Used catamaran prices, availability during recession or crisis?

[Cadence]

I guess it is a heyday for bio chemists, work from dusk till dawn, around the world. Hopefully a vaccine will be fold sooner than later.
The world economy is at risk. The haves may have to exist like the have nots if they can. I for one couldn't.

[Scaramanga F25]

from a family member who is catamaran broker: "my clients had the money in 2008 and
could absorb the costs, they still do" i.e. no slump in the over 38 foot catamaran market

[Captain Anthony]

Buy from a bank. In early 2009 I purchased a 100K Sea Ray 37 Sundancer for 26K cash. Banks keep the best quality boats for resale. The dead of winter is a good time to make a very low offer. I was ready to go up to 70 k, boy was I surprised to get a call telling me that the bank actually accepted my low ball offer. I had "proof of funds" to show the bank so the bank knew that I was not just kicking the keel. Pay with cash for all of your toys, you will definitely enjoy then more. Many cats are relatively newer, expensive and mortgaged. Strike while the iron is hot. Remember, you get what you pay for in this world, don't cheap out on a boat that your life may depend on one stormy night.

[Sand crab]

Originally Posted by Scaramanga F25

from a family member who is catamaran broker: "my clients had the money in 2008 and
could absorb the costs, they still do" i.e. no slump in the over 38 foot catamaran market

Let's see what happens to the charter cats in the next few months.
I am wondering how it works? Don't the charter companies guarantee income or at least a wash on the bills? Who are these financed through and who picks up the tab if the money isn't flowing? And what happens if the charter company goes bust?

[Scaramanga F25]

People that buy catamarans to put in charter do so for tax advantages. No poverty there.

[Cadence]

Originally Posted by Sand crab

Let's see what happens to the charter cats in the next few months.
I am wondering how it works? Don't the charter companies guarantee income or at least a wash on the bills? Who are these financed through and who picks up the tab if the money isn't flowing? And what happens if the charter company goes bust?

I feel sure the charter co. is a corp. or LLC. If they go tits up they are probably only liable for office furniture. The boat owner is probably stuck with the boat and wondering what to do now?

[contrail]

Originally Posted by Sand crab

Because the US is now considered a "high risk country" you will be quarantined for 14 days if you have not been away from the US for at least that long.
https://viconsortium.com/vi-coronavi...virus-pandemic

Actually, no. The automatic quarantine group is called "Special interest". "High risk" is actually allowed, in general, although interviewed. The Government of the BVI is taking everything every seriously, but trying to let the tourism industry stay alive. We have had three people tested, all of whom came out negative. We have tests. Cruise ships are banned. And a wing of our hospital has been prepped to serve as a quarantine area, should it come to that, as it seems it must. But, you can still get in and out from the US or the USVI. The Government and the Charter Yacht Society are in almost constant contact, and working closely together.

[Jeannius]

Originally Posted by contrail

Actually, no. The automatic quarantine group is called "Special interest". "High risk" is actually allowed, in general, although interviewed. The Government of the BVI is taking everything every seriously, but trying to let the tourism industry stay alive. We have had three people tested, all of whom came out negative. We have tests. Cruise ships are banned. And a wing of our hospital has been prepped to serve as a quarantine area, should it come to that, as it seems it must. But, you can still get in and out from the US or the USVI. The Government and the Charter Yacht Society are in almost constant contact, and working closely together.

Not anymore...


pertinent part....

6. Cabinet endorsed that entry into the British Virgin Islands by sea or air be prohibited with effect from Thursday, 19th March, 2020 for all passengers, who are not nationals, Belongers, Work Permit Holders or persons ordinarily resident in the Territory, or their dependents. The travel restriction will not apply to flight crews, diplomats or freight, cargo or courier craft or vessels;

7. Cabinet also agreed that visitors and crew members to the BVI, who are not nationals, Belongers, Work Permit Holders or persons ordinarily resident in the Territory, or their dependents and permanent resident, who have traveled to, from or through countries specified on the Special Interest Group List and the Very High Risk Country List within a period of 14 days or less will not be allowed to enter the British Virgin Islands. (These lists are reviewed daily and Special Interest Group List includes China, Italy, Iran, South Korea, France, Spain and Germany and the Very High Risk Country List includes: United States of America, United Kingdom, Switzerland and Norway).

