Boat Prices: Has the world changed????

[RT Firefly]

 

[Delta Riverat]

Yes, I've seen this!

 

[backinblue]

I would think the quickly rising interest rates in addition to a falling stock market will begin to dampen large purchases like homes and boats. Unless you pay cash for everything, the cost of a mortgage has doubled in the last few months. Someone who could afford 300K at 3% may not be able to at 6% or higher.

 

[Judy at JWY]

There is no doubt that changes in the yachting market should be anticipated. But I find our trawler market to be in a different category, certainly a different discussion than those related to the dramatic upswing in boat sales due to COVID.

It made sense that for the guys/gals who began working from home and were either bored, losing patience with the at-home kids, or tired of the isolation claustrophobia - a weekend family boat was a great adventure as well as escape. But I have found that our trawler club has a different mindset that almost all other boat categories.

Aside from many trawler buyers being meticulous, detail oriented, and research fanatics, they don't buy cyclically. They have long-term plans and proceeded methodically (when the kids leave, retirement, ..). They don't typically buy boats because their stock portfolio has gone up nor because their neighbor bought a boat. I don't see the price of fuel as being a significant deterrent either. Bet the first batch of boats to flood the market are the center consoles with 3-5 outboard engines and the Sea Rays and Boston Whalers in the discussion.

I'm not saying you might not see more trawlers listed or that prices might not hold as hard, but what I am suggesting is that reading trends and prognostication might not be universally applicable to the trawler market.

And please forgive me while I must respond to a quote from a post above:"...and will enjoy watching the broker squirming likely to increase in coming months." Sorry to hear that any participant in a trawler forum would wish ill on anyone for any reason. We brokers supporting our families can go months without income, we can spend extensive travel money on boats and clients that never come to recompense, and we can be of great benefit to those that need help in boat buying or selling. You don't have to appreciate or use our services, but please don't wish bad on your fellow compatriots.

 

[backinblue]

Well-said Judy!

 

[mvweebles]

Aside from many trawler buyers being meticulous, detail oriented, and research fanatics, they don't buy cyclically. They have long-term plans and proceeded methodically (when the kids leave, retirement, ..). They don't typically buy boats because their stock portfolio has gone up nor because their neighbor bought a boat. I don't see the price of fuel as being a significant deterrent either.

I'm not saying you might not see more trawlers listed or that prices might not hold as hard, but what I am suggesting is that reading trends and prognostication might not be universally applicable to the trawler market.

First, I really wish a few more brokers were confident enough to post on the forum. As always, thanks for your contribution.

I do have an observation that undermines the premise that trawler owners respond to financial influences differently than other segments. Look no further than the rapid run-up in values and purchase demand during the pandemic. Whatever influences there were will presumably have a reverse effect on the downside - these days. Not all owners - at the higher end, and serial-owners, are committed to the lifestyle. But I suspect those buyers are at the margins.

I think the biggest factor right now is the non-measurable: Wealth Effect. For the last 2-years, a LOT of people felt pretty dang wealthy. Jobs were secure, house value doubled, investment returns at record highs, etc. That's all gone (or is going). That is not conducive to buying what is for many, the second largest expenditure they will ever make.

That said, the amount of household equity in the US (the measure of excess equity of value vs mortgage with a 20% buffer) is something like $2-trillion, highest in history. When sentiment changes, I would not be surprised to see purchases of higher end RV/Boats slowly resume. But right now? Tough to imagine a scenario where boat purchases remain strong with at-asking price sales.

Finally, Judy, I appreciate you taking a moment to remind us readers of the professionalism folks like yourself bring to yacht brokerage industry. I'm sure you have ruffled the feathers of some clients over the years (I've known of you for over 20-years, and you seemed to have an established business then so you've been around for a while). But overall, the professional brokers and sales-persons I've met have been outstandingly helpful. Yes, I've met a lot of duds (or worse), but that's to be expected. My observation has been that yacht brokerages attract newbie boat owners who are looking to make a few bucks; and the brokerage will take a chance only because, as 100% commissioned sales, it costs them nothing to have the newbie hangout and answer the phone.

