Buyer's Market: Sailboat Sales Plunge

[sandy daugherty]

I think this is an authoritative report of conditions in the sailboat market:
Sail America issues new reports on monthly sales

[George Wade]

Originally Posted by sandy daugherty

I think this is an authoritative report of conditions in the sailboat market:
Sail America issues new reports on monthly sales

"The first report shows unit sales of sailboats are down by a third through the first five months of 2009, from close to 3,000 in the 2008 period to less than 2,000 this year. The collective valuation of boats that have been sold is off even more, declining 45 percent to $131 million from $236 million....."

Is that value decline made up of 33% fewer sailboats sold minus 12% lower price; or has the writer's mind not been made up properly yet ? $236M/3000 averages $78,666 each. $131M/2000 averages $65,500 each. Average price has dropped 20% per boat.

I still have to wait a few weeks before my pension will pay the cash purchase price...!

[Jolly Roger]

Velly interestink! But I think it only confirms what anyone who is looking to buy a boat, especially a larger one, already knows. Sailboats are sticking, until the owners realize, for one reason or another, that their baby is not worth what they think it is. The best indication of this, and the seriousness of the seller, is the length of time a boat has been on the market.
It would be even more interesting if someone 'in the know' could post the complete report.

[DWT]

Sandy,

Thanks for sharing this report with us. I second the request from anyone that has the full report and is willing to share it with the forum.

The time is getting better for buying a boat!

[George Wade]

Originally Posted by DWT

Sandy,

Thanks... I second the request from anyone that has the full report and is willing to share it with the forum. The time is getting better for buying a boat!

Go to the linked article in 'Soundings' trade only. End of article: Click here for the full release gets you: sailboat0624.pdf which is One Whole Page long and does have links to expanded tables from Adobe Reader. Except they wouldn't open in Adobe Reader; in Safari or Firefox; not even in Pages.

However, one needs to be a member to get the raw data: 'Note: YachtWorld.com's proprietary database, SoldBoats.com, measures boat sales reported by member yacht brokers; the data, which is unaudited, is available only to members, except in aggregated form as reported above. YachtWorld.com is owned by Dominion Enterprises, in Norfolk, Virginia'. Is there a forum member, who is not sworn to secrecy, who has access. Not that it's necessary — expect a combination of a final crash and stagflation to pay for everything.

[dmx]

This is pretty interesting news, and I'm interested to hear more details. But it's hard to generalize this market.

The boat market itself seems to operate as many sub-markets (monohull vs cat, in production vs out of production, model vs model, etc.). Overall market stats are nice, but if you're actually trying to understand if you are going to get a deal on a particular kind of boat then you need to map out the supply and demand data for that boat. If you want a cat, that market is totally different from monohull. And sail performs differently than motor boats (thankfully!).

As a prospective buyer, I can see that more difficult financing is likely to lead to depressed boat sales (fewer financings) and also lower prices (everyone can "afford" less boat). This could give new boats an advantage over used as they drop prices and offer manufacturer financing. I can see hints of this already at the boat shows -- the "show specials" are cutting down into the price range of the last 5 years of boat production. That could get interesting over time, at least for buyers of boats still in production.

[Kefaa]

As a person who has been looking for a while, I have to agree with Jolly Roger. The market appears to be selling less, but not costing less. We all hear about bank repos, and people "walking away" but those are far more notable, than common. I think it falls into these categories
1. The person looking to sell, but knowing they don't have to take "any" price and can wait.
2. The person looking to sell but owes as much or more than the boat is worth. So... they cannot deal. Instead they hold out hope tha somehow over the next couple of years it will all work itself out. (And I hope for them they are right)
3. The person looking to sell - has looked at NADA and BUC and feels that while that may be the value of everyone else - their boat is different. The added new sails and $3000 in electronics five years ago and are sure that somehow those offset the 12% depreciation over the same time.

Because of #1 and #2, #3 is never going to be realistic in pricing but they are not going to sell either.

