When Will Boat Prices Drop?

Buying a trawler at this time is difficult given hazards of air travell, meeting with sellers, brokers, and surveyors; and most importantly, is now the time to give over some serious cash.

What's the thinking on this forum for where the market is heading, and when?

Welcome aboard. It is a brand new experience. This is something that almost nobody has seen before. My mother will be 100 next month and even she wasn’t around when the Spanish Flu was going around. Only time will tell what will happen with boat prices.

I think that there is no question that boat prices (and real estate) will drop over the rest of this year. My take is that the 15-20% unemployment that we are experiencing now will drop to about 10% by the end of the year and slowly go down after that. But it will probably take at least two years to return to sub 5% levels.

With less money in the hands of buyers due to unemployment, sluggish growth and unemployment holding down wage increases, there will be fewer buyers. And some of those unemployed will need to sell their boats to stay afloat so overall demand will be down and supply will be up, thus prices will drop. My guess is 10-15% by next spring.

David

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.

Bacchus said:

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.

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This could happen and also the fire sale on boats could happen. Only time will tell.

Here's hoping Mr. Baccus/Don is correct on this one

FoxtrotCharlie said:

Here's hoping Mr. Baccus/Don is correct on this one

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+1

The market will crash when we put our boat up for sale. So, if you can wait a couple of years...

My guess is that there will be many fire-sale boats available; I see a couple on our marina's dock now. But they are not the nicer, well maintained boats. Nice, well-maintained boats are immediately available to take their owners on a safe and fun boating adventure. Safe and fun travel adventures are presently in short supply.

I agree with Bacchus that a significant part of the destination travel spenders' have nowhere to safely go. They have money looking for alternatives. Cruising, to me, is journey travel spend - not so much about the destination. Given the few good travel alternatives, why would someone with a nice boat sell it now?

I haven't seen any price drop yet, but I sell more catamarans then power boats and that market is pretty steady. I did lose one sale due to Covid-19, but that same boat went back under contract in under a month. We're talking 200K plus range. If you happen to have a boat, be it sail or power, and that boat is in demand, you're kinda insulated when it comes to market movement. If you're holding something more run of the mill or dime a dozen, then I believe the market is going to slowly slide down and then recover.

I've always pictured boat acquisition as an expenditure/write-off and not as an investment.

markpierce said:

I've always pictured boat acquisition as an expenditure/write-off and not as an investment.

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Yes, boats are expenses, not investments.

Are we taking low end boats or high end boats. Higher end boats usually take longer to sell. Being on the market for a year is not uncommon. It will probably take 6 months for us just to figure out which way the market is going. Boats are selling now, coved-19 might have slowed the traffic but good boats priced right are still selling quickly. Bad boats priced poorly never have sold and still don’t

My crystal ball says...........
As of now, all of it is speculation. I hope Bacchus is correct!
However, I fear that we are heading for some economic "bad times" and that at least for the short term we could experience a number of business bankruptcies and accompanying much higher unemployment levels, as well as some investments dropping. If that does come to pass, then I would expect real estate prices to drop and certainly things purchased with disposable income like boats to drop as well due to a lesser demand accompanied by a larger than usual supply.
One thing I do know for sure, we are in uncharted waters economically, socially, and health wise as well, and overall impacts are yet to become clear!
I also fear that we are globally headed for some much higher inflation levels due to all of the "stimulus" packages basically adding huge amounts of money into circulation. Something has to give????
Hope not!
It seems like we need to get back to work ASAP to get the economy going again, but it must be in a manner that does not increase the spread of this very contagious disease or all of our economic pain to this point could be for naught. Sounds easy doesn't it????

Probably the used boat market will get more competitive. A buyers market. Good boats will hold their value better than poorer boats. The ones that have to go, won't be getting much maintenance. I'd expect a lot more trailer size boats to come on market than trawlers.
Something else... Being retired this hasn't affected us very much. Still the same income coming in. Sure our investments have dropped but we don't live off them. Other than not making trips to town and sensible precautions not much has changed.
Wish everybody was in the same situation..

Nobody really knows when these times may lower boat prices significantly. It may be a year of round two of Coronavirus and November going into the next flu season before we have enough financial impact for a surplus of used boats on the market, (which will lower their prices.)

Like the old adage goes. "Significant price drop Tomorrow, Free beer tomorrow also"

Seriously, I think it is starting to happen right now and I also think it will be steeper than Baccus anticipates.

pete

My opinion the more expensive the boat, the least it might be affected by the pandemic.