Peter

 

[backinblue]

Peter, I agree 100% on the "wealth effect". Even if you are not drawing on your nest egg to buy a boat, consumer confidence is a big factor in most buying decisions. As you correctly poined out, many people were feeling pretty wealthy at the beginning of the year. If you've seen that wealth diminish by 20% over the last few months, there is a normal psychological effect to make people want to hold on to their money and not make large purchase even when those purchases are not directly dependent on those funds.

 

[FWT]

Well said Judy. I agree that the demographic cycles and bulges play a big role in the ebb and flow.

And something far more difficult to gauge. Fad and fashion. Golf was red hot, then not. Too few golf courses, then too many.

Doing The Loop has excited a lot of imaginations, and read stuff on that and you find a lot of people who have never owned a boat suddenly looking for a cruising boat, asking the most basic questions on Facebook groups. And then the Facebook listings of boats for sale once they have done it.

 

[Nick14]

And please forgive me while I must respond to a quote from a post above:"...and will enjoy watching the broker squirming likely to increase in coming months." Sorry to hear that any participant in a trawler forum would wish ill on anyone for any reason. We brokers supporting our families can go months without income, we can spend extensive travel money on boats and clients that never come to recompense, and we can be of great benefit to those that need help in boat buying or selling. You don't have to appreciate or use our services, but please don't wish bad on your fellow compatriots.

Judy, I apologize if I caused you or anyone else any offense. My comment was driven by the frustrations I experienced in trying to buy a boat, which I ranted about in this thread:

https://www.trawlerforum.com/forums/s62/boat-buying-nightmares-63951.html

There are brokers I've worked with over the past literally half-century that I appreciate, admire, respect, and personally like. Some I've been honored to consider friends. Unfortunately, the hot seller's market of the past two years has brought out the greed in some people, as I described in the aforementioned thread. Though I am a follower of Buddhism and the Dharma and do not (generally) wish ill will on anyone, I am also a fallible human being, and did not appreciate being treated the way I was, by a number of people.

You are absolutely right, there is a list of people I will seek out for my own future brokerage selling and buying needs, who I have come to respect and admire over the years, who adhered to standards of integrity, professionalism, ethics, and simple courtesy despite market opportunities for additional profit, and likewise a list I will avoid for the rest of my life.

 

[Judy at JWY]

Thanks, Nick, your apology and post are much appreciated.

I must elaborate by revealing that I became a trawler specialist because of the people at the helm, not the boats. I worked at Richard Bertram for a short stint but the behavior of the fishermen on their boat shopping excursions was not an environment in which I chose to stay. Ditto for the megayacht crowd from which I came. I don't need to expound on the trawler profile, but I rarely find a trawler buyer or seller who is not respectful, appreciative, and with appropriate and admirable values and principles.

I am most appreciative that what I see on TF accurately portrays those characteristics. As another aside, I only read or post on two forums with TF being one of them. This is a gentlemanly crowd and I have always appreciated the consideration of the posts.

 

[BandB]

most boat builders have orders going out 2-3 years, with deposits.

Most boat builders would like you to believe that, but those future orders can be cancelled more rapidly than they were made and most of those deposits are either minimal, refundable, or transferrable. Don't buy the hype. Smart builders remember 2008-09.

 

[psneeld]

In my world living around marinas and working on the water...

A trawler isn't a trawler......

There are the $10,000 to $$50,000 kind that may never reach a brokers ears..... and then those that do either because of the need for exposure or all the varied reasons people feel more secure going through professionals and an established system. Though as pointed out, many brokers are people trying to turn a hobby into a profession that really aren't suited for the job. Saw it a lot with future brokers, charter guys and delivery guys taking captain licensing courses.

I am going through it right now in the RV world. This winter, I was going to buy relatively new and a much better model brand...but now....maybe, probably not.

It is forcing me to buy into and older, less expensive version so I can continue the dream with more room and features than what I have now, or extend beyond my financial pain limits.

I think other posts were saying the same or alluding the same....so I am not sure many "theories" posted here on what may happen apply across the board to the "trawler world".

