About a year ago, I read an article that warned of “the coming crash in sailboat prices.” I didn’t believe it then, and nothing has happened in the last year to make me change my mind. In fact, while no one is ready to declare that the “soft” market for new sailboats is over, there are numerous indications that sales are up, and that used boat prices are beginning an upward spiral.
Since last October 19th, based on a major correction in one relatively small sector of the U.S. economy, the news media seems intent on helping the American people talk themselves into a recession. The fact is, however, that as we enter 1988, the U.S. economy is incredibly strong. Manufacturing, exports, and employment are up; taxes and interest rates are down. Despite the loss of what were largely “paper profits,” this strength is increasingly evident in the market for new and used boats.
Stocks trade quickly and in large volumes. As a result, wholesale corrections can take place quickly. Sailboats, on the other hand, trade slowly and in small volumes. Price corrections can be painfully slow.
A combination of factors were needed to create the soft market. During the years of double-digit inflation in the ‘7Os, when prices were rising rapidly, many boatowners were under the mistaken impression that their boats were appreciating in value. When the spiral began to slow in the early ‘8Os, many of these owners decided to cash in. At the same time, the strong dollar resulted in an unprecedented influx of foreign-built boats into the United States. Changes in the tax laws simultaneously flooded the top end of the used boat market with boats that had previously been in charter service.
At the same time that this unusually large supply of boats was peaking, recession, high interest rates, and high unemployment were combining to reduce demand to an unusually low level. The “crash” in sailboat prices isn’t something that will happen in the future; if indeed the word is applicable, it already took place in 1982 and ‘83.
It’s taken all this time for the market to absorb this oversupply of used boats and for the expectations of potential sellers to align with the realities of the marketplace. The market correction in sailboat prices has taken five long years.
Today, with generally lower taxes, lower interest rates, higher employment levels, and a growing number of newcomers entering the market, sellers can look forward to a much better climate in which to sell; buyers will have to look harder in order to find a bargain. Whether your long-range plans call for trading up or trading down, consider the fact that 1988 may provide your best opportunity in many years.. .and for many years to come.
