Sailboat Prices

[deluxe68]

We have been watching boat prices on new and used boats drop due to the economy. Brokerage boats in particular seem to be dropping very fast. The banks are requiring down payments even on heavily discounted new boats. My loan officer thinks that by July the manufacturers should be feeling some serious pain and great deals will be available. Beneteau, for example, is having a blow out next weekend but I do not know what the prices will be. Will the end of July San Diego boat show be the right time to pull the trigger?

[bangkaboat]

This is much on my mind, as well. The sellers & brokers on the west coast of Canada seem to be deluded with the belief that the buyers will come, paying the asking price. As a result, I am looking south of the border. California seems much more competitive - for obvious reasons - and should be an area for continued decreases, but, for how long?

What dates are the San Diego boat show?

[MikeZ]

I'm helping two friends find moderately priced used boats (30-33' or so) and we haven't seen prices dropping significantly the past three months or so. Really, not at all.

(In fact, I just saw one boat ad where a fellow relisted his boat without removing the OLD listing from about 18 months ago -- and he's now asking $3k MORE. Gotta laugh at that one.)

What's interesting to all three of us is that we keep hearing it's a buyer's market yet we are having a devil of a time getting brokers to respond to us at all. Phone calls asking for appointments to see specific boats go unanswered. Emails go unanswered or we wait four or five days for a brusque response -- and then they don't answer the questions asked. So we ask again and get no answer at all.

If I were a seller right now I think I'd sell the boat on my own based on this bizarre experience with a whole bunch of brokers. Of course, we have also waited three days or more for a reply to OUR response to a seller's ad, but at least those folks aren't in the BUSINESS of selling boats.

Well, go figure ...

regards,
Mike

p.s. We're looking on east coast, SE to mid-Atlantic.

[deluxe68]

I have seen the asking price for a B36.7 drop from 127k to 112k, another B36.7 dropped from 119k to 112k, a B40.7 from 149k to 138k. Many ads on yachtword state "just reduced" or "please make an offer" etc. I have seen one Swan raise their price from 139k to 149k. I have been told it is the middle market that is most affected and the boats under $100k or over $500k are not doing too bad since these buyers probably are not relying solely on bank financing. Too many people put zero down on luxury purchases like 2nd homes and boats, they have no $ at stake when they walk away from the loans. On top of requiring 15-20% down on all new boats, some banks will not loan the sales tax amount. They are starting to require liquid equity of at least 50% of the boat price. I heard from someone at the Dana Point boat show that there is not too much activity and the dealers are starting to get nervous. I think that show is powerboats though.

[watson1990]

Lets see if i can keep this brief[ a chore for me ]
The real estate market suffered a huge blow late last year and into this year ,primarily due to sub prime loans defaulting. We are now about to enter a new market [ or non market ,if you will ]
What we see now is that 1 in 8 homes ,secured by good credit is now in default or in foreclosure ..Thats 1 out of every 8 houses where they have GOOD STRONG credit. This is becaucse of all the lay offs from huge corporations but most people don't understand that somewhere in the area of 95 per cent of all jobs in the United States are with small companies or mom and pops stores /ventures .These are the ones who are about to find out just how bad it is when no one is buying flat screen t.v.s or stereos or cars or landscaping etc etc etc...
They are now gonna lay off another 1.3 million workers in the next 2-3 months ..Then these good credit people won't be able to pay their mortgage and those little shops in all the mini malls are gonna close.
Now ,,,stage two : all those mini malls as well as large malls will be closing up and the owners of the malls will be foreclosed on . Now we have a Glut of commercial stuff and no where to sell it ..can you say "stagflation ?" interest rates are going to soar in the next 24 months [prolly a lot sooner ]
This next 12 -15 months will be living hell for not only those folks who are hard working and pay their bills but also for the people who own the mini malls and larger malls as well. it is an downward spiral and Obama has already shot his wad of cash ...and the big stuff ain't even here yet !!
What will he do ??? what will he do ...
You want to see boats going for 25 cents on the dollar? Just save your cash and wait ...The financial blood bath hasn't even happened .
Kinda funny how every week they [government] say stuff like ' We see a glimmer of hope " or things are beginning to turn around ....when the reality is that none of it is true ..Just look at the bond market this week ! They dumped billions of dollars in bonds on the market and nobody bought !! especially not the Chinese...they are afraid ..so The Government had to artificially raise the rate of return on the bonds in order to move them ..that price will be paid [by us or our children ] in the next decade but the present administration doesn't care : they won't be around then !
Put your money under your mattress ,,,maybe gold,, and wait...and wait there will be people paying you to take their boats so they don't have to pay the storage fees ... living hell ... I wish I was wrong ,,,but afraid not..

