Asking Price vs Selling Price - Caribbean Cats?

[CortoMaltese]

....to have a complete idea u'd have to say also that only in the month of august banks started 358.471 new foreclosure processes (source:RealityTrack)......just to give an idea about how real estate market is far to be stabilize IMO.

[David_Old_Jersey]

Agree with you on the statistics front. 9 out of 10 are made up. and the other 5 are lies

Originally Posted by Fishspearit

There are areas where homes are selling for less than they can be built for, if that's not a bottom than I don't know what is.

IMO nothing fundamentally wrong with being bullish, but I would mention that just because something costs £100 to make doesn't automatically mean it is worth that. Historically houses (in the West, especially in the Anglo Saxon economies) have tended to be the only s/h item that is expected to increase in value (in real terms). No inherent reason why that should be, it's down to supply and demand. fuelled by speculation (which happens in cycles - this one happens to be the mutha of them all ). Property going up in value is not like the sun rising in the morning, where it may (?? ) not really matter how many goats you sacrifice the night before - simply have to wait 8 hours.

Notwithstanding that, I also expect property in general to revert to the historic norm of increasing in value - at some point in the (distant?) future. but some won't, and will continue to depreciate even further below what they can be built for.

[Fishspearit]

When I'm not idling my time away on cruisersforum, I'm usually reading economic sites. It's funny, most of those guys are always screaming about 'Quanitative easing from the Federal Reserve, expanding money supply, future hyper-inflation, falling dollar, rising oil costs, buy Gold! Inflation is just around the corner!'

But people shopping for boats (fiberglass resin being an oil product) are just as sure that deflation will continue.

[Palarran]

Can you corrolate boats and cars?

Luxury car market may never look the same - The Driver's Seat- msnbc.com

BTW, In my opinion, the only reason home prices should go up is availability of land. If you live in an area like I do, there is an almost endless supply of rural land available. Metro Chicago, not so much

[Augusto]

One question to Fishspearit, are you selling a boat or out to buy one?

Home sales in the US are recovering, that means that there are more transactions, but since price is still dropping that really means that sellers are coming to grips with new prices and accepting offers, still a pressured market in Price terms.
Cost of building will also come down, remember that with excess labor (unemployment rate up) hourly wages come down, and all housing items (including land prices) are also coming down in price, so new houses will be "cheaper" to build so prices will continue to have downward pressure.

[Augusto]

Again, Stocks, houses, gold etc, are potentially profitable investments, due to dividend, holding reserve value etc.
BOATS are an expense item ONLY. If tomorrow the is so much charter business that I can rent out a boat year round then people will begin to buy boats for rental income and prices will rise. This scenario will NEVER happen.
We are using the housing market here to show how bad things are even for a good that could be an investment (a house), but a Boat will never be as good as an investment as a house, stock, gold etc.
For boat prices to even commence going up you need excess savings and increase propensity to spend. I do not think we are there yet.

[Palarran]

Originally Posted by Augusto

Cost of building will also come down, remember that with excess labor (unemployment rate up) hourly wages come down, and all housing items (including land prices) are also coming down in price, so new houses will be "cheaper" to build so prices will continue to have downward pressure.

Ok, complete drift, but I disagree with new home prices going down, at least the hard costs. I'm a heating contractor and in 2005 we put around 1000 heating systems in new homes. At that time we where constantly getting hammered on price due to the "volume discount". This year we will be lucky to do 200 systems. It's more expensive for me to do less volume, that's for sure. While I haven't increased my prices, they sure are not going any lower. And I'm pretty sure this is the same for all trade subcontractors.

[David_Old_Jersey]

Originally Posted by Augusto

I do not think we are there yet.

Contender for understatement of the year award?

[CortoMaltese]

Originally Posted by Augusto

Again, Stocks, houses, gold etc, are potentially profitable investments, due to dividend, holding reserve value etc.
BOATS are an expense item ONLY. If tomorrow the is so much charter business that I can rent out a boat year round then people will begin to buy boats for rental income and prices will rise. This scenario will NEVER happen.
We are using the housing market here to show how bad things are even for a good that could be an investment (a house), but a Boat will never be as good as an investment as a house, stock, gold etc.
For boat prices to even commence going up you need excess savings and increase propensity to spend. I do not think we are there yet.

i agree. actually who compares boats with houses might just be a seller! thinking that an eventual increase of sold houses is just a sympthom of things getting better is wrong (IMO) and that can also affect an increase of sold boats is an illusion. I'd rather say the opposite; maybe considering that real estate is getting interesting, some people that saved some money to buy a boat, would instead use it for a house and think about the boat again in a few years when they'll sell the house with a nice revenue.

[Fishspearit]

One question to Fishspearit, are you selling a boat or out to buy one?

