When Will Boat Prices Drop?

Predicting the market price of assets is impossible with any precision. There is just too many unknowns. One can only assess various probabilities to different possible scenarios.

That said, prices of boats will depend a great deal on the make, model, type and year. There is a significant size market segment that has sufficient assets, conservatively deployed, to pay cash for an older trawler and to not be affected very much by economic turmoil. I think 20-35 year old boats (1985-2000) fit into this category and their price will mostly be determined by condition. The market that is likley to suffer price declines is the newer vessels where people have financed them--a significant portion of these owners will be experiencing economic hardship and will be anxious to sell--even with a loss.

I think in some segments, demand for quality boats may actually increase and prices may even rise. Boats attractive to 70 year olds who have conservative investment portfolios and/or healthy pensions know, now more than ever, that life is finite and uncertain--enjoy life while you can.

I think that some boats will have little affect from the C-19 repercussions. Let's face it, small boats like runabouts, sunbridges, etc will be affected. But larger boats generally draw their interest from those with a little more cash on hand and many have profited from the C-19 stock market.
Add to this, that many will be looking for alternative living resources. Here in the PNW, especially around the Seattle area, the cost of housing is so outrageous that many, even non boaters are seeking out larger boats to live on. A small condo will cost you well over $300K here in Everett. Not the most desirable area. A boat in the $90K to $160K range has become the alternative of choice. Especially given the areas multiple water ways and cruising options.

As a maritime attorney I handle the occasional yacht closing. One was cancelled a few weeks ago due to the pandemic. The buyers decided not to take the plunge on an older Hatteras that was in good shape and used the survey deficiencies to cancel. My broker friends tell me that high end, newer, large yachts are still getting traffic. Younger buyers with money want fast boats with low hours and new technology. Older boats are getting less traffic, especially if they require a lot of maintenance/updates or repairs. Trawlers bigger than 50' is stagnant unless its new or newer, high end Outer Reefs, Flemings or Marlows. Predictions for the fall see even less activity except in the high six figure and seven figure boats mentioned. Let's all hope things improve soon!

We did our part to keep the market at pre-Covid levels! We are completing our purchase of our new to us 37 Nordic Tug this week. We were set to complete the sales in early March but delayed because of everything that has been happening. We decided to get on with life, not worry about if the prices are falling and enjoy the time we have with the kids this summer. Thankfully the sellers stuck with us and we have been so lucky to be dealing with such wonderful people. In college I worked on a used car lot and the old-time manager would always tell me if you think you got a good deal believe it and once its done don't ever verify it. With that in mind this will be the last time I check out this thread!

Good luck on your future sales or purchases.

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?

Click to expand...

As always the buyers will decide.
If you are the one with the money then ultimately you decide the price.
Make your offer, see what happens.

For me, my boat is not for sale but is was a few months ago. Now we just live on it full time, on anchorage with very low costs.
Just watching the bank balance go up when then government keeps handing out stimulus money.
Best times ever.

Although most wont admit it, we consider our boats as a haven, an escape boat.
When things turn to the stuff behind the horses, we want to be able to untie and venture out and allow things to cool down.
For example, this pandemic, we have the ability to untie and anchor out, cant do that is you are living ashore. Now that grocery stores are delivering to a dock, we really do not have to interact with the crowds in the grocery stores.
Once we get a boat load of non-parishables on board, all we really need are fresh items such as meat, potatoes, diary and veggies.
All we really need, other than the above, is the occasional visit to the fuel dock and pump out (unless we consider a day trip out to dump our sanitary tanks.)
And the added feature, if you do not like your neighbors, you can move to another location.

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.

Click to expand...

I saw something similar recently, and also a second, similar-toned video put out by a prominent catamaran broker. After watching, my skeptical gut feeling was here’s a salesperson desperately trying to say... “everything’s fine folks... nothing to see here”! They need everyone to think everything’s good, while hoping for a miracle to maintain the momentum that was there 3+ months ago.