Just one mans opinion
your mileage may vary

Watson

[maxingout]

Watson, Lots of interesting points in your post.

We are in uncharted territory,there are reefs all around, the wind is blowing 120 knots, the seas are 80 feet high, there was an earthquake 10.0 on the richter scale, and a tsunami is coming. But I'm not afraid. I can see a glimmer of hope.

[Sailormann]

While I agree with some of what you say - I think you need to remember that the US is still an internationally important economy. Similar to some of your banks there, it is deemed "too big to fail" by the foreign economic community.

What is sure is that your 'average American' is going to see things get worse than they are, however there are a lot of economies that are in better shape than, yet somewhat dependent on, the US economy (Canada/China/India to name three).

You will receive aid when things get to the point where destabilisation becomes a possibility. It won't come in the form of bushels of grain being distributed from low-flying planes, and probably won't be much publicised at all, but it will happen.

So get out there and work, spend and enjoy ourselves - but don't go into debt - that will indeed get ugly.

[captain58sailin]

The sky is falling! The sky is falling! The sky is falling!

[TaoJones]

Originally Posted by watson1990

. . . Just look at the bond market this week ! They dumped billions of dollars in bonds on the market and nobody bought !! especially not the Chinese...they are afraid ..so The Government had to artificially raise the rate of return on the bonds in order to move them . . .

I can't quibble with the basic tenor of your post, my dear Watson, except, perhaps, with two or three details, such as that part which deals with the reality of the US Treasury bond market. It's true that the attempted sale of Treasuries last week was unsuccessful, but it is inaccurate to state that the ". . . Government had to artificially raise the rate of return on the bonds in order to move them . . ."

As you may, or may not, be aware, the price and the yield on bonds move opposite to one another; i.e. when the price goes up, the yield falls, and when the price goes down, the yield rises. Therefore, when no buyers appear for the bonds on offer, the lowering of the offering price is the mechanism for enticing buyers into the auction.

The effect of this lowering of the offered price is to increase the yield on the bonds (the "interest" the bond-holder will earn over the life of the bond, or until he/she sells the bond on the open market.) The interest rate as stated on the bond does not change, but if the price a willing buyer pays for the bond is discounted, he/she will be getting that interest rate for a smaller outlay of capital - thus, his/her yield will increase as a percentage of the price paid for the bond.

Other than that point of information, there is only one other minor detail in your post with which I would take issue, as well as one major, glaring, bit of bad advice you put forward. The minor point is that the Chinese are not "afraid" to buy American Treasuries, now - they buy them all the time. But they no longer are buying long-dated bonds. They, and the rest of the world for that matter, have come to the conclusion that that is a sucker's bet.

The Chinese have moved the preponderance of their US Treasuries purchases to the short end of the yield curve; i.e. they are now mostly buying short-dated Treasuries. That is why the Fed had to step into the markets and buy US Government debt in mid-March of this year - an event I referred to as The Black Swan - Part 2 in an earlier thread.

The major flaw I see in your post, however, is the advice to "Put your money under your mattress . . ." which only makes sense if you are convinced that deflation is the likelier scenario in the foreseeable future. If you are wrong - if, in fact, inflation is what the future holds - then stuffing useless paper currency under the mattress is the worst thing one could possibly do.

Your off-handed ". . . maybe gold . . ." is the far-better strategy during an inflationary tsunami. Should inflation evolve into hyper-inflation (think Zimbabwe, presently, or Germany between the World Wars), then almost anything but currency is a safer investment. At that point, boats, as well as all other "luxury" goods, will be available to willing and able buyers at deeply discounted real prices. When repossessed items like boats and cars are languishing on the note-holders' books along with a mountain of real estate holdings, there will indeed be bargains aplenty when the price is adjusted for inflation.

Few Americans will step forward to purchase any of this booty, however. There will be far too few American buyers willing and able to perform to make a huge difference, and their currency will be virtually worthless, in any event.

Rather, it will be the nouveau riche in the newly emerging creditor nations who will take advantage of this rare opportunity. That will represent the beginning of the decline in prestige for the US, and America will no longer be recognized as a superpower, thereafter.

TaoJones

[anjou]

Sounds realistic to me TaoJones

Here in the uk, we are also eagerly awaiting the first signs of green shoots after an awfull winter of doom and gloom. Nothing to report yet though, even though last week one building society said house prices were up last month for the first time, but as quickly as that statement was made, another bank said the opposite.

Moron brown has also shot our wad and all we have to show is 30 years of crippling taxes ahead of us. Makes me glad i dont have kids to worry about.

I dont see boat prices lowering here. Several owners ive spoken to say if it doesnt sell, they will clean her up and sail her for another season. They obviously arnt the desperate types who need to sell, but I get the feeling its only power boat types who borrowed serious money to buy a boat anyway.

