Cruising Sailboats: a Dying Breed?

[john61ct]

Originally Posted by cyan

In the US in 1970, the median income was about 26% of the median home price. ($6185 / $23,533)
In the US in 2017, the median income was about 26% of the median home price. ($59,055 / $227,300)

Gross statistics don't show the whole story.

Where the decent jobs are, the financialization of the RE stock has led to skyrocketing housing costs relative to income.

Only affordable places are where the jobs hardly pay enough to survive.

https://www.citylab.com/equity/2018/...-whack/561404/

http://overflow.solutions/demographi...s-metro-areas/

[dparker]

Originally Posted by Jammer

No one has mentioned the investment tax credit of the 1970s which heavily subsidized the purchase of new boats (and new aircraft). This distorted the market for years.

You beat me to it. To amplify, up until the tax reform in 1986, it was possible to use this tax credit, together with certain business expense deduction rules to significantly lower the cost of buying a boat on a loan by using it for "entertaining customers". In 1979 the maximum federal tax rate was 70%. If you add in the state tax rates for east coast states (where most boats sold at the time) then you can see why rich folks were hungry for any legal tax avoidance, even if it was a boat they'd use three times a year.

For boats in the 27-35 foot range, for a while in the early 80's boats where in such demand for this reason that some of them actually appreciated during the first few years. This further increased demand. I was at the Newport boat show in 1983 and was told the wait list for a Catalina 27 was four years long. Used ones were selling at or above new prices. When I was back there 5 years later the show was a third the size because of the builders that had gone or were going broke. Used boat prices were dropping as all the "tax boaters" were selling. And the market crash of 1987 tanked the demand in a big way.

This is one of the reasons why boats in the late 70s to mid 80s were so common on the used market for so long, and not rare today. And a lot of those boats were originally bought by dabblers, not cruisers.

The fate of manufacturers has a lot to do with the dynamics of supply that help determine whether boats are affordable for youngsters. A big washout of builders happened after the financial crisis in 2008 as well, so you see supply dropping after that year in certain parts of the market.

When you add that to all the other issues that have already been mentioned about the lower relative buying power for young people today, it really is harder for them to find something affordable compared to the days of yore.

[LargeMarge]

Normalcy Bias:
Since 'it' was this way for as long as I can remember, I expect 'it' to always be this way.

One example is a nice long hot shower... until the water heater goes on the Fritz.

Expectations can be entertaining. Or they always used to be entertaining... that may change!

[cyan]

Originally Posted by john61ct

Gross statistics don't show the whole story.

Where the decent jobs are, the financialization of the RE stock has led to skyrocketing housing costs relative to income.

Mmm...I respectfully disagree.
A free market tends to balance out eventually.
In a free market, the people simply go where the jobs are.
Nobody flocked to Silicon Valley because of the weather, like they did to San Diego. It DOES have the the killer jobs, though, so... people.

Using Indeed.com...
The average construction worker wage in the WORST housing-cost US city, Los Angeles CA, is $17.81/hr. The median home price in LA is $670,000.
If that hourly worker moves up to supervisor, they can average $69,877/yr. Alas- that median house ownership is more than 3 times out of reach, using the x3 rule. Not gonna happen.

The average construction worker wage in the BEST housing-cost city, Cleveland OH, is $13.52/hr on Indeed.com. But wait. The median house price in Cleveland is only $135,000.
If that hourly worker moves up to supervisor, they can average $86,682. Heck, a Cleveland supervisor STARTING salary is around $44K. Guess what? That person is a home owner.

Okay, the winter weather in Cleveland is not as nice as Los Angeles, but owning a home is the question, right? It's hard to shed a tear for expensive Coastal houses that are out of reach for the masses, when there are plenty of cheap ones elsewhere.

