Used boat market 2nd half 2022?

[argosail]

Originally Posted by GordMay

When people are deciding whether to borrow or not, one important thing to consider, is not the nominal interest rate, but the “real" interest rate.
In other words, the “real" interest rate is the nominal rate, after subtracting inflation.
So, if a borrower has a nominal interest rate of 1½ per cent, while inflation sits at 8½ per cent, the "real interest rate" [what the lender is earning from that loan, while taking inflation into account] would actually be negative seven per cent.
What this suggests, is that, if you have to borrow money, to buy a boat today, at what is effectively a negative real interest rate, and the price of that thing is going to keep rising at the rate of inflation, it's better to borrow, and buy it now, than to save up, and buy it later.
I have no idea how long the current negative “real” interest rates will last.

This actually makes a lot of sense, however inflation is a broad number as some items will be much higher than other items. Really tough to say. But I do know people that bought their boats years ago and sold it this year for more than they purchased, the same goes for cars. So this may still hold off. Of course it doesn't make sense as an investment since you are paying moorage/berth costs, upkeep, maintenance, parts, etc (Maybe you break even in the end?).

[Lake-Effect]

Originally Posted by argosail

Of course [a boat] doesn't make sense as an investment since you are paying moorage/berth costs, upkeep, maintenance, parts, etc (Maybe you break even in the end?).

Yes, exactly. And the post-hurricane and COVID boat markets and their kicks to boat prices are flukes; normally you'd expect a fairly steady decline in boat value as it ages. Of course there are also some with the knack (or good fortune) of finding boats at low prices, doing some upgrades, and being able to make a small profit when it comes to selling.

But for most of us, boats are not investments (and will never perform as one), they're costly toys. Ok, they're also "investments" in the quality of life, they improve our mental health, and are rewards to ourselves for keeping our noses to the grindstone.

[valhalla360]

Originally Posted by goboatingnow

I don’t believe we are heading for a recession , but more a relatively short period of disruption

We'll have to agree to disagree as I see a fairly hard and painful downturn that we are already well into and shows little sign that we are turning back upwards.

The duration is open to debate:
- If things sort themselves out fairly quickly (covid stays low, russia backs down, supply chain gets sorted, oil prices come down, inflation settles down, etc...), I could see it lasting 1-2yrs with a fairly strong rebound after the pain but the boat market will be hit hard during that period and take time to recover.
- If it doesn't get sorted out, it could easily turn into a 1970's style problem that drags on for several years.

[valhalla360]

Originally Posted by argosail

Ok, but how about those that will then just stay on the hook at a free anchorage?

They make up a tiny percentage of the market and skew towards older less expensive boats. They are unlikely to significantly impact the larger market.

The vast majority of cruising boats live dockside at marinas and are weekend cruisers.

[argosail]

Originally Posted by valhalla360

We'll have to agree to disagree as I see a fairly hard and painful downturn that we are already well into and shows little sign that we are turning back upwards.

The duration is open to debate:
- If things sort themselves out fairly quickly (covid stays low, russia backs down, supply chain gets sorted, oil prices come down, inflation settles down, etc...), I could see it lasting 1-2yrs with a fairly strong rebound after the pain but the boat market will be hit hard during that period and take time to recover.
- If it doesn't get sorted out, it could easily turn into a 1970's style problem that drags on for several years.

At least in the US, IMO there is strong political pressure to have inflation sorted and back to normal by the presidential election.

Supply chain is easing out, to the point some mega-stores like Target are already having to offload excess inventory. It still is a problem but nowhere near as severe it onces was. China's zero-covid policy however is a serious problem.

Hard to see if oil prices will come down, Russia has a lot more influence here than people expected, Saudis aren't doing much of anything to increase supply now.

IMO Russia will just go into a war of attrition, this is a common theme in their doctrine, manpower is expendable and they have a huge reserve waiting to be called on. It will end when Putin's reign ends.

So on the plus I see inflation and supply chain getting sorted, but oil and the war in Ukraine crises not getting solved anytime soon.

In the 1970s savings rates were in the teens, I can't imagine this happening now though even if we have worst-case scenarios on the crises mentioned... I wonder how the used boat market would fare in a 70's style economy. It will certainly take the sails out of the new boat market.

[valhalla360]

Originally Posted by argosail

At least in the US, IMO there is strong political pressure to have inflation sorted and back to normal by the presidential election.

Supply chain is easing out, to the point some mega-stores like Target are already having to offload excess inventory. It still is a problem but nowhere near as severe it onces was. China's zero-covid policy however is a serious problem.

Hard to see if oil prices will come down, Russia has a lot more influence here than people expected, Saudis aren't doing much of anything to increase supply now.

IMO Russia will just go into a war of attrition, this is a common theme in their doctrine, manpower is expendable and they have a huge reserve waiting to be called on. It will end when Putin's reign ends.

So on the plus I see inflation and supply chain getting sorted, but oil and the war in Ukraine crises not getting solved anytime soon.

In the 1970s savings rates were in the teens, I can't imagine this happening now though even if we have worst-case scenarios on the crises mentioned... I wonder how the used boat market would fare in a 70's style economy. It will certainly take the sails out of the new boat market.

A bit late but I think they have finally came around to attacking inflation. The cure may be almost as bad. They now have to hit it hard if they want to get it back under control and that is driving the market down and in short order is likely to push unemployment up. Question is do interest rates or oil prices win out in setting inflation and what is the collateral damage?

Russia backing down and Putin ending are likely one in the same. He has no way to exit while saving face, so I can't see him doing anything to end the war on reasonable terms. The replacement leader will have a big impact but I think there will be a lot of internal pressure to find a way out as the oligarchs have borne a lot of the pain with nothing to show for it.

