
If you need another example go back to 1983 when the big prizes were in real estate for next to nothing.
If you have a nice boat that you enjoy, one you plan on keeping, then don't do anything and simply watch the destruction from the sidelines.
You might find what I've just written as distasteful. Then again I'll bet you're not in the business of protecting other people from their own bad financial decisions.

This is anecdotal, but I make a lot of trips between NC and FL. A year ago, there was nothing in auto/RV/boat dealer lots. Everything was empty. Now RV lots are full. I've noticed more boats with plastic covers (aka new) in the yard. Auto dealers still empty and only used cars.


I'm holding on to my cash. I'm waiting for the right boat to come along. I think I'll find a good deal before 2023 ends...

Well, I know we're all speculating based on expertise and life experience here, but I don't think the 2008 crash is comparable. As disruptive as that was, we didn't have the red-hot inflation for that period that we do now, or the supply chain craziness. I think that's going to make a huge difference in how this plays. Take my own situation for example, just to illustrate what I mean. Our income is rising only modestly, which in this environment means it's losing value or purchasing power pretty badly every day. We're comfortable in life, even now, but real estate prices have risen so high so fast that now we live in a house that we could never afford to buy, or would have chosen not to buy at the current price. The boat (oddly) is more expensive that we would have chosen to buy, or could have prudently afforded when we bought it. Our cars are more expensive now (oddly) than we would have chosen to pay when we bought them. My point is that we have tangible assets now that we either couldn't have afforded or wouldn't have chosen to buy just out of prudence. We talk about this all the time on this forum -- lately we can sell our boats for much more than we expected earlier, but then good luck trying to buy, to move up for a reasonable price. Likewise, we could sell our house right now and make a killing, but good luck finding a comparable or better next house. And don't even get me started on chronic, seemingly random shortages -- it's already affected our shopping behavior to the point where we buy in larger quantities now to stay stocked, because I don't know when we'll have another shortage of utterly routine home items. We've adopted a Soviet consumer mindset. You throw all that together and I think lots more people are going to hunker down and stay put in their assets. I think this is going to drive a lot more conservatism in personal finances, not mass sell-offs and lowered prices.

Yeah, you'll certainly get over-extended boat owners I know who can't afford $6 or $7 diesel or $6 gas, or the marina bill, or the rising service costs - you can always grab bargains or special circumstances in recreational markets like boats and RV's. But I don't think there's going to be a general or broad dive in boat prices. We're trying to get some work done on our house lately and I can't get a contractor, and they can't get supplies and materials, and their quotes are so high they're burst-out-laughing silly. Given all those constraints I don't see my house (or boat) declining in value at all.

hmason said:

Thread drift.

Student debt is a major issue. My daughter came out of college with no debt whatsoever. She then decided to go to medical school and is now a practicing pediatrician. She did it all on student loans. She never spent the money on anything other than medical school expenses. She loves her work but hates her $400K debt. There is a growing shortage of doctors. I wonder why.

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I'm sure it's a major issue for her. She knowingly took out 400K in loans for med school to become a doctor. Whether that was a good choice or not, it was her choice. There is a lot of sympathy for people with student debt, but nobody cares about those who managed to pay off their bills and what that might have taken.

Perfect description Dan. I have a friend that FB posted asking how long people thought gas prices would be high in reference to whether or not she should look for a high MPG car to buy. I laughed out loud. If people ever buy low MPG cars (ie the obscene Escalade you mentioned), they haven't been paying attention over the past 4 decades!

I have to laugh as I hear so often complaints about what highly skilled boat mechanics charge per hour. Today, I know a lady in search of a handyman. First quote was $196 for first hour and $128 for each additional. Three week job suddenly was over $15,000.

We haven't experienced times like today. First pandemic in our lifetime and now it seems like market must crash in the midst of an inflationary period but interest rates still low compared to history. Where does it all fit in? Is it 2008 or 1994 or both?

Just housing as one example. Prices still rising, high and availability tight. So much disrupting market. What if a couple of the investment companies that own hundreds of thousands of homes decided to dump them? Last year, investors bought between 18% and 25% of all homes sold in ten metropolitan areas. Home owners and home buyers aren't controlling home prices. I know one investor who now owns 30 homes averaging about $4 million in price in a small waterfront area of Fort Lauderdale. The market became tight because she bought everything available. It's not home owners, it's Wall Street. Investors are buying at the rate of over 300,000 homes a year.

In 2008/09, foreclosures controlled the real estate market. They could again, but not if investors buy them all.

I still believe the market will crash but not likely the impact of 2008/09 and that real estate will drop but not like it did then. I think we'll continue to see inflation but nothing like the 70's. However, overall I don't know and my opinions aren't at all firm. Certainly don't know when.

So, guessing on boat prices is just that. Some people will be right because everything is guessed. My best investment in the past year is anticipating British boat purchase, I bought some pound sterling. Earned 14% in 10 months. Total hunch. Of course Euro would have earned more.

It's a crazy time. I think you protect yourself and move cautiously, but not moving at all is a dangerous way to go. Can't win.

I've seen weird fluctuations in valuation of assets before. At the moment we're adding in inflation related primarily to the rise in energy costs (which by the way we won't be able to correct inflation until oil supplies open up and we're back to $2/gallon gas). Anyway, this is all happening before the crash which is certainly coming. That's when you'll see the fire sale prices on real estate, boats, airplanes, etc. If the market is hard to read and the valuations seem crazy it means be conservative and don't buy anything right now. Wait and see what happens. That won't cost you anything and you won't lose cash. Personally I'm waiting for that ideal blue water steel trawler to become available at a giveaway price. It will be $1,000 well spent.