I'm a happy boat owner, but if I thought I could get a good price I would sell it, but only so that I could then buy another one.

[Augusto]

Fishspearit, but if the price of the boat you want to buy drops by 30% how much of a drop in price will you accept on the sale of your boat? Keeping in mind that the difference in price remains the same.
Now comes the tricky math part. If you want to buy an USD 300,000 boat and you have a USD 150,000 one, if the USD 300,000 drops to USD 240,000 (thats 20%) and you are able to sell yours for USD 100,000, you will be actually same USD 10,000 compared to the original trade diference,but your price drop is 50%.
What you cannot expect is for the other boats to drop in price and yours keep its price range.

[planetluvver]

I had the impression that the OP was asking about the Caribean, because of an interest in sailing in that locality, He did not mention bringing the boat back to Turkey.

[CarlF]

If there's one piece of financial "truth" I've learned, it is to believe in cycles. You don't know exactly when the cycle will turn -- but turn it will. And the turn is almost always quicker than the experts on TV predict (as has happened in equities since March).

Housing is still going through the bursting of one of the biggest speculative bubbles in history. While it might have been correlated with boats in the past, it isn't now. Boats weren't part of that bubble. There is not a huge supply of brand new sailboats sitting around like Florida condos and prices had been pretty stable for a decade. Of course, boat prices got hit in the recession and credit freeze like every other discretionary good.

It's still near the bottom of the cycle. Could it go down more? Sure. It's hard to know the bottom except in hindsight. But the odds against it are increasing everyday. The cruising sailboat market was pretty healthy 12 months ago. If I was a betting man (and I am) I'd say that "in demand" cruising sailboats will be selling at substantially higher prices 12 months from now.

Carl

[Augusto]

This is what drives the market, different opinions.
I myself really believe that some stocks will go up in price by next year, and I bought some! Now I doubt anyone that believes that boat prices will go up in the next 12 months is out there buying boats and putting them on a warehouse to to sell them in 12 months.

I would also believe that we should all identify ourselves in this post as: Buyer, Seller, Broker, Builder.

I am a buyer, and I am trying, with good arguments, not to biased. Sellers, Brokers, and Builders will have different opinions.
Carl, which one are you?

[talus]

What Augusto is referring to is similar to "price compression" and you can see that occurring in the market already.

Lets look at three examples:

1. 1993 - 42' Lagoon TPI - $249,000
2. 2000 - 45' Leopard Owner Charter USA - $280,000
3. 2005 - 43' Leopard Charter (BVI) - $280,000

Note: I have not surveyed any of these boats. I am simply using them as examples. They are cited for their difference in age, similarity in price and popularity. **Do not start a flame war over these particular boats.

Now ideally, we would have viewed and surveyed each vessel, so lets assume we have -- and each one is in the condition presented by the agent with no major defects. Options are relatively similar with the TPI having a water maker and the 45'er having a generator. Engine hours are roughly similar - each in the 3500-4000 hrs range (although the TPI isn't posted). Lets also assume that all have appropriate duty paid, and we will ignore arguments on the wear and tear of charter vs owner charter vs owner used.

For the sake of this discussion, lets assume that the asking price is the expected sale price --- or, each owner/broker feels that the boat is valued appropriately and priced to sell.

Now step back and look at the numbers. Given three relatively equal boats, of relatively equal price, in approximately the same condition... Which boat is of greater value?
(-- assess your answer, you might just make an emotional choice here)

A better question might be, if already owned each boat... At what price could I guarantee the sale of that boat? What if I absolutely needed to sell the boat in 30/60/90 days - what would I ask?
(-- now what is your answer? is it emotional or logical?)

IMO, replacement value and survey value are of little worth except for loans, insurance and bragging rights. We are not dealing with an irreplaceable item therefore, the value is only what the market will bear.

In other words, we don't know what the value is until the boat is sold.

Currently, and logically, boats are priced based on recent comparable sales. However, since sales of 40+ catamarans represent a relatively small market, comparable sales selection will extend back in time and likely contain a mix of different catamaran types, sizes, and model years (not unlike our three examples). This "rear-view mirror effect" will not take into account the current market (except in the case of a recent large number of sales). This will cause a lead or lag effect.

I argue that:

• The recent past provided cheap and easy credit;
• Catamaran values were recently greater as supply was limited and demand greater;
• Comparable sales valuations (and seller expectations) are in error due to the fact that "recent sales" do not FULLY take into account the current economic situation (some account is made but we are chasing downwards therefore it is never fully priced in);
• Price compression is currently occurring as the market adjust to todays realities; and
• The downward trend will not end soon (soon defined as the next 2-3 years - at least).

Full Disclosure: Emotionally detached Owner (not selling) and Buyer - looking for 40+ cat with planned purchase in the next 3-18 months.