While many opine that it’s just low-end workers getting laid off, I would suggest we’re at the tip of the iceberg. The travel industry will get decimated. If you’re thinking maids... think again. Did you see the numbers of airline pilots receiving notices this week?! (Do you know how many pilots are boat owners?!) A major car rental company talking chapter 11 today? The restaurant industry operates on razor thin margins. We picture servers... but how about restaurant owners? The retail industry was already in turmoil trying to reinvent itself in the era of Amazon. How many businesses will never come back? All of these will snowball as they drag consumer spending down. They may prop up the stock market for a few weeks... and the 1% will be worth less while still getting their tax breaks and bailouts, but for the rest of us, I think we’re on the cusp of a major recession (depression?).

I’m no soothsayer, but my bets are that sales volumes are going to tank this year, compared to 2019. A chunk of charter boats will add to the market, and negatively impact prices. There will also be some newer boats on the market that were financed by folks who were over leveraged and need to dump that loan. There will also be a bunch of 45k - 70k boats that will be on the market by owners whose jobs are gone and maintenance and slip fees (luxuries) will be displaced by the food, housing, and transportation budget.

None of this will happen quickly. For the next few months, brokers will be patting sellers on the head and telling them to wait it out, or “let’s just see where this goes”. It will take most of the summer I think before sellers will start getting desperate. Even then I’m not predicting a blow out of prices. Probably somewhere between five and 15% reduction from last year‘s prices. It’ll be late summer, towards a given areas “end of season” where sellers will start telling brokers “F-this... get that thing sold”! Then you might get lucky and find something in the -15% to -20% range.

And that is the opinion of one man who had nothing to do this evening but throw my opinion into the fray. Even though I’m currently wearing buyers shoes, I hope I’m way wrong, and there’s really nothing to see here folks!

Prices

I have a friend who is a Broker. He will not even consider selling anything but quality boats. In the last month he has moved a couple of great boats at phenomenal prices. Owners wanted to move them immediately. I have known him for 7 years. I don't think he has ever had people wanting to move boats this quickly. There are many boats at fire sale prices in SW Florida. Some of them are top of the line boats.

My $.02. Boats are similar to private aircraft. Sales of private aircraft tanked in the late ‘70’s. Boats went into the 80’s pretty strong. Now the fleet of both is rapidly increasing in age. Both have held their value to some degree because of the high costs of replacement. Both are luxury items that are subject to downturns in economic conditions.

My take is that valuations will fall modestly in the current recession. If the next shoe drops and the massive liquidity being pumped in fails to pull us out of this mess then think depression and resulting lower assets values on luxury items.

I don’t know which way things will go. I can think of worse places to be in a Zombie apocalypse than my boat.

Here s what I think...

If you wait till boat prices steeply drop all you are going to do is get older in the process.

If you want a boat, buy a boat. If you need prices to drop thinking that you’ll then ab able to afford your dream boat, think again. Prices do not drop that much.

I was in the big boat buying market in the last big recession. What I found is that prices did not really drop all that much, but the selection got much better.

Waiting for estate sales

Considering COVID-19 hits seniors. And the demographics of trawler owners is senior. I would think estate sales, at fire sale prices, are a reasonable conclusion.

Remember what happened to the boating industry when Carter put a luxury tax on boats? I think it was somewhere in 25%? The luxury had the exact opposite desire effect. Boat builders went out of business, boat sales, new and used, tanked, unemployment in the industry sky rocketed. The shake out was unbelievable. When the tax was removed, it took decades for the boating industry to recover.
We will see both the trickle down effect, parts manufactures cut way back. Loss of skilled labor etc.
The trickle up effect, fewer boats being produced, may have an effect on the build quality.

No one wants to see nor experience that again.

So if the boat prices dont drop, I guess we should be happy, to a degree.

I agree with Ksanders.... you want a boat, buy a boat, support the industry or the industry may not be there when we need them.

Just did the mini loop in Florida. Cant be more isolated. Fuel is considered essential!

Interest high - cash not so much

I have a sailboat on CL for a friend and we are getting many many more inquiries now then pre-Covid. The boat is $10k OBO and I think some people are looking to get out of their apartment leases. The first question is always about transferable moorage although it says no moorage in ad.
Several lately have been experienced with this make of vessel. Of course, inquiries have not equaled cash. The owner now regrets discouraging the first few offers as he was waiting for a “worthy” buyer for a boat he loves.