Im watching the crude price and gas pump prices rise again this week, first time for 9 months. The chinese are starting to buy more mines and mineral reserves globally.

Still a lot of pain left in this recession yet i fear and the bigger you are, the harder you fall.

[Maren]

Originally Posted by TaoJones

Your off-handed ". . . maybe gold . . ." is the far-better strategy during an inflationary tsunami. Should inflation evolve into hyper-inflation (think Zimbabwe, presently, or Germany between the World Wars), then almost anything but currency is a safer investment. At that point, boats, as well as all other "luxury" goods, will be available to willing and able buyers at deeply discounted real prices. When repossessed items like boats and cars are languishing on the note-holders' books along with a mountain of real estate holdings, there will indeed be bargains aplenty when the price is adjusted for inflation.

Well put, Tao. I would like to point out that for all those looking to make money off gold that, at this point you're late, you will be just maintaining the value of your cash.

I think it's time for another chart or two -- thousand words and all that:

The first is gold vs dollar. Notice the secular trend started in 2002 (hence the you're-too-late-if-you-thought-you-stumbled-on-how-to-actually-profit-off-this) and how it has improved vs the dollar by 17% this month.

The second is the dollar vs a basket of currencies worldwide. Notice the trend the from 2002 and that the dollar is down 6% for the month.

I leave the difference between the two -- and well as the point that the currency markets are seeing a lot of activity as emerging markets (and by extension, traders) are looking to move away from the dollar as their sole currency reserve -- as an exercise for the reader.

[Herbseesmoore]

but what about the Price Of Boats



Herbster

[TaoJones]

Originally Posted by Herbseesmoore

but what about the Price Of Boats
Herbster

If deflation prevails, over time asking prices for boats (and everything else) and completed sales will decrease. But if inflation prevails, nominal asking prices and completed sales will remain the same, or even go up, but the real price - that is, the price adjusted for inflation - will actually be less.

The greatest favor a person can do for him- or herself is to become educated on the realities of inflation. Learning how to "adjust for inflation," and understanding what that means, is the key to coping with an out-of-control economy wherein those with their hands on the levers are practicing the black art of quantitative easing.

This is all one needs to know: Quantitative Easing = creating "money" out of thin air.

TaoJones

[Jolly Roger]

Good point Herbseesmoore.
I don’t actually think you can generalize about, “the price of boats.” They are very emotive items, like houses, and people don’t buy them only when they can afford them, and one man’s steal could be another’s rip-off.
All I know is, I have decided, after painful consideration, to hold off buying the boat I have dreamed of sailing away in – literally - and hoard our cash for the time being. After all, I am in real estate, which must be the worst business in the world right now – next to building cars that is.
I’m not doing this because I am waiting for prices to drop, although from what I have heard there is now a bigger difference between asking prices and selling prices. I do it because I know what it is like to have a boat you can no longer afford, and worry about mooring fees, diesel prices, or even breakages/breakdowns, you might not be able to afford to fix. I also feel happier having backup cash available if something nasty happens, pay my mortgage, and be able to go out for meals when we like, etc. etc. In other words, we’re being personally prudent.
Have you ever wondered why there are so many boats on the market? It’s because a greater number of people want to sell them, and I am pretty sure this number will increase - like houses - before it starts to decrease.
So my logic is that prices generally will continue to drop, even when the economy starts to pick-up, because - also like houses - the backlog will need to be taken up.

[deluxe68]

So, how do I create the best deal for a boat this year? I agree that inflation is going to be rampant in the near future because of the trillions printed to spend on the war and the bailouts. We have been talking about getting back into sailing for 10 years and after we got back from sailing week in Antigua we decided to not put this off any longer. The interest rates are fairly low, I think they are going to start rising later this year and may be closer to 10% next year. There are a ton of powerboats on the market and lots more foreclosures/repo's to come. There are marinas in socal that have had waiting lists for years and now have started to have open slips. According to the loan broker, sailboat buyers spend more time researching their options before making a decision. Power boat transactions are more likely to be impulse related. Unfortunately the banks are not separating the two and lump all boat purchases into dollar categories. By next year it might be near impossible to finance a boat......We are still undecided on what type of sailboat to buy. We are going to retire in 5-7 years and would like to do some bluewater cruising, either in the Carribean or the Pacific. We have limited, small lake, experience and were looking to get a 35 foot performance cruiser such as a 36.7 now. Then in 5 years trade up to a 45 foot cruiser and spend two years live-aboard before setting off. However, there seem to be some good deals on 40 foot cruisers now and if the prices go down we could just get a cruiser now. An example would be a X-Yachts 412 for $219K, it is a little light on tankage and storage but it would probably be ok for the Carribean. The price is just a little out of our budget and at $180K we would probably go for it.