I contend that the gross stats DO tell the whole story here.
The overall "skyrocketing" cost of US housing is a myth- it's up in places, down in others.
Overall, it's about the same as it was in 1970, after normalizing consumer prices with wage increases. (see earlier post)

Perhaps you could say that US COASTAL housing prices have increased disproportionately, and since COASTAL residents are the ones who buy boats, then this is a factor.
Perhaps.

[Wayfarer1008]

Reading through the discussion it is amazing how the millennial generation is not into doing much of anything. The one trend That I have noticed from Skiing to Sailing any sport that has a long learning curve is not being taken up by the current generation. Instant gratification and approval by their friends seems to dominate their mind set where everybody wins a prize for taking part.

[Bob Morane]

Originally Posted by cyan

Mmm...I respectfully disagree.
A free market tends to balance out eventually.
In a free market, the people simply go where the jobs are.
Nobody flocked to Silicon Valley because of the weather, like they did to San Diego. It DOES have the the killer jobs, though, so... people.

Using Indeed.com...
The average construction worker wage in the WORST housing-cost US city, Los Angeles CA, is $17.81/hr. The median home price in LA is $670,000.
If that hourly worker moves up to supervisor, they can average $69,877/yr. Alas- that median house ownership is more than 3 times out of reach, using the x3 rule. Not gonna happen.

The average construction worker wage in the BEST housing-cost city, Cleveland OH, is $13.52/hr on Indeed.com. But wait. The median house price in Cleveland is only $135,000.
If that hourly worker moves up to supervisor, they can average $86,682. Heck, a Cleveland supervisor STARTING salary is around $44K. Guess what? That person is a home owner.

Okay, the winter weather in Cleveland is not as nice as Los Angeles, but owning a home is the question, right? It's hard to shed a tear for expensive Coastal houses that are out of reach for the masses, when there are plenty of cheap ones elsewhere.

I contend that the gross stats DO tell the whole story here.
The overall "skyrocketing" cost of US housing is a myth- it's up in places, down in others.
Overall, it's about the same as it was in 1970, after normalizing consumer prices with wage increases. (see earlier post)

Perhaps you could say that US COASTAL housing prices have increased disproportionately, and since COASTAL residents are the ones who buy boats, then this is a factor.
Perhaps.

A simpler way to look at that would be to chart Home prices to Income Ratio along the years.
It's actually not that bad for the US, the ratio didn't skyrocket by any means, in fact barely moving, 2008 bubble excepted.

However the US are an outlier in this scenario, every other developed country had the cost of housing skyrocket leaving the earnings in the dust and pricing young people out.





Source :

https://www.betashares.com.au/insigh...ousing-bubble/
https://www.rba.gov.au/publications/...012/dec/2.html

[cyan]

Originally Posted by Bob Morane

A simpler way to look at that would be to chart Home prices to Income Ratio along the years.
It's actually not that bad for the US, the ratio didn't skyrocket by any means, barely moving actually, 2008 bubble excepted.

However the US are an outlier in this scenario, every other developed country had the cost of housing skyrocket leaving the earnings in the dust and pricing young people out.

Wow, Bob, that is an interesting set of charts!
It confirms (in a much simpler way) my earlier point that US housing affordability is NOT "skyrocketing" at all. Flat on average, as I stated earlier- just varied by region. The "American Dream" of home ownership for ANY hard worker is not dead, as some would claim. (those workers without a ton of school loans, that is)

What I did NOT realize is that the housing price-to-income ratio is that high in the OTHER developed countries, and trending worse. (I only presented USA numbers because that's where I live. Guilty.)

I'm curious to hear of stories OUTSIDE of the US where younger folks struggling to purchase housing in such conditions would naturally be more likely than their parents to put sailboat dreams aside. OR- would such people have different plans altogether?... say, a Kiwi young adult? In NZ, sailing seem like a really big deal compared to other places. Is the modern idea there simply to bypass the housing, and go for the sailboat?

