Used boat market 2nd half 2022?

[aqfishing]

Originally Posted by aqfishing

I have looked at Leopard and Balance. You can’t get a Leopard for at least 2 years, Balance not till 2026. From what I can gather most yards are pretty booked out. This may change with the current way the economy (world) is going, but it could go either way.

If you go onto the Moorings/Sunsail brokerage, there is not much available, hence I do not quite believe your comment on insurance of ex charter boats.

Things are constantly changing and anyone who says they know what’s going to happen it guessing!

So as long as the waiting lists are there, then there will be a healthy second hand market.

I personally believe this buyers market bubble will burst at some point….my guess!!!

Sorry, meant sellers market!

[grantmc]

Originally Posted by argosail

I know the used market for anything has been nuts, boats, cars, bikes, etc. But now that interest rates are rising to curb inflation and the stock market losing a lot of ground, do you foresee the used sailboat market returning to a "buyers market" this year?

I don't know how the cost of boats will change with the coming recession, but I think it's a more complex problem. And I am gauging my response to what I see going on here where I live not North America, perhaps someone will correct me.

Originally Posted by Snerf1

...
Virtual reality will be the substitute

Snerf1 is right about this but it's not VR per se, rather it's been a bunch of U-tube influencers. So huge numbers of people have taken up the call to go sailing. Eventually the vicarious lifestyle takes over for many. And a percentage of those people buy old boats and so embark on the refit process. And for people living in cars, caravans (I think most of you call them trailers?) or really struggling to pay rent, living on a crappy little boat is a cheap option. And this really appeals to the dreamers.

But here's my wider point that it's not the cost of the boats per se. All those boats need a place to be, a marina, or at least an anchorage. Here where I live marinas have been expanding like there's no tomorrow. Huge investments, and to fund that development prices for berths have sky rocketed. Now most marinas were already located in what where once mooring fields, ie safe and sheltered areas within the confines of a harbour are typical places to build a marina. But to expand the marina it encroached on mooring fields. So most of those mooring piles were removed, long gone, no more happy co-existence. And all those moored boats? Owners had little choice but to take on a berth in the newly expanded marina. Few cheap/safe places to moor now (outside marinas).

Boat berth cost will be key
And so I predict that it will be the cost of storing your boat that will actually cool demand quite dramatically.

And to add to that simple problem is the reality that marina growth has been driven by demand. More people buy boats so need more berths. It's been an endless expansion for the past 20 years. Someone mentioned insurance, in NZ it's almost impossible to get insurance (if not a live-a-board) without being berthed in a marina. Strangely insurance companies prefer their policy holders to store their boats in marinas with security guards, cameras and locked gates. Go figure.

And for marina owners, I am thinking they'll be watching the same news and so the marina expansion and investment will slow too. So berths will be limited, and with a diminished availability berth rates should rise.

Many boats don't justify their berthing costs
But economists would suggest that people will ditch the boat to avoid berth fees but the reality I see over and over is the oppositive. People seem to have a weird attachment to their old boats. A good 20% of boats in marinas never get used, and are worth less than $10K yet their owners are typically paying about $400 per month in berth fees (for a 30 odd footer).

With a tough 1970s style economy (high inflation, high interest rates, low wage growth) as some are predicting many people will be caught out not being able to afford that $400 pm. But what do you do with all those old boats, where can they go?

Lack of berths
And also in some areas marina berths are at a premium, Auckland and Tauranga have waiting lists. So marina operators can set premium berth rates.

Anyway just another perspective on the cost problem. What do you other keyboard warriors think? Do please share your thoughts.

[Lake-Effect]

Originally Posted by PinkHemiCoronet

First post on the forum. I just bought a 30' Islander mkii ready to sail for $1500 last week. That was in Ithaca, NY. Diesel motor runs like a top. Owner said he listed it for $4000 and didn't get a single inquiry. That forced him to lower the already underpriced boat.

Welcome to CF,

Wow that sounds like a great score! How old? Any guess as to why the seller couldn't even get interest at $4k?

[ohdrinkboy]

I got an email today from a broker trying to sell a spot on Leopard 2024 build list at 2023 prices. I take it as an indication the slow down is starting. I think we will see a drop back to pre-pandemic prices in 2023.

[PinkHemiCoronet]

Originally Posted by Lake-Effect

Welcome to CF,

Wow that sounds like a great score! How old? Any guess as to why the seller couldn't even get interest at $4k?

1975. The boat was a one owner boat. The owners parents, kids, and grandkids were in Wisconsin. The owner retired and was moving in 2 weeks back to Wisconsin and just wanted rid of it. I talked to the marina staff about the boat and they had every maintenance record on it for the last few years. The owner had every peice of paperwork and lusts of what was repaired/refitted back to the 80's. They had spent more than $1,500 on sheets and rigging in the last couple of years. I think the biggest driver for the low-cost was its location. Ithaca New York is in the middle of nowhere. It's on one of the largest lakes in New York. But getting it from the lake to someplace more interesting was going to be a great big headache.

[Rumrace]

Sounds like you bought a family treasure.
It’s a really hard boat to insure. You’d have to talk to an insurance broker and value a total loss at nil. It’s not right but insurance.

There is a 32’ boat out on the island. Dark blue hull very clean boat. Not sure what it is but it looks stunning. Looks like a C&C with a more interesting stern and a wheel. Was for sale for 30k, one offer was for 18,000. He was so upset he kept the boat. If you added up the perfect condition the boat was in was worth 45k.
It’s rare to find something so well taken care of.