In short - Fewer sales is not the same as less expensive. Same price during the questionable economy means it is not a buyers market unless you find a person who has to sell. Again - notable, but uncommon.

[dmx]

Building on Kefaa's post (which is a very good point), I don't think the boat market reacts any different from any other market when it comes to how people make decisions to sell at a price during periods of new information.

But I'm not sure holding out is an optimum long term strategy in the absense of a systemic recovery of the marine financing market and the luxury goods market.

An economist named Thaler actually studies this delay between changes in market information and when people decide to sell because it's so curious, and determined that often people take the following approach to new information in a market:

underreaction > adjustment > overreaction

One of the drivers for this is that people hate to lock in a loss -- and since everyone else is "holding out" they might as well wait too. But at some point the systemic changes do affect the market dynamic (through supply and demand forces), and everyone races to escape a situation where lots of people are deciding to sell at once. Then, the market over-reacts. Wipe, rinse, repeat.

Admittedly, there's probably more of an emotional attachment to a boat than to equities. It's certainly more fun!

[Pblais]

My own snooping around says that folks with the boats you are really wetting your pants to get are holding rather than selling. A lot of boats listed for sale are not really for sale. The boats on the lower end are perhaps selling 20% less than they might have in a great market. There has not been a great market for about 4 years.

Boats on a deal may have been neglected for 4 years and that will cost you as much as you might have saved.

I would not let the economy let you think you can steal great boats because folks that own them have been maintaining them. They know what it takes better than you do. You can still find deals just as you always could but there are far fewer "gimme's" out there than there used to be. Good times tend to yield the better deals.

If you are ready now to buy then do so with caution as there are more lemons out there because the jewels are being held back by folks that know what the boat is worth and can afford to wait. When they are ready to sell - these are the boats to look for. Buy a boat from someone not forced to sell because they could maintain it like they really cared up until you bought it.

That dimension is worth more than the drop in market prices. You want the better boat not the better deal? After 2 years you know the difference. I've been there twice and always got the better deal on the better boat.

[Jolly Roger]

I concur with Kafaa, dmx and particularly Pblais’ last post, because I am now just about ready to make the leap.

But how can you find out, before making an offer, if an owner really wants to sell or is able to wait out the present price slump? Surely, as a general rule, boats offered through brokers are more seriously for sale? If the broker thought otherwise he would be wasting his time - wouldn't he?

So what would you conclude about a brokerage boat which has been on the market for over three years? Starting at $230,000 and now down to $140,000, and still no takers. Is there something very wrong with the boat, or the owner and/or his broker? One would have to assume the owner and the broker can afford to wait, which means I either pay up, or also wait for another one.

[Pblais]

Is there something very wrong with the boat, or the owner and/or his broker?

Given two legs there is no telling where people will go or why they do. It's not really up to you to figure these details out when there is no way for you to do so. You look and you poke around and maybe you feel inclined to write an offer or ask a few questions. You don't have to know what the owner will do before they actually do it.

It's about doing your own homework to know what other boats are out there at that moment you can actually try to buy. You really are looking to buy only one. Your purchase price won't change the market one bit. What a seller and buyer agree to is the right price. It takes some effort to do all the looking and research.

It is also part of the process that it can take time for the right buyer to see the right boat. If you consider boat buyers tend to look at a fair number of boats before they actually buy, it stands to reason most buyers are not looking to buy the actual boat they come to see most all the time. Last time we did research and picked 6 to look at but we were not committed to buy one. As it turned out we looked at all 6 and got down to 2. Financially one was the better deal and one was the better boat. It took some effort to sort out the differences. It means we saw 5 boats we didn't buy and 2 we almost did and in the end only bought 1.

If you start with the idea you are not forcing the sale to happen and you accept it will cost you real money to do all this shopping and looking then you might find a boat but not know when until the moment you understand why. Selling a boat follows much the same process too.