[valhalla360]

Originally Posted by Jim Cate

How could there have been a cruising frenzy in the 70s and 80s?

So what statistical evidence do you have that there was a cruising "frenzy"?

I suspect it's like the "tiny house" movement of today...a few fringe folks who get lots of press make people believe it's a frenzy.

[Jim Cate]

Originally Posted by valhalla360

So what statistical evidence do you have that there was a cruising "frenzy"?

I suspect it's like the "tiny house" movement of today...a few fringe folks who get lots of press make people believe it's a frenzy.

Geeze, mate, it wasn't me that made that statement... I was just commenting upon it. And since I joined the full time cruising community in '86, I guess I coulda been part of the frenzy... I certainly felt frantic when we left for the first time!

Jim

[valhalla360]

Originally Posted by Bob Morane

A simpler way to look at that would be to chart Home prices to Income Ratio along the years.
It's actually not that bad for the US, the ratio didn't skyrocket by any means, in fact barely moving, 2008 bubble excepted...

However the US are an outlier in this scenario, every other developed country had the cost of housing skyrocket leaving the earnings in the dust and pricing young people out....

Interesting charts but I wonder if it's not presenting a distorted view.

From discussions with European friends, in the past, most families often clung to the family home generation after generation (at least to a much higher degree compared to the USA).

As a result, if you are selling the house to the kids, you likely aren't driving a hard bargain and may even be putting the minimum amount that won't be questioned by the tax man....the result is house prices look like they are lower.

But European housing is becoming less entrenched in this idea over the last 50yrs, so the true market values are starting to come come out.

Of course, the ratio is still much higher but you have a lot more people living in a smaller area (supply & demand)...plus the residual property ownership by the nobility. Where as in the USA there was lots of cheap undeveloped land available and little regulation.

PS: Of course, it's not a black and white issue, some USA families cling to the family homestead but I think to a much lower degree as the USA population has always been more mobile.

[Heath68]

[QUOTE=Ecos;2751825][QUOTE=cyan;ere. Do you see the same crowding trends across the Caribbean?

I think the number of boats spending the summer on the Rio Dulce is increasing slowly every year. The main agent told me he handled about 600 boats last year. Last year there were also quite a few boats from the eastern Carib because of the storm damage.[/QUOTE]I wonder what percentage of people who lost their cats during the storm replaced them....?

[Bob Morane]

Originally Posted by cyan

I'm curious to hear of stories OUTSIDE of the US where younger folks struggling to purchase housing in such conditions would naturally be more likely than their parents to put sailboat dreams aside. OR- would such people have different plans altogether?... say, a Kiwi young adult? In NZ, sailing seem like a really big deal compared to other places. Is the modern idea there simply to bypass the housing, and go for the sailboat?

This might not be an accurate representation but, in my circles in both France and Australia, there are 4 scenarios that I encountered among friends in their 20's who expressed interest in cruising :

1st scenario: Their parents got ahead from hard work, real estate booms, stock booms and are supportive. Usually, they get supported by getting their deposit paid or loaned at no interest, or parents agree to be caution to avoid mortgage insurance. They think about cruising once their house is paid, have some assets and they are financially independent.

2nd scenario: Family is not supportive, they fear of missing out, and lock themselves into 25-30 year mortgages they can barely afford with 10% or less deposit paying huge mortgage insurances and get higher rates compared to the first category effectively getting terrible equity in the first 10 years. Going cruising is the least of their concern or, at best, a distant dream to escape reality.

3rd scenario: They don't want to get locked with a mortgage and piss their money in cars, electronics and partying. They want to go cruising because they like the idea of a boat "holiday" sold by the youtube channels. Their lack of self discipline will most likely prevent them to ever do it.

4th scenario: They give up on the idea of owning houses or getting "rich", discipline themselves into a minimalist lifestyle, save a bit of money and get out there while it is still worth it.

There are some in-betweeners but that encompass about 90% of my friends that expressed an interest to cruising and my project.