For the latest updates on COVID-19 visit bvi.gov.vg/COVID-19

So from what I understand, today is your last chance to get into the BVI.

[Barra]

We bought our last cat after the gfc. Followed the market pretty closely through that time so I can speak from actual experience of how cats go in a stressed market. Plus I don't currently own so I'm not biased.

Based on the gfc there will be a few quick sales where sellers hit the current buyers offers then things will dry up for a bit. Sellers will hope it's a temporary stall and buyers will have trouble getting finance/ have their savings eroded in the financial turmoil.

Then in about 6 months the sellers will start getting tired of their holding costs and start dropping prices. If the buyers are there then that will be a small correction. If they aren't then the sellers keep dropping till they find a floor.

So in the gfc the best time to buy was actually about 1 to 2 years after the recession when buyers returned and the sellers then stopped dropping bit by bit.

This time it might be a bit different. The downturn could be short lived in which case only a small drop. On the other hand the savings of buyers have been smashed very quickly so it's shorter but steeper crash. So you might get a quicker steeper drop than the gfc in boats too.

The charter market will be interesting to watch. In the gfc it slowed but didn't seize up so no fire sales but a drop to zero revenue will be like holding cost problems on steroids. Could see fire sales here pretty early on.

Either way make no mistake when you get a 30% fall in markets and the real economy seizes up too boat prices get hit pretty hard. Just in slow motion.

[Bunji]

Originally Posted by Barra

We bought our last cat after the gfc. Followed the market pretty closely through that time so I can speak from actual experience of how cats go in a stressed market. Plus I don't currently own so I'm not biased.

Based on the gfc there will be a few quick sales where sellers hit the current buyers offers then things will dry up for a bit. Sellers will hope it's a temporary stall and buyers will have trouble getting finance/ have their savings eroded in the financial turmoil.

Then in about 6 months the sellers will start getting tired of their holding costs and start dropping prices. If the buyers are there then that will be a small correction. If they aren't then the sellers keep dropping till they find a floor.

So in the gfc the best time to buy was actually about 1 to 2 years after the recession when buyers returned and the sellers then stopped dropping bit by bit.

This time it might be a bit different. The downturn could be short lived in which case only a small drop. On the other hand the savings of buyers have been smashed very quickly so it's shorter but steeper crash. So you might get a quicker steeper drop than the gfc in boats too.

The charter market will be interesting to watch. In the gfc it slowed but didn't seize up so no fire sales but a drop to zero revenue will be like holding cost problems on steroids. Could see fire sales here pretty early on.

Either way make no mistake when you get a 30% fall in markets and the real economy seizes up too boat prices get hit pretty hard. Just in slow motion.

I don’t think there will be anything temporary or short lived this time round, the worlds economy was in relatively good health prior to the GFC, not so now Govt and personal debt levels have never been higher, we are still doing the same stupid greedy stuff we were doing pre GFC, Govts around the world are up to there eyeballs in debt (Printing money) interest rates are already at record lows and here in Australia we have amongst the highest personal debt levels (mortgage stress) in the world. Economists have been predicting this for several years, coronavirus is just the trigger it was going to happen anyway, Govt and Reserve banks will borrow, print more money and debt becomes even higher, were still paying back debt from the GFC. Unemployment levels are predicted to rise to 10% currently 5% in Aussie, people loose there jobs the banks move in. GFC all over again the main difference this time is the worlds economy was already screwed. Wanna buy a house or boat wait couple years

[Barra]

Originally Posted by Bunji

I don’t think there will be anything temporary or short lived this time round, the worlds economy was in relatively good health prior to the GFC, not so now Govt and personal debt levels have never been higher, we are still doing the same stupid greedy stuff we were doing pre GFC, Govts around the world are up to there eyeballs in debt (Printing money) interest rates are already at record lows and here in Australia we have amongst the highest personal debt levels (mortgage stress) in the world. Economists have been predicting this for several years, coronavirus is just the trigger it was going to happen anyway, Govt and Reserve banks will borrow, print more money and debt becomes even higher, were still paying back debt from the GFC. Unemployment levels are predicted to rise to 10% currently 5% in Aussie, people loose there jobs the banks move in. GFC all over again the main difference this time is the worlds economy was already screwed. Wanna buy a house or boat wait couple years

Yeah i said COULD be short lived. No one actually knows how this will pan out thats why financial markets have gone nuts. What your talking about is a whole other level of economic collapse on top of a virus slowdown. Maybe / maybe not but if you are right then boats (and everything else) will be VERY cheap.