Expecting a general price drop in the boat market is based on the premise that most people will need to sell their boats. I expect only those who are financially strapped would be in such a position. I suspect most people on this site, and trawler owners in general, research, plan and own the sort of boat that meets their desires. As such situations like this are unlikely to force them into selling whereas someone who as bought a boat impulsively is much more likely to be in a situation where they need to sell.

Another factor is the boat industry is (was) still recovering from 2008. This has a big impact on age and diversity of inventory that is available. It could be that the industry is in a better place to weather the new conditions due to 2008.

Undoubtedly changes in the economy will hit the boating industry but in general I don't expect a general downturn in market pricing except for situations where dealers with new inventories that they need to move and owners of boats where they didn't fully understand and plan for what they were purchasing.

It will be good to look back on this thread in 3 - 6 months when transactional prices have dropped. Hopefully they will not drop too much.

grahamdouglass said:

Considering COVID-19 hits seniors. And the demographics of trawler owners is senior. I would think estate sales, at fire sale prices, are a reasonable conclusion.

Click to expand...

Just like the old joke: What is the average age of a Harley owner?

This may or may not be relevant.

According to two realtors I know, the real estate market is strong right now.

pete

Pete Meisinger said:

This may or may not be relevant.

According to two realtors I know, the real estate market is strong right now.

pete

Click to expand...

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

The availability of financing will be a huge factor in RV's and Boat's. The vast majority sold involve some amount of financing. Even if it's not directly tied to the item, people may borrow in some other way or finance something else. I don't think we know yet what the availability will be but I fear as banks start foreclosing and repossessing things will tighten up quite a bit.

I'm going to go back to a time I was barely born but many of you will remember. 1974. Energy crisis, lines to get gas. However, that's not what hit autos, boats and RV's the worst. Banks did most of the floor planning until then and they pulled the rug from under the dealers. That's when GMAC and Ford Motor Credit had to come about. At retail the same thing happened. Banks had no interest. North Carolina National Bank, forerunner of BOA was the largest auto dealer and real estate company in NC almost overnight. The largest Winnebago dealer in the state went one entire year without selling a motorhome although they sold a couple trailers and fifth wheels. That's when we also saw runaway inflation and even when there was financing it was prohibitive for most buyers. I had an uncle who got relocated by his employer and lost money as his interest rate on his old house was 10% and on his new was 18%.

So while the supply and demand of boats will be big, the supply of financing will also be. Toss in insurance issues as well.

FF said:

" I've seen it as well and often wondered how some RV dealerships could afford to carry so much inventory. Acres and acres of RV's..."

They do it the same way car dealers do. the factory owns and finances the inventory , it changes hands on final sale.

That way the dealer can have access to inventory that is not on his lot , and not have to wait for a unit to be built if he has a customer.

Click to expand...

Actually, at car dealerships, the factory does not own the inventory on dealer lots, but they do finance it, if the dealer wants. Some dealers pay cash for their inventory and do not floor plan saving the interest expense.

Back in the day, GM gave us months of free interest on new inventory, but those days are long gone.

Not sure about RV lots, but wow, some of them have astonishing amounts of inventory. If financed, the interest expense must be significant.

I understand that farm equipment dealers don’t have to pay a dime for inventory until sold. That explains the acres of tractors on dealer lots.

BandB said:

The availability of financing will be a huge factor in RV's and Boat's. The vast majority sold involve some amount of financing. Even if it's not directly tied to the item, people may borrow in some other way or finance something else. I don't think we know yet what the availability will be but I fear as banks start foreclosing and repossessing things will tighten up quite a bit.

I'm going to go back to a time I was barely born but many of you will remember. 1974. Energy crisis, lines to get gas. However, that's not what hit autos, boats and RV's the worst. Banks did most of the floor planning until then and they pulled the rug from under the dealers. That's when GMAC and Ford Motor Credit had to come about. At retail the same thing happened. Banks had no interest. North Carolina National Bank, forerunner of BOA was the largest auto dealer and real estate company in NC almost overnight. The largest Winnebago dealer in the state went one entire year without selling a motorhome although they sold a couple trailers and fifth wheels. That's when we also saw runaway inflation and even when there was financing it was prohibitive for most buyers. I had an uncle who got relocated by his employer and lost money as his interest rate on his old house was 10% and on his new was 18%.

So while the supply and demand of boats will be big, the supply of financing will also be. Toss in insurance issues as well.