Generally speaking, if you can afford a few hundred thousand or more for a boat, you are well off enough that this is not going to be a big deal in the overall scheme of things. You are probably not a single income source dependant person.

Also many larger boats are owned by retired folks, and their income hasn’t been affected.

Yes there will be for examples where I’m wrong, like an airlines pilot, but in general I think higher net worth folks are not as affected.

Northend said:

Buying a trawler at this time is difficult given hazards of air travell, meeting with sellers, brokers, and surveyors; and most importantly, is now the time to give over some serious cash.

What's the thinking on this forum for where the market is heading, and when?

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I doubt you’ll see much changes in this market sector.

Boat prices were already dropping in a very good economy.

I don't think it is as much a matter of the economic downturn that is going to be caused by Covid-19, but that the younger generations are simply not interested in boating at the rate that they once were. There will be a shortage of buyers for larger boats. The younger people are buying center consoles, pontoons, and jet skis. No or low maintenance, a quick booze cruise and tie it up and go home. If you ask any person under the age of 35 "where is the starter on the engine?" I would guess 1 in 10 could answer the question. I agree that the really high end boats will hold value better because there are so few of them. You can buy a 42 Bertram for $40,000 with 800 hour Detroits in it. Six years ago it was $125,000 and 10 years ago it was $175,000. Granted this is one boat model, but I think it says much of where things are headed. Most of the younger kids also don't like the idea of pumping the carbon of two big diesels or big block gassers into the environment. At the current rate of carbon increase we are all going to need a boat sooner than we think. Many of the marinas in my area are closed due to high water. Big shortage of wells.

Again referencing the RV / MH industry...
They reported an almost correlation of MH sales to stock market indexes. I would think boats are similar.
Always exceptions... smaller, used vs new, older vs newer etc. But even higher net worth folks are not as "high" now as several mos ago and
Likely has some impact on emotions.
Then there is the crystal ball question of how long will markets be affected? Some say quick recovery others doom and gloom for longer time.

moparharn said:

I don't think it is as much a matter of the economic downturn that is going to be caused by Covid-19, but that the younger generations are simply not interested in boating at the rate that they once were. There will be a shortage of buyers for larger boats. The younger people are buying center consoles, pontoons, and jet skis. No or low maintenance, a quick booze cruise and tie it up and go home. If you ask any person under the age of 35 "where is the starter on the engine?" I would guess 1 in 10 could answer the question. I agree that the really high end boats will hold value better because there are so few of them. You can buy a 42 Bertram for $40,000 with 800 hour Detroits in it. Six years ago it was $125,000 and 10 years ago it was $175,000. Granted this is one boat model, but I think it says much of where things are headed. Most of the younger kids also don't like the idea of pumping the carbon of two big diesels or big block gassers into the environment. At the current rate of carbon increase we are all going to need a boat sooner than we think. Many of the marinas in my area are closed due to high water. Big shortage of wells.

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I think that the fact that there is a "population bulge" called the "baby boomers" (and on average they have accumulated a reasonable degree of wealth) and they will be trying to divest assets (like housing, RV's, boats, etc.), and that this divesting of assets may be accelerated in both time frame and amount due to Covid-19 (causing an increase in supply), coupled with the fact that the following generations either don't have the same interest in boating, or the same levels of disposable income (especially after Covid), will ultimately lead to a "softening" of the various markets. Add in the impacts of inflation (to come) caused by the large injection of new money by world governments and the unbelievably high levels of debt in our societies (corporate, personal, and Governments of all levels) and it does not bode well for maintaining boat prices (IMHO). Time will tell, and I hope I am wrong.

moparharn said:

I don't think it is as much a matter of the economic downturn that is going to be caused by Covid-19, but that the younger generations are simply not interested in boating at the rate that they once were. There will be a shortage of buyers for larger boats. The younger people are buying center consoles, pontoons, and jet skis. No or low maintenance, a quick booze cruise and tie it up and go home. If you ask any person under the age of 35 "where is the starter on the engine?" I would guess 1 in 10 could answer the question. I agree that the really high end boats will hold value better because there are so few of them. You can buy a 42 Bertram for $40,000 with 800 hour Detroits in it. Six years ago it was $125,000 and 10 years ago it was $175,000. Granted this is one boat model, but I think it says much of where things are headed. Most of the younger kids also don't like the idea of pumping the carbon of two big diesels or big block gassers into the environment. At the current rate of carbon increase we are all going to need a boat sooner than we think. Many of the marinas in my area are closed due to high water. Big shortage of wells.

