Boat Market

[Pete]

Having read some comments here and watching the resale market in the south east, the time to sell a boat, Hatteras included, seems to have increased significantly and the selling price appears to have dropped significantly from five years ago when I bought. I have this gift of picking market tops, but only when buying!!

Given that the economy has picked up pretty good, you would expect that boat sales would follow. But that is not the case as best I can tell. I have read and heard that insurance availability/cost, dock availability/cost, diesel prices, replacement parts cost, yard cost, and various government restrictions, all have contributed to a less attractive ownership environment.

If the above is in fact the case, it may be an extended down turn for our recreational choice. Or maybe boats just lag the economy and will soon be on the come back. What do you folks from the various areas around the country see as the current environment, the reason, and your feel for when the light at the end of the tunnel will be visable. Thanks for your thoughts.

Pete

 

[Genesis]

I can't speak to the environment elsewhere, but around here (Florida Panhandle) I see no indication that the problems are going to ease any time soon.

Fuel is not the big problem. The big problems are insurance issues and lack of mairna/yard space. These two are killers - the latter in particular is a critical problem that makes the annual haul a real chore and renders your slip vulnerable to the whim of eviction - contract or no contract.

We've had several marinas here close in the last three years. In each case the tenants were given less than 30 days notice to get out. In one case it was less than two weeks notice. Annual contract or no annual contract. Can you sue in a situation like that? Sure - and probably win, but you won't get fees and you will burn crazy amounts of money on the suit; the marina owners know this.

The guy with an 80 footer has a captain and doesn't care. Its the guy who has a boat in the 30-50ish foot range who's got an issue, because its no longer practical for him to haul annually, get the work done and get back in the water.

I was out for almost six weeks last year doing what should have taken two, because I was forced to haul 50 miles away from home - or pay a yard "whatever they want" type charges (that yard prohibits owner work of any sort while you're out - even silly stuff like repacking stuffing boxes and overhauling strainers)

I sold my 45C over this stupidity. I loved the boat, but the prospect of being tossed with a week's notice and having to either keep the boat an hour or more away from my home, pay double (or more) for slip space in a "charter boat" area near the pass, or deal with someone who had treated me poorly in the past - on top of the rest - was just too much for me.

Now I keep my boat on a trailer in the driveway. All the grandstanding by the developers no longer matters to me, and I can work on the boat any time I want 10 steps out my front door.

 

[Pete]

Let me add one other consideration for your input. I am seeing transient dockage rate esculating at a rapid rate. At this time in the Pamlico Sound, NC area where I am, you can get $1.50 to a few $2.00 a foot rates. Being a cruiser I am sensitive to these rates. In planning a cruise north to the Chesapeake and New Jersey and I see the rate going to $2.25 to $3.00 a foot. I understand that this is cheap compared to the northeast where $5.00 is not uncommon. And most add electric charges. Adds up after a little cruising.

Pete

 

[captainwjm]

Can't offer any guidance on your area or boat, but I'd disagree that the overall economy has 'picked up.' What I've seen, and what has been confirmed by those in the marine business around here, is that while the extremely well-off and corporations have done well, the middle-class [and that includes even those of us with more than $100,000 household incomes] continue to struggle. All costs have gone up, but real wages [for those of us who depend on them] have remained stagnant. I'm not an economist, but our local boat broker remarked several days ago that the decline in the middle class has really changed the face of boating. No longer is it a sport enjoyed by 'Joe Six-Pack'. He reported that '06 was his best year financially, eventhough he sold fewer boats that ever. He says that is a natioanl trend that is exaserbated in the areas of expensive residential development, such as the southern coasts. Even here in the inland waters, the only growth in boating is occuring in the category of people who consider themselves fishermen who own a [bass] boat, not boaters who enjoy fishing. Of course, fuel prices and lack of available marina space are issues [thankfully, insurance lack is not a problem here], but the real culprit is the lack of disposable income by the vast majority of the population who once were considered prime candidates for recreational boats. I wish you well in your efforts to sell out, but suggest that you check the market carefully to determine if this is really the right time.

 

[Pete]

My post may have implied that I was looking at the selling option. Not the case at all. Fortunately for me, the boat is tied to a dock behind our house in a canal type community. So, worst case I will just get to play with it at the dock, with ever decreasing usage. Anyway, it is a required element of my viking funeral, hopefully a long, long time in the future.