Handcrafter said:

(which by the way we won't be able to correct inflation until oil supplies open up and we're back to $2/gallon gas).

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We will never be back to $2/gallon but back to a new low, perhaps $3, maybe $2.50, maybe $3.50 at some point. $2 has gone the way of $1.

There were those who said that they'd never sell another boat (or RV) if gas hit $1.

Hi Y'all this may not be exactly the same thing but is the boating industry. Though I do own and love my 38' President I work with the Freedom Boat Club and hence deal with much smaller boats on a daily basis. Those boats all range in the 20 to 25' range. That said compared to the the end of 2021 and the first quarter of 2022 our sales of new memberships have dropped tremendously. I dare say by probably 70%. That drop in sales is from the MD/DC, DE/Southern NJ and lower Hudson River area of NY. This reflection comes from actively working in the field in those areas. Most definitely we're all looking at inflation/gas prices and how it's impacting our free cash as well as the general phycology of the consumer especially with what is going on in the world right now, "i.e. Ukraine", as well as the general disunion that is going on in our own country. In a recent sales meeting one of our sales reps. stated that there seem to be general vibe of disinterest with new potential members who are seem generally disinterested even though they are attending sales events such as open houses and grand openings of new locations. I will also add that going the club is not like buying a new Flemming or Kady, but it's still a chunk of money for many and in that realm there seems to be a general pull back at the moment. With that in mind if that mentality extrapolates upward over time we should see a general pull back in the resale value of boats. Me personally I'm sticking with my 87 38' President cause well, she's my sweetie

Greetings,
What's going to happen next week? Next month? I'll tell you this time next year. Forecasts and predictions are just that and are based on historic statistics of trends or past reactions to economic pressures.


Given the current goings on, worldwide, I don't see how anyone can say with ANY certainty what will happen with prices or supplies for ANY commodities.


Very easy to point fingers and blame your least favorite government but, again, WAY too many variables at the present time to even begin to assign "blame" IMO.


If the "experts" are so good at seeing the future, why aren't they all billionaires? (I know, some are but...).


Enough "predictions" are being made to the extent that SOME of them will be correct and the predictor can then say "I told ya so".

Yeah thats for sure, no use trying to predict the future when you can go boating now If there one thing for certain in this world is that nothing is for certain. Especially when your on the water or dealing with anything that traverses it.

Atlantic Sunshine said:

Hi Y'all this may not be exactly the same thing but is the boating industry. Though I do own and love my 38' President I work with the Freedom Boat Club and hence deal with much smaller boats on a daily basis. Those boats all range in the 20 to 25' range. That said compared to the the end of 2021 and the first quarter of 2022 our sales of new memberships have dropped tremendously. I dare say by probably 70%. That drop in sales is from the MD/DC, DE/Southern NJ and lower Hudson River area of NY. This reflection comes from actively working in the field in those areas. Most definitely we're all looking at inflation/gas prices and how it's impacting our free cash as well as the general phycology of the consumer especially with what is going on in the world right now, "i.e. Ukraine", as well as the general disunion that is going on in our own country. In a recent sales meeting one of our sales reps. stated that there seem to be general vibe of disinterest with new potential members who are seem generally disinterested even though they are attending sales events such as open houses and grand openings of new locations. I will also add that going the club is not like buying a new Flemming or Kady, but it's still a chunk of money for many and in that realm there seems to be a general pull back at the moment. With that in mind if that mentality extrapolates upward over time we should see a general pull back in the resale value of boats. Me personally I'm sticking with my 87 38' President cause well, she's my sweetie

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I have to ask this. How does 2022 compare to 2019? It's completely unrealistic to compare to 2020 and 2021 now and that's a problem many have. I'll give hardware as an example. Huge gains the last two years. So, numbers are now flat or even down a bit if you remove inflation for many and you'd think the world was ending. Compare to 2019 and they still look great.

So, I'm wondering if Freedom and lost all the pandemic surge or has lost that plus some now?

I'm told Zillow just cut its real estate price change forecast from 14% growth to 10%

10% is still pretty strong. Just not as strong.

Every region will differ. Your mileage may vary.

Takoradi said:

Perfect description Dan. I have a friend that FB posted asking how long people thought gas prices would be high in reference to whether or not she should look for a high MPG car to buy. I laughed out loud. If people ever buy low MPG cars (ie the obscene Escalade you mentioned), they haven't been paying attention over the past 4 decades!

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Regarding gas prices, Gotto say, loved the GWagon until it was destroyed while boat shopping by someone parked in our lane....you could watch the needle move...but then again that was in January, and prices have gone up. I think I will go back to the Isetta...or the Alfa. And my Scout gets about 1000 miles on 100 gallons of diesel.

I did my "boat buy" in January of this year with a lot of profit from the market to pay for it.

Market not so good now, but I'm glad I bought when I did.

Under contract within hours, so I guess good boats are still moving fast.

https://www.yachtworld.com/yacht/2006-grand-alaskan-raised-pilot-8316382/

Adopo said:

Under contract within hours, so I guess good boats are still moving fast.

https://www.yachtworld.com/yacht/2006-grand-alaskan-raised-pilot-8316382/

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Also shows benefit of professional photography. When I sold my house last year I had it professionally staged and photographed. Honestly, I barely recognized it from the listing - man, it looked beautiful. I had a half-dozen all-cash offers (above asking) within 3-days. Did I need to spend the money on staging and photography in that market? I have no idea, but I surely was not going to take any chances. Obviously, house didn't sell via pictures, but it definitely brought people to the open two open houses - over 125 people each day.

Peter