Out of the people who were interested in my boat last spring, all the way to those that seemed serious.....only one couple was a "buyer" and they bought it. So again, I think at or near the end of the financial ladder of trawlers, there is a bigger gamut of prospective buyers than when you get into serious money.

 

[Nick14]

I rarely find a trawler buyer or seller who is not respectful, appreciative, and with appropriate and admirable values and principles.

This is a gentlemanly crowd and I have always appreciated the consideration of the posts.

Thanks Judy. It’s a shame some of your broker colleagues don’t share your sentiments or the values you see in most trawler owners. Some (such as most of the ones I’ve run into lately) apparently prioritize profits above all else, such as integrity and simple civility.

 

[Nick14]

Most boat builders would like you to believe that, but those future orders can be cancelled more rapidly than they were made and most of those deposits are either minimal, refundable, or transferrable. Don't buy the hype. Smart builders remember 2008-09.

FWIW, the new build I recently contracted had a completion date 11 months from signing. I was also told that was in part possible because of a couple of recent order cancellations.

 

[OldDan1943]

I may be totally wrong but, I remember polio, swimming pools were closed, discouraging crowds etc. People were buying or building cottages, summer time activities were canceled. Basically, people were doing everything possible to reduce the risk of exposure to polio.
I see much the same responses but, because we are associated with the boating community, we see the effects within the boating community, price, availability of boats, availability and location of slips etc

 

[slowgoesit]

Judy, I have appreciated your posts on TF, and from others I gather that you are one of the "good" brokers. Unfortunately, many of us while boat shopping, or selling have had more than enough experience with "bad" brokers to last us a lifetime. You are also in business in one of the two states in the US (that I am aware of at least) that requires licensing in order to hang up a "Broker" shingle. I have met, and been in contact with several brokers over the past 4 years who have impressed me, and who I would have no problem working with in the future . . . . . . However, I have also been in contact with a large number of brokers who have lied to my face, misrepresented their clients, refused to send offers to their clients (sellers), one of whom, seller that is, who said the broker never passed on our offer, even though he said he had. That particular boat ended up selling 7 months later for significantly less than our offer. The seller was not happy after finding that there had been an offer that his broker had not passed on.

On the other hand, I posted on this forum several years ago asking a general question of "What's up with brokers not returning calls?" and was contacted by one broker, Curtis Stokes, who apologized, and told me he hoped that none of his agents had been one of the offenders. Actually, one had, never responding to my attempts to contact him, but I'm not sure that was his fault, or the fault of yachtworld not passing on the contacts. Based on the contact he made, and our phone conversations, I would put Curtis Stokes in the "good" broker column, and would not hesitate to do business with him in the future.

We also had very good luck with Eric Blenheim in LaConner, WA. We worked with him on the purchase of our current boat. Although the Seller's broker, Eric went out of his way to represent the boat, arrange access, facilitate our working with the Seller, in short, Eric did everything I would expect out of a professional broker. I would use him again.

Bottom line, we, as buyers and sellers, may be having more, or different contact with brokers than you are as a professional, and sadly to say, many of our contacts have been somewhat less than professional.

In closing, I'd like to extend my thanks to you for being a professional and adding your experience to the Trawler Forum.
Scot

 

[Delta Riverat]

Since we are naming names...

I can wholeheartedly give Barney Fie at Richard Borland Yachts my 2 thumbs up. Honest, responsive and totally up front. We didn't even need to wire a deposit. Showed, reviewed and explained the last 2 surveys he had in the file. I knew what I was buying well before I bought it.

 

[bowball]

Household savings are at record levels, given substantial savings during the pandemic. At this point it is more of a psychological effect, and looking at one’s stock portfolio, but that’s still a real effect.

 

[Nick14]

Household savings are at record levels, given substantial savings during the pandemic. At this point it is more of a psychological effect, and looking at one’s stock portfolio, but that’s still a real effect.

Household savings are indeed at record levels - record lows, the lowest level since 2008, thanks to rapidly rising inflation:

https://www.bloomberg.com/news/articles/2022-05-27/us-savings-rate-drops-to-lowest-since-2008-as-inflation-bites

 

[bowball]

Household savings are indeed at record levels - record lows, the lowest level since 2008, thanks to rapidly rising inflation:

https://www.bloomberg.com/news/arti...drops-to-lowest-since-2008-as-inflation-bites

You are linking to an article about savings rates not savings.