Pete

 

[Genesis]

There's nothing wrong with the economy guys.

There's a lot wrong with people. "Joe Six Pack" has decided that he needs two Lexi, a $4,000 plasma TV AND a $100,000 boat. This, of course, comes at the expense of his emergency fund, his kids (now in daycare with mommy working so they can have that second Lexi) and their 401k.

Then Joe gets laid off. What would be a routine disruption and no big deal suddenly turns into disaster.

But the problem was never really the economy.

It belonged to the boat salesmen pushing 15 and 20 year notes that leave the buyer upside down for 5+ years, trapping them with no escape.

It belonged to the concept that you NEED a 4,000 square foot house for a family of four, a Plasma TV in every room, and $600 video game consoles - one for each kid - plus a passel of $50 games for each. Oh, and two Lexi - a Chevy is "so beneath you."

It belonged to the idea that "we'll always have plastic", instead of socking back 6 months of expenses before you buy toys, and paying off one's credit card bills every month - in full.

Some facts, from '06:

The Median Income was $46,325. This is 32% more than the mid '60s, after adjusting for inflation. Its also 13% higher than during the economic boom of 1985, again, after inflation.

The typical American Household has a net worth of $465,970, up 93% from 1965, 60% from 1985 and 35% from 1995.

Reality? Family Median makes 25% more than his father did 25 years ago, after adjusting for inflation. He enjoys a house nearly double the size of the one he grew up in.

And, even with all of the advances in standard of living and toys, Family Median has 8% more real purchasing power (after inflation) than their parents in 1965.

There is no "lost" Middle Class. What there has been is quite a bit of outrageous behavior by certain industries that have sought to drive up the cost of their products and services at 2, 3, 5 or even 10 times the rate of inflation. Look at the price escalation in new boats over the last few years sometime.... coupled with "creative" financing, you will find much of the problem in that sector of the market right there.

http://genesis3.blogspot.com/2006/11/is-americas-purchasing-power-really-in.html

 

[MikeP]

Yep - guy at our marina before I left wrote a check for $105,000 to get out of his boat. That's right, the selling price was 105k below what he owed on the 3 year old boat...

 

[jim rosenthal]

I agree with Karl; it doesn't matter how much more you are making if your spending habits are accelerating even faster. With endless varieties of new electronic toys out there, it is easy to see why people end up wrong way round in all this stuff. For example, the $400 mobile phone you bought in July is yesterday's news by August. No, thanks.

Even in areas of the country where dockage is available and marinas are not getting condoed out of existence, used boat prices are soft and they are staying on the market longer. Even two years ago these boats were considered desirable items, and were easier to sell. Something is changing, and I am not certain what it is or even whether anyone else knows. It may be more a confluence of several smaller factors than one big one; fuel cost, insurance cost, dockage cost, and that people find smaller newer boats appealing for the same price. We here don't, but as we've noted before, we are in a minority around here.

I always thought I could sell Blue Note for what I had in her. However, I think with the recent work, I have crossed over the point to where I might not be able to. So, I guess I will just have to keep her and do a lot of boating. There are worse fates, certainly.

 

[Trojan]

Boats up here are not selling. I was going to sell my 43 in order to purchase a 53 that I have been eyeballing for the last 3 years. His price has dropped $40,000. in 3 years and I don't think his boat is over priced it's near perfect. The owner is just getting to old to operate it. Its a 75 with naturals. I'm not sure but I think it been taken off the market I hope not. I got a real good deal on my boat but from what I see I could not sell it for a profit. So I have been holding off.


BILL

 

[(Nobody You Know)]

Karl is absolutely right on this one. Virtually all young couples we know live in huge homes and drive newer cars, SUVs than us.

Let me add this to the line of posts to this point:

As an owner of 4 boat (condo) slips and other RE in NC & SC there is still great opportunities for reasonable slip rentals and at quality marinas with yacht club amenities. I think you will find that many buyers of FL "boatamenium" slips as in other locations want cash flow too and will be willing to rent out.

I truely beleive that a lot of the boat price issues will adjust out over time as your well maintained 35'-53' er is a much better deal than the new s*** they are turning out in that size range and filling up page after page of every boating magazine with their magnificant luring adds.

There are ever increasing vast arrays of electronic marvels coming out on the market each year. Remember, with a chart and a little knowledge a hand helds GPS will still get you home. Control your expenses.