[Juho]

Originally Posted by El Pinguino

'frinstance... since I arrived back from NZ three years ago I have encountered more Finnish yachts than US/UK/Oz/NZ combined....

They are so used to being cold. I dream of sailing one day to the Patagonia, and Alaska too.

[lituya1617]

Fiberglass sailboats were constructed to last in the early years of construction, 1968 - 1983. Hulls were not cored, decks were laid over plywood early on, fittings had massive backing plates, keels had redundant and strong attachments or were completely encased in frp, etc. In short, many boats then were "overbuilt" by current standards. Those old boats remain structurally sound today even when many of their fittings and exterior wooden parts are in need of repair or replacement. Some shipyards have produced durable boats for decades and these seldom end up scrap because they remain valuable even in disrepair. As a result of the building practices of the early years of composite construction, an older boat that is well maintained is a much better buy than a new boat in many cases. Shipyards have, to a degree, fallen prey to their own earlier good standards. They are competing against their own previous boats for sales. If car manufacturers were to build cars as well as the typical 1975 sailboat was built, they would have the devil of a time selling new cars. I think this explains declines in production. On the other hand, there seems to be just as many cruisers around as always, which means not that many. When I look for a sailboat, I look for a boat that will come through a major storm and remain seaworthy.
Not many current production boats are built to be that tough but the older boats were. Personally, I wish more people would abandon cruising so I could find an old boat I can afford. If anyone is thinking of leaving off cruising and would like to donate a boat to me, feel free to do so. I love and pamper my boats so you can be sure your boat will have good care. I can repair anything on a boat except the electronics so I will accept a project boat as long as it will not cost a ton of money in parts to put it in good condition. I would love to go back to cruising myself.

[valhalla360]

Originally Posted by lituya1617

Fiberglass sailboats were constructed to last in the early years of construction, 1968 - 1983. Hulls were not cored, decks were laid over plywood early on, fittings had massive backing plates, keels had redundant and strong attachments or were completely encased in frp, etc. In short, many boats then were "overbuilt" by current standards. Those old boats remain structurally sound today even when many of their fittings and exterior wooden parts are in need of repair or replacement. Some shipyards have produced durable boats for decades and these seldom end up scrap because they remain valuable even in disrepair. As a result of the building practices of the early years of composite construction, an older boat that is well maintained is a much better buy than a new boat in many cases. Shipyards have, to a degree, fallen prey to their own earlier good standards. They are competing against their own previous boats for sales. If car manufacturers were to build cars as well as the typical 1975 sailboat was built, they would have the devil of a time selling new cars. I think this explains declines in production. On the other hand, there seems to be just as many cruisers around as always, which means not that many. When I look for a sailboat, I look for a boat that will come through a major storm and remain seaworthy.
Not many current production boats are built to be that tough but the older boats were. Personally, I wish more people would abandon cruising so I could find an old boat I can afford. If anyone is thinking of leaving off cruising and would like to donate a boat to me, feel free to do so. I love and pamper my boats so you can be sure your boat will have good care. I can repair anything on a boat except the electronics so I will accept a project boat as long as it will not cost a ton of money in parts to put it in good condition. I would love to go back to cruising myself.

I think you have a distorted idea of longevity.

First there are very few 1960-1970's boats still in use and 1980's boats are fast fading into history. Most remaining are classics that are kept up by fanatics, similar to classic cars.

Probably more important is your average car get used twice a day 5-7 days per week. The mechancials simply wear out and it's not worth replacing. (figure 500-700 runs per year)

Your average boat has maybe 20 runs per year. So as long as decent maintenance is done, of course, it will last many more years than a car...but when you have a 30-40yr old boat and the diesel gives up the ghost, it's not financially viable to replace the engine and the boat typically goes to the landfill (maybe someone strings it along for a few years strapping an outboard on the back but it's a fast downhill slide).