Savings levels in commercial bank accounts are at a record, and indeed another $3 trillion excess was saved during the pandemic; around $7 trillion in 2008 you reference, and $18 trillion now. In the last few quarters a small amount of the excess is being spent, which maybe correlating to your savings rate point.

Consumers have substantial savings coming out of the pandemic, and this ability to consume is what is worrying the Fed about inflation and why small interest rate changes won’t effect consumption and hence inflation.

What will affect consumption is the perceived loss of wealth from stock market/crypto drops. Also any fear that need to buy now as prices in the future will increase - that is what needs to be stamped out. The wage/price spiral.

 

[SteveK]

Household savings???
people actually have money left over at the end of the month.
Somebody is not having a good time everyday.

 

[Peter B]

....I am most appreciative that what I see on TF accurately portrays those characteristics. As another aside, I only read or post on two forums with TF being one of them. This is a gentlemanly crowd and I have always appreciated the consideration of the posts.

Thanks for those kind words, Judy, on behalf of the mod team. We try hard to keep the tone as high as possible on here...

 

[RT Firefly]

Greetings,
"...the tone as high as possible on here..." Yep.

 

[FlyWright]

IMO, trawlers and other live aboard cruisers are in a different camp from most go fast day boats because, if set up properly, you can live aboard in the comfort and convenience of home while afloat and safe from many of the current day land-based disturbances, crime and strife.

The independence, self-sufficiency, mobility and comfort of functional trawlers make them more akin to RVs on the water than water toys. It's a home, a lifestyle and an escape...all wrapped up into one nice package...an ark.

For that reason, I would expect demand and prices of functional trawlers to remain high in the coming years as our land-based world strife factor skyrockets!

Every day I thank the Good Lord that he gave me an ark!! I have a feeling this ark is going to come in handy for many of us as the future unfolds.

YMMV!

 

[bowball]

These discussions are interesting. No one knows the future of course, and as the market demonstrated during the pandemic we can be wrong. And that the Fed’s actions are often determinative. Everyone’s situation is different and everyone’s risk profile and everyone’s view of their future health is different, so we just need to make the best determination for ourselves.

 

[mvweebles]

I don't agree that you can't predict the future, at least directionally. Sure, there's a tendency to use past events to understand future, and sometimes the current events are so unique that they defy easy understanding. Right now, there is a lot of emphasis on the Fed being late (1) to raising interest rates; and (2) reducing balance sheet/treasury purchases. But both of these policies have been in place since 2010 with no ill effect, so what happened to catapult interest rates? There's a growing body of economists who point to dumping $5-trillion in pandemic relief into the economy, much of it was indiscriminate and went to everyone whether or not they were affected. The US GDP is roughly $21T in 2019, and Consumer Spending is 70%. $5T is a huge input and fueled a tremendous amount of demand (ergo the boat/RV market). If this theory is dominant, then what Jamie Dimon (JPMC Bank) said the other week is important: based on bank deposits, he sees about another 6-months of savings in the average consumer bank account. What happens then? He mentioned a "hurricane" afterward that has really roiled market watchers. Time to hunker-down and keep your powder dry as the sayings go.

How does this effect the boat market in the $250k-$1m range of many on this forum? Sure, the buyer in this range has a warchest and may be less affected. But these are also the folks who benefited most from the lospided effects of the Pandemic economy - they didn't lose their jobs, their job prospects exploded due to work-from-home opportunities and market forces, they received a chunk of the $5T relief that they didn't need, their house value shot-up, and their cost of living went down a LOT because they stayed at home. So while this segment may be technically able to endure economic hardship, they will likely perceive a startling change in their economic future. In short, this very segement may be Exhbit #1 of Wealth Effect spend-reductions.

Broadly, there are three scenarios. #1 - short supply means prices keep rising at above-average rates. #2 prices stabilize/plateau as supply/demand equilibrate. #3 prices drop due to reduction in demand and increase in supply (both driven by Wealth Effect reaction). I suppose #1 and #2 are possible. But unless something changes in the economy, over the next 12 months or so, I'd put good money on #3.