Get the best financial planner and CPA you can so as to maximize on your financial growth and pay the Gov. absolutely no more than you legally have to. Live well within your means folks. There's nothing more comforting than financial security.

BTW, it cost me $2,083 to get that main engine seal fixed on "Ernestine", my 8 year old Caddy. Love driving that thing too.

 

[thoward]

I guess it depends on where you live and work. My office is in a small country town with mostly blue collar workers. The real estate bust has caused lots of problems out here. We have many familes moving away to find work. I know quite a few middle and lower mgt. people who have lost their jobs also. I see it working its way up. My office started seeing the down trend well over a year ago and is now down 50%. My wifes business started seeing the down trend over the last 3-4 months but nothing like mine. Honestly, I do not personally know any locally established small business owners who have not slowed down. You can say the economy is great but for those of us who are running small business's in it, well I say BULLSHEET! Bankruptcys are way up and ARMs are going to be a thorn in the side for another 3-5 years. Florida reported 11,709 new foreclosure filings during the month, which is the third highest total among the states and a 40 percent increase from the previous month. I foresee some tough times ahead....

 

[labrador]

Capt Bill where in N.C. do you have those slips? Are they rented and if not how much do you want? I'm in New Bern and I've been told I may have to leave due to new condo's and the marina selling the slips. Don't know if thats the case however was thginking of taking the boat to Beaufort or somewhere on the beach anyway.

 

[rswirtz]

Capt Bill where in N.C. do you have those slips? Are they rented and if not how much do you want? I'm in New Bern and I've been told I may have to leave due to new condo's and the marina selling the slips. Don't know if thats the case however was thginking of taking the boat to Beaufort or somewhere on the beach anyway.

I would be interested in moving my boat from Charleston Resort Marina as well. I pay $500 plus metered electric. I'm told this is a pretty average price, but a nice mom and pop place on a coastal river would appeal to me if there are any such places anymore. Thanks, Rick

 

[Genesis]

I guess it depends on where you live and work. My office is in a small country town with mostly blue collar workers. The real estate bust has caused lots of problems out here. We have many familes moving away to find work. I know quite a few middle and lower mgt. people who have lost their jobs also. I see it working its way up. My office started seeing the down trend well over a year ago and is now down 50%. My wifes business started seeing the down trend over the last 3-4 months but nothing like mine. Honestly, I do not personally know any locally established small business owners who have not slowed down. You can say the economy is great but for those of us who are running small business's in it, well I say BULLSHEET! Bankruptcys are way up and ARMs are going to be a thorn in the side for another 3-5 years. Florida reported 11,709 new foreclosure filings during the month, which is the third highest total among the states and a 40 percent increase from the previous month. I foresee some tough times ahead....

Ok, let's examine this one a bit.

ARMs.... hmmmmm.... bankruptcies.... hmmmmmm.....

Where's the problem here? Your office started seeing a downtrend? Yep. I believe that.

But is that an indictment of the economy, as you allege? Nope! It is an indictment of people and their money management practices, much of which has been fueled by the real estate, financial and yes, boat firms!

The real estate "bust" was fueled by a speculative bubble which those very people who are crying now PROFITED FROM IMMENSELY AT THE EXPENSE OF THOSE WHO ARE NOW BEING FORECLOSED UPON! Those people had their financial future compromised so that those who are not crying could make their profit.

Pardon me while I go cry a river for someone who raped their neighbor and now, when BOTH of them end up paying for it, the rapist is the one doing the complaining!

 

[thoward]

Oh, the guy swinging the hammer "raped their neighbor"? Please!

"Economy (from Greek οικονομία, oikonomia, household) refers to the human activities related with the production, distribution, exchange, and consumption of goods and services."

When business's see substantial decreases in the consumption of goods and services it means something IS wrong with the economy.