Supply chains are getting better but in fits and starts....a big covid surge that bypasses the vaccines could throw that out of wack.

I can see things being better in a year or so if nothing major goes wrong but even that has the western economies in a major downturn for long enough to knock boat prices down significantly. Certainly don't expect to see the economy surging back in the next 6 months, so biding time to see what happens with the boat market seems logical.

[seandepagnier]

Originally Posted by GordMay

Solar [& wind] is not our only clean & renewable energy option.
Deep geothermal energy is a high-density renewable energy solution, with the potential to get us to net zero by 2050.

This is incorrect information. geothermal is not renewable in the sense that wind and solar is. If we cool the core even slightly it can destabilize the magnetic field which protects us from cosmic rays, and prevents the atmosphere from being blow away by the solar wind.

Right now the geothermal used is tiny, but if it were limitlessly scaled the situation is far more catastrophic than climate change unfortunately.

It is renewable, inexhaustible, and available everywhere.

All 3 are wrong.

Quaise Energy, a startup born from research at the MIT Plasma Science and Fusion Center, is pioneering a new type of energy drilling system, in order to reach the depths necessary [10 - 20 km] to exploit the largest source of power-dense clean energy on Earth.
Quaise’s core innovation is its gyrotron-powered, millimeter-wave energy drilling system.
By 2028 Quaise Energy expects to have the first [existing] fossil-fired power plant repowered with clean geothermal steam.

every time a new energy source is found, it is abused causing more problems than there originally were.

[valhalla360]

Originally Posted by seandepagnier

This is incorrect information. geothermal is not renewable in the sense that wind and solar is. If we cool the core even slightly it can destabilize the magnetic field which protects us from cosmic rays, and prevents the atmosphere from being blow away by the solar wind.

Right now the geothermal used is tiny, but if it were limitlessly scaled the situation is far more catastrophic than climate change unfortunately.

All 3 are wrong.

every time a new energy source is found, it is abused causing more problems than there originally were.

By this logic, the sun is not limitless because in several billion years it will run out of hydrogen but for all practical purposes, it's limitless.

Also, most typical geothermal uses are neutral in terms of the core heat of the earth:
- In volcanic zones (like iceland), they are capturing heat that is otherwise rising to the surface.
- In household heat-pump systems, it's surface ground temps which are largely a result of surface temps and indirectly solar. In temperate climates, they tend to be neutral over the year as they extract heat in the winter but put it back in the summer. Achieving the same heating/cooling with much lower external power consumption.

Unless you are talking about some sort of sci-fi system of 100mile deep wells taping into the mantle on a massive scale, geothermal is an excellent option.

[Chris31415]

A lot of discussion about the economy and the demand side. I think the Covid inspired purchases will also play a roll.

How many of the people who bought a boat during Covid will hold onto them?

Some surely will, but I expect many will go back to what they used to do and the supply of used boats will increase and drive down prices.

[argosail]

Originally Posted by Chris31415

A lot of discussion about the economy and the demand side. I think the Covid inspired purchases will also play a roll.

How many of the people who bought a boat during Covid will hold onto them?

Some surely will, but I expect many will go back to what they used to do and the supply of used boats will increase and drive down prices.

Yes, especially when after a year or so big maintenance bills might be upon them!

[Lake-Effect]

Originally Posted by seandepagnier

every time a new energy source is found, it is abused causing more problems than there originally were.

Jevon's Paradox.

Energy --> Wealth --> Power

That genie has long since left the bottle; there's no point in looking for a cork. All we can do now is to find cleaner energy.

[Rumrace]

Weed Man. The new hemp battery is beating lithium. Wow

Geothermal is great tech. Drilling down to steam vents is just plain stupid. Iceland may rip apart any moment. It is expanding and not prime real estate.

A drill which could do pylons without disturbing neighbouring foundations would be better use.

[Montanan]

Topical read:

'Somebody forgot to tell the boat industry' about inflation, the bear market, and recession fears

Brian Sozzi
Anchor, Editor-at-Large
Thu, June 16, 2022, 4:45 AM·3 min read

https://news.yahoo.com/boat-industry...104547131.html

[argosail]

Originally Posted by Montanan

Topical read:

'Somebody forgot to tell the boat industry' about inflation, the bear market, and recession fears

Brian Sozzi
Anchor, Editor-at-Large
Thu, June 16, 2022, 4:45 AM·3 min read

https://news.yahoo.com/boat-industry...104547131.html

I guess the logic goes that most (perceived by the landlubber public anyway) boat buyers' discretionary spending won't be affected, a "damn the torpedoes full speed ahead" attitude? You gonna tell your partners in the law firm that you back out of your 2 year back-ordered contract for a 6 figure Sea Ray which you were bragging about endlessly?

For me it makes me really question if I should go through with my purchase closing end next month for my 35 footer costing around $1100 a foot.

[Baby tug]

Originally Posted by GordMay

When people are deciding whether to borrow or not, one important thing to consider, is not the nominal interest rate, but the “real" interest rate.
In other words, the “real" interest rate is the nominal rate, after subtracting inflation.
So, if a borrower has a nominal interest rate of 1½ per cent, while inflation sits at 8½ per cent, the "real interest rate" [what the lender is earning from that loan, while taking inflation into account] would actually be negative seven per cent.
What this suggests, is that, if you have to borrow money, to buy a boat today, at what is effectively a negative real interest rate, and the price of that thing is going to keep rising at the rate of inflation, it's better to borrow, and buy it now, than to save up, and buy it later.
I have no idea how long the current negative “real” interest rates will last.

I don’t know where you live , where I’m at in the Pacific Northwest or the US for that matter you can’t get financing on a used boat unless you’re talking about boats that are less than 10 years old try to finance a 1985 Boat good luck