Time will tell. But I don't think it's serendipidy.

Peter

 

[FWT]

I had to laugh. Last night I wandered into a forum focused on fishing and go-fast big fishing boats. In a discussion of how fuel prices were impacting plans for the annual trip to the Bahamas for a few weeks to fish, what sparked was the DISCOVERY of how much more economical it was to throttle back to a more modest cruising speed. Offset by the angst of not sticking with the habit of running constantly with the throttle down.

 

[OldDan1943]

Generally speaking, I take all projections with a grain of salt and maybe less.
For example: I have been following one well known stock and in order to fulfill its projected price it would have to gain over $30/share. I dont see any of the experts says, "If I am wrong, I will buy your shares at today's projected price." These experts will quietly lower their projected highs.

Anyone can be an expert and for this message, I declare that I am an expert and make the following projections.

Fuel prices may come down a bit but I doubt if we will ever see it at $3.00 or less, ever again.
We may see engine hp decrease and maybe even fuel tanks sizes decrease on 'day-boats' and perhaps coastal cruiser so the builders can add more bells and whistles.

Things will never return to the 90s prices.
Boat prices unfortunately continue to rise until the availability gets close to demand.
We may see some builders go belly up because they are over extended, prices for raw materials increase, orders cancelled. They are building boat without having generator to put in them.

Parts prices may remain high or parts become scarce as people work to extend the life of the boat they own.

Okay, I am finished with my "expert opinions and projections." If I am correct, then, 'you heard it here first.' If I am wrong, people will be so happy, they will forget what I said.
I could be totally wrong but, I dont think so.

Anyone want to buy my "expert hat"?

 

[FWT]

In agreeing with much said here, I'd put the cyclical piece this way:

In the recent conditions of cheap fuel, speed was cheaper and faster boats saw more relative demand.

In an era of more expensive fuel, slower and more fuel efficient boats may well see more relative demand.

 

[Nick14]

I don't agree that you can't predict the future, at least directionally.

Broadly, there are three scenarios. #1 - short supply means prices keep rising at above-average rates. #2 prices stabilize/plateau as supply/demand equilibrate. #3 prices drop due to reduction in demand and increase in supply (both driven by Wealth Effect reaction). I suppose #1 and #2 are possible. But unless something changes in the economy, over the next 12 months or so, I'd put good money on #3.

Time will tell. But I don't think it's serendipidy.

Peter

FWIW, I completely agree with you. It is possible to 'predict' the future. It's just very hard to to it with any kind of accuracy, and very easy to get it wrong. The broader the brush, the easier it is to paint a picture of the 'future.'

As you described, the macroeconomic fundamentals all point to global economic slowdown over the next 12 months. While 'anything can happen', I think betting on your scenario #3 would be a good bet.

One easy prediction about the future, at almost any time, is that economic forces move in cycles.

Anyone can be an expert and for this message, I declare that I am an expert and make the following projections.

Fuel prices may come down a bit but I doubt if we will ever see it at $3.00 or less, ever again.

Things will never return to the 90s prices.

Again FWIW, I think you're spot-on with your prediction of fuel prices. It seems as long as Putin is alive there will be hostilities in Ukraine and the West will boycott Russian oil (to some degree), which will limit supply and keep prices high.

Even after supply is no longer a major limiting factor (at some point in the not-near future), the simple reality of capitalism is that oil companies have little incentive to decrease prices out of the kindness of their hearts. Once it's been demonstrated that demand is relatively inflexible, that people may whine and complain but largely continue to buy gas at $5/gal, there is little incentive for companies to lower the price.

The oil companies are making record profits right now, and their shares are way up despite a down and declining stock market. It's codified into law in this country that every corporation's highest priority is to 'maximize shareholder value', which they can do with high prices.

Unless a situation were to develop where the world is somehow glutted with oil and at the same time demand falls off a cliff (which would probably take not just a recession but a depression), I think you're right that we've seen the last of $3/gal fuel.