Click to expand...

Thank You! I was hoping someone would broach the financing side.

If we look back to 2008 one of the big drivers was that financing opportunities dried up, literally overnight.

That is not happening now, actually the opposite is happening. Money is available, and at a low interest cost.

Read this thread earlier today and thought it was quite interesting. Then this afternoon had to drive into town. On the way and next to the road (Hwy. 19, a two-lane "highway") there is a storage facility that has a very popular "for sale by owner" gravel lot out front. Normally, there are dozens of cars, RVs, and trailerable boats for sale. I hadn't been by in awhile but was almost shocked to see that there were maybe five cars and one boat.

Not sure what that says in relation to this thread, but it probably means something...

Phyrcooler said:

I saw something similar recently, and also a second, similar-toned video put out by a prominent catamaran broker...

While many opine that it’s just low-end workers getting laid off, I would suggest we’re at the tip of the iceberg...

I’m no soothsayer, but my bets are that sales volumes are going to tank this year, compared to 2019. A chunk of charter boats will add to the market, and negatively impact prices...

And that is the opinion of one man who had nothing to do this evening but throw my opinion into the fray.

Click to expand...

IMO, 'cooler's assessment is the most accurate and a bunch of the rest of the authors on this thread are living in denial or just hopefully optimistic.

The marked for used boats has always been a buyer's market. What the OP should do to test his theory/question, is just go out to ten boats that interest him and make ten offers of 50% the asking price. If he can find an estate sale then offer 20 cents on the dollar.

That will answer the question quickly.

And if you think this only applies to old Taiwanese tubs in the under 100k range, well take a look at the used listings. See how many 62ft Nordies are for sale? One of those sellers will be highly motivated to sell. Perhaps not 50% off, but still a huge chunk. Only advice I would give is to wait until later this year when the recession deepens even more.

If you have cash in this market then you are king.

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.

ksanders said:

Thank You! I was hoping someone would broach the financing side.

If we look back to 2008 one of the big drivers was that financing opportunities dried up, literally overnight.

That is not happening now, actually the opposite is happening. Money is available, and at a low interest cost.

Click to expand...

As for there being not much for sale along the side of the storage lot. I think it has everything to do with social distancing and stay at home orders. As a buyer do you really want to go meet some stranger and crawl all over their boat or car? As a seller do you want to have to go meet MANY potential buyers and spend who knows how much time around them? Sellers might also feel that this is not the best time to attract lookers as they may be sitting it out at home, so they wait.

I have sent several communications to brokers lately- Not one of them was returned. Hell, one of the emails was to my broker. The brokers are on the sidelines as well. Not all of them, I think it is largely dependent on location and the situation of the particular broker. Right now is not the time to sell or buy really. Selling because of lack of buyers, buying because the market has not adjusted yet and there are not that many boats for sale compared to normal years at this time.

Craigslist in Detroit currently has about 1100 boats listed, last year at this time it was around 2800.

People are still in shock. I pray we return to something close to what we left. I think that prayer might be a stretch. Change is ahead. We will adapt and overcome as we ALWAYS do. Between now and then it may be a bit painful.

Moonfish said:

Read this thread earlier today and thought it was quite interesting. Then this afternoon had to drive into town. On the way and next to the road (Hwy. 19, a two-lane "highway") there is a storage facility that has a very popular "for sale by owner" gravel lot out front. Normally, there are dozens of cars, RVs, and trailerable boats for sale. I hadn't been by in awhile but was almost shocked to see that there were maybe five cars and one boat.

Not sure what that says in relation to this thread, but it probably means something...

Click to expand...

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.

Cant sell what you dont have, or a reasonable delivery date.

As an economist, I always remind that "at the margin" is quite different than "on the average". The less popular boats in poor condition will fall dramatically. The popular boats in first class condition will probably hold up quite well. To sell a "marginal" boat will require a big price drop. Prices of popular bristol boats will probably hold up well as they are in such short supply...in a poor economy with more deferred maintenance, they become ever more rare.

moparharn said:

As for there being not much for sale along the side of the storage lot. I think it has everything to do with social distancing and stay at home orders. As a buyer do you really want to go meet some stranger and crawl all over their boat or car?

Click to expand...

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."