 

[johngalt]

FWIW here's my 2 cents.I live in a little corner of the NE that is not a true indicator of the country as a whole. The Hamptons is the rich man's playground. Here the boat market is full of potential purchases and I think that the reasons are many: most of which have already been touched upon. Fuel price increases alone accounted for many many boats never being launched last year in this area but one must also factor in the incredible lack of suitable dockage.The one thing I have yet to see anybody bring up as a contributing cause for the dearth of slips is enviromental regulations. Here in my neighborhood there is an absolute prohibition on the construction of new docks. Hell, just trying to get the permits necessary to maintain an existing dock is a bureaucratic nightmare that can take months or even years . Just to replace a piling lost to the ice can cost a fortune in time and cash.As to the state of the economy , again I live and work in a Fantasy land which does not reflect the reality of the country as a whole but I tend to side with Genesis on this one. I think a great deal of people have made it a practice to live beyond their means. One tends to blame Madison Ave. and the popular culture for the endless desire for more,more,more but as a firm believer in personal responsibility I blame the individual for their own personal choices. No one makes anyone buy a new car every couple years.

 

[johngalt]

What happened? before anyone says it I typed that last post in paragraphs but when it posted they disappeared.

 

[Trojan]

The economy SUCKS BIG TIME. I don't care how you perfume it. It stinks. As long as we have this one way free trade it will continue to rot and degrade. Quote:" US will become a service country", but who will have money to pay for the services. Until the poor suckers in the foreign countries start seeing the money and start asking for a fair wage it will continue. With China supplying so much of the goods it will be a long time before the economy starts to change. It won't be a little recession this time. It will be a full blown DEPRESSION. WE HAVE SEEN THE BEST OF TIMES. I sure hope I'm wrong. But I have seen this picture before. So has everyone over 60. Right now the FAT CATS are in charge. There is no middle class any more. Your useless politicians have seen to that. If there was not money being spent on the war there would be a lot of missing jobs. Look who's doing all the smoke blowing your president. When things were down the wars have kept us going. If he can finish his term with the war ending at the beginning of the next president term. He won't be blamed for the state of the economy. Enjoy!!!! I'm stocking up on ammo.


BILL

 

[Genesis]

Oh, the guy swinging the hammer "raped their neighbor"? Please!

"Economy (from Greek οικονομία, oikonomia, household) refers to the human activities related with the production, distribution, exchange, and consumption of goods and services."

When business's see substantial decreases in the consumption of goods and services it means something IS wrong with the economy.

The guy swinging the hammer made his money because his neighbor was sold an unsuitable house - something he couldn't afford. He didn't directly do it but he sure as hell profited from it!

When businesses saw "substantial decreases of goods and services" it doesn't necessarily mean there is something wrong with the economy.

Witness the farrier industry after the introduction of the motor vehicle. Boy were they pissed. But there was nothing wrong with the economy.

Witness the thousands of businesses that went bust after the '00 tech bubble. There was nothing wrong with the economy - the correction was not only late it was necessary, and all the screaming about how we were headed for another Depression proved to be a bunch of diesel soot.

This time around is no different. The speculative bubble moved to housing. Those people made outsize profits for a few years, and now the correction has come. But housing has not collapsed. Yes, the pace has radically slowed down, but if you take a 5 year moving average - including the "bust" right now - the trend is still upward!

Your thinking is a prime example of what I referred to in my blog posting on this myth of the "Disappearing Middle Class". Go back and read it. There is a permanent wealth effect - if you made $50,000 for the past 10 years up until three years ago, two years ago you started to make $100k, and THIS YEAR you make zero, are you ahead or behind?

You're ahead! WAY ahead! You've got FOUR YEARS of income in two years! What the hell are you complaining about? If you make nothing for the next two years, you're even.

But no, you're poor! That's because instead of doing the smart thing, you took that $100k income and you spent it. You bought a new Lexus, you got rid of the 2,000 square foot house and bought a 4,000 square foot one, then you took an interest-only loan on it!

Who's fault is that? The "economy" went bad?

Nope.

You got greedy, and now you're paying for it.

Happens in every walk of life, and has predictable results.

The economy, as a whole, is doing just fine. The GDP - the definitive measure of the economy - continues to grow at a measured, stable, and sustainable rate.

There are long-term economic problems on the horizon. They stem directly from the idea of the government providing entitlements that have no foundation in our Constitution. Those promises cannot be kept - no matter the political will - and when that finally is forced upon us things will get quite ugly.

What this means is that the wise man does not count on any government entitlement program existing beyond the next 10-20 years. If you structure your life in that fashion, you'll make it.

 

[Pascal]

our GDP is the envy of the western world and so is our record low unemployment rate (almost half of ole europe).

the only problem is the media brainwashing the public and pushing their political agenda.

the economy as whole is doing just fine. there might be some corrections going on at the local level but that's about it.