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I agree with your summary - the younger folks are not interested in the commitment of time and money for boats for the most part
Couple that with the fact that many folks are not really that 'handy' anymore and the costs of repairs/upkeeps continues to drive the used boat market down. This virus will accelerate the ability for many folks to fund boats as well whether that be cash or loan. The ability to strike a deal for a used boat right now if better already in some cases where folks need to get out and the summer sales season appears all but lost. My guess is that more will follow the pent up demand for sales as the months progress for at least the summer season.

I'll say it again:

When was the last time you saw a 30 something year old person out on a boat larger than 30 feet which was not his fathers boat?

I will admit I have seen some slightly older individuals, around 40 maybe, on go fast boats but early thirties? Maybe never.

I'll turn it around a bit in a Harley Davidson Analogy. When was the last time you saw someone under thirty on a Harley? Sure there are exceptions but darn few of them. Now look at any information on the sale of big Harleys and the company's future. Bleak..

There are millions of Harleys out there , new and used for sale. The market is really soft. Used prices are really falling. Not so much room on the new market but the dealers are offering lots of other incentives.

You can get a really nice used Harley for around $5,000. A really nice new one goes for closer to $20,000. Now lets look at 35 foot boats. A nice used one for around $35,000 and a nice new one for about $500,000. I think a person "on the fence" about buying a Harley could feel that "What the heck, it's only a few grand" That same fence sitter thinking of a boat would have to think "Hmmm, thats a lot of money, more than I make in a year, or a couple years or maybe a lot of years."

IMHO, the boat market is soft and going to get softer, soon.

pete

Pete Meisinger said:

I'll say it again:

When was the last time you saw a 30 something year old person out on a boat larger than 30 feet which was not his fathers boat?

I will admit I have seen some slightly older individuals, around 40 maybe, on go fast boats but early thirties? Maybe never.

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Everyday of the week in chicago.

I agree with Pete,
Here in what some would consider to be a heavy use boating area, I rarely see anyone on a boat (bigger than a run-a-bout) much if any under "retirement age", with the possible exception of a few chartered boats.
Interesting to hear you have a different experience in Chicago.

firehoser75 said:

I agree with Pete,
Here in what some would consider to be a heavy use boating area, I rarely see anyone on a boat (bigger than a run-a-bout) much if any under "retirement age", with the possible exception of a few chartered boats.
Interesting to hear you have a different experience in Chicago.

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Wage demographics skew chicago- it’s an old money, new money, multiple industries town that also skew to younger demographics.... no longer a manufacturing capital.... but tech and financial industries make it a lot different than most nowadays.

The economy is tanking so I imagine the boating industry will follow. Those who are ready to cash in their newly vested options are going to wait until the market recovers. The real estate owners are going to wait until their tenants start paying rent again. Overall the price of luxury items will stall or drop. The price of used luxury items will simply drop. How much is anyone's guess.

If I were in the market for a boat, or a new car, or a second home, I'd be low balling the candidates. I don't need one tomorrow at noon. I can wait.

I think "Gmarr" brings up a good point about Chicago. It is definitely an "upscale" market.
Last time I tied up at that main marina across from the Navy pier we were fascinated by the people we saw. Mostly young, jogging or biking or just out for a walk, alone or in pairs, nicely dressed, polite (though most had "buds" in their ears) . It was a fantastic experience, made all the better by a short walk downtown for dinner at a very nice restaurant.

We are going again this summer to cruise the river.

Really too bad Chicago has a bad rep. We didn't see it but I know it is out there.

pete

I expect that we will see a buyer's market for boats this Summer/Fall.

The stock markets don't necessarily reflect main street. I think that pumping 2 trillion dollars into the economy and dropping interest rates to near zero, has caused the markets to look stronger than they actually are. Regardless, it is not the only indicator of the economy.

Boats for the most part are bought and maintained with discretionary dollars. If Joe Public (not retired) can't afford or questions their decision about having bought a boat, and questions the cost of boat ownership, we will move into a buyer's market. The monies that Joe Public has available for boating, often isn't related to the wealth of the stock markets.

We have done a terrific job in many parts of the country of flattening and lengthening the curve. This is great as it allows us to get the necessary healthcare, when needed. In the next month, or two, many parts of the country will re-open, and many folks who have been laid off will get back to work, although many folks will still be unemployed/underemployed. We will not get back to whatever is the new "normal" until there is a vaccine for the virus.

Jim