[12 sail away]

In Europe there is still a shortage of boats, most of the brokers complaining ...next to this the 'upcoming expected next wave of Corona' could be a trigger for people to still decide to buy that boat.
I have no clue what percentage of boat buyers finance the purchase, I guess it is more common in US.

[GordMay]

Originally Posted by Lake-Effect

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[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.

[valhalla360]

Originally Posted by Lake-Effect

It depends on what size boat. I'm expecting that interest rate hikes will cause many indebted owners of higher cost boats to want to sell by the fall.

Typically it would be the opposite.

If you already have a loan, your interest rate and payments are locked in.

Where it breaks down is people trying to buy. If rates go from 4% to 10% (yeah we aren't there yet). A 10yr $100k loan goes from just over $1000/month to $1350/month. This thins out the potential buyers.

Of course, there is a lot of fast moving parts to the economy right now and rates are only one part.

If I had to predict, yeah, I agree the boat market is going to get crushed in the next 6-8 months.

[goboatingnow]

I think most buyers are well heeled types with high incomes or cash buyers ( pension lump sums or inheritance ) , these people can afford the boats they are buying.

Covid has made people value having access to the “ outdoors “ this effect will continue for some time
I don’t see any significant change in the sail boat market in the next 2-3 years. Motorboats are certainly struggling to sell. Diesel has reached €2.50 a litre at marina pumps

High end sales ( >400k) do seem “ soft “ probably because that niche market is holding on to their money

My impression is that boat buyers are rarely young people and few buyers are using finance in any meaningful way.

[Lake-Effect]

Originally Posted by valhalla360

Typically it would be the opposite.

If you already have a loan, your interest rate and payments are locked in.

Understood. I wasn't referring to just the boat loan, but to a person's overall debt load, especially mortgages, and to failing income streams (eg reduced investment income). In other words, less funds available for the boat loan, the insurance, marina/club fees, maintenance, fuel etc. And maybe the need to work more, which means less time to use the boat.

[valhalla360]

Originally Posted by goboatingnow

I think most buyers are well heeled types with high incomes or cash buyers ( pension lump sums or inheritance ) , these people can afford the boats they are buying.

Covid has made people value having access to the “ outdoors “ this effect will continue for some time
I don’t see any significant change in the sail boat market in the next 2-3 years. Motorboats are certainly struggling to sell. Diesel has reached €2.50 a litre at marina pumps

High end sales ( >400k) do seem “ soft “ probably because that niche market is holding on to their money

My impression is that boat buyers are rarely young people and few buyers are using finance in any meaningful way.

Will the market go away entirely...no.

But even those well healed buyers will be hit. While some will look at it as "now or never", many will delay or maybe move down market as their investments/income are hit by the economic fallout. That will hit the market and once prices start to fall, even those who are "now or never" will start pushing harder for lower prices.

These are luxury items and people can live without them, so when it comes time to tighten the belt, they are more susceptible to market forces.

[goboatingnow]

Originally Posted by valhalla360

Will the market go away entirely...no.



But even those well healed buyers will be hit. While some will look at it as "now or never", many will delay or maybe move down market as their investments/income are hit by the economic fallout. That will hit the market and once prices start to fall, even those who are "now or never" will start pushing harder for lower prices.



These are luxury items and people can live without them, so when it comes time to tighten the belt, they are more susceptible to market forces.

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

Those people with the desire to own a boat and have liquid assets will actually heat the market up even more as 2nd hand boat prices are rising , especially since many new boats are either supply chain restricted or experiencing dramatic list price increases.

Certainly the brokers friends I drink with see a degree of buying frenzy in the market at present.

Undoubtably a selection of “ Covid” boats bought by the less dedicated owner will reappear in time on the 2nd hand market especially if prices remain strong.

The desire to see a soft market may simply be wishful thinking !!

[argosail]

Originally Posted by grantmc

Boat berth cost will be key
And so I predict that it will be the cost of storing your boat that will actually cool demand quite dramatically.

And to add to that simple problem is the reality that marina growth has been driven by demand. More people buy boats so need more berths. It's been an endless expansion for the past 20 years. Someone mentioned insurance, in NZ it's almost impossible to get insurance (if not a live-a-board) without being berthed in a marina. Strangely insurance companies prefer their policy holders to store their boats in marinas with security guards, cameras and locked gates. Go figure.

And for marina owners, I am thinking they'll be watching the same news and so the marina expansion and investment will slow too. So berths will be limited, and with a diminished availability berth rates should rise.

Many boats don't justify their berthing costs
But economists would suggest that people will ditch the boat to avoid berth fees but the reality I see over and over is the oppositive. People seem to have a weird attachment to their old boats. A good 20% of boats in marinas never get used, and are worth less than $10K yet their owners are typically paying about $400 per month in berth fees (for a 30 odd footer).

With a tough 1970s style economy (high inflation, high interest rates, low wage growth) as some are predicting many people will be caught out not being able to afford that $400 pm. But what do you do with all those old boats, where can they go?

Lack of berths
And also in some areas marina berths are at a premium, Auckland and Tauranga have waiting lists. So marina operators can set premium berth rates.

Anyway just another perspective on the cost problem. What do you other keyboard warriors think? Do please share your thoughts.

Ok, but how about those that will then just stay on the hook at a free anchorage? There is a good book on the Sea Gypsy life that talks about this, "Get Real, Get Gone".