Personally I think we will get a V shaped recovery with a massive overshoot on stimulus that will then set us up for the kind of stuff you are talking about the next time around with no bullets left to fire.

But both of us are just guessing as is everyone else right now.

[BlueSkyOne]

Of course a large number of yacht owners are wealthy individuals who can breeze through recession and would never dream of selling at depressed prices, and brokers will wheel out all sorts of reasons why prices will hold up. BUT, as with all markets its not the majority that sets the price its the relatively low number of transactions at the fringe that defines true market price - its the marginal cost of supply meeting demand, and this is why some non essential assets become so depressed in hard times.

Its clear from every past downtime assets such as boats will be hit, if you can sit through it and wait then great - carry on enjoying your boat, but that won't stop prices falling. Its the relatively small increase in the marginal seller who can now no longer afford or justify the ownership expenses combined with a smaller pool of cashed up buyers that causes a small illiquid market to fall.

The fact that cat manufacturers order books are full 1 year forward will also mean there will be small number of cases of people who pull out and need to firesale their slot, so this has the effect of taking the heat out of new build market, anyone who locked finance in last 6-months are now faced with having locked high interest rates. All those 38 foot cat sales at 450k that were at 300k in 2016, well reality will crash in. Any orders for new into charter will be under discussion even if all charter companies survive (when the likes of Hilton, Marriott may not get through the crisis why would the much more cash strapped charter companies)

So I think combination of slightly elevated sales on the margin plus heat removed from new build market mean prices can only erode. But agree with some of the other posts it will take time for this reality to take hold, so best time to buy is probably in a years time when a summer of no sailing and the winter costs have taken hold and people just want out.

[rabbi]

Originally Posted by BlueSkyOne

But agree with some of the other posts it will take time for this reality to take hold, so best time to buy is probably in a years time when a summer of no sailing and the winter costs have taken hold and people just want out.

Which brings up the question: Why would I want to purchase a catamaran these days?

[valhalla360]

A lot depends how things play out. But assuming you already have cash (not stocks) set aside for a purchase:
- If spring comes and the virus cases drop off by mid May, likely not much impact to the larger market. Could be a few overextended who get caught but likely not the bulk of the market and you will have to be in the right place at the right time.
- If the virus is still going strong come July, expect a lot of fire sales if you have cash. Unless you get into the upper end, far too many of the "rich" actually live paycheck to paycheck. They might be good for a couple months but if income dries up, they need to start liquidating and boats have high carrying costs. If the charter market breaks, you could see a flood of 1-2yr old boats held by folks thinking they were smart who no longer have rental income to cover the mortgage payments at the same time they are being laid off.

As always, there will be exceptions but the idea that middle to upper-middle class folks won't be impacted is flat out wrong given the current economic impacts (which are wildly worse than 2008). Now if you get into the newer 55ft+ range, then it might be different as that's a different level of wealth but even then, if this keeps up for 3-4 months even the wealthiest will be significantly impacted and might start looking at options to cut expenses and free up cash.

[Bunji]

Originally Posted by Barra

Yeah i said COULD be short lived. No one actually knows how this will pan out thats why financial markets have gone nuts. What your talking about is a whole other level of economic collapse on top of a virus slowdown. Maybe / maybe not but if you are right then boats (and everything else) will be VERY cheap.

Personally I think we will get a V shaped recovery with a massive overshoot on stimulus that will then set us up for the kind of stuff you are talking about the next time around with no bullets left to fire.

But both of us are just guessing as is everyone else right now.

Oh yes they do, Markets are reacting primarily based on decisions Govts and Reserve banks are making, Thousands of people are already being layed off, Govt is about to add another 40 to 50 billion dollars to our already ballooning $600 billion gross debt bill, There is no doubt in my mind what the future holds. As I said the virus was just the trigger it was going to happen anyway. Gubermunt can blame the virus/bushfires now, how convenient