Boat Bubble

[Phil8uga]

With the rising costs of ALL boats, does anyone think a boat bubble is coming?


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[CHassmann]

No, not anytime soon, if even at all.......

[rcsmith727]

Even the market crash in '08 didn't impact boat prices, did it??

[Bevostein]

Yes, 08 affected the boat market. I remember seeing posts on this website of people that had boats they wanted to sell and they couldn’t sell them for what they had financed. I distinctly remember someone with a brand new 236 who listed it forever.

Are we in a bubble? You’re only in a bubble if you have a market correction of the overall economy. The boat market is one of the first things to go when the economy goes south and one of the last things to come back in a recovery.

Obviously the best thing to do is to pay cash for these toys and only do so if you can afford to not recover a substantial portion of that spend. Second best option is to make a very large down payment if you finance. That way if things go south you can unload the boat for loan balance. The people that really get hammered on boats when the economy tanks are those that pay 10% down and finance 90%. They will be upside down in a hurry.

[scottb7]

There will always be market corrections. Cause and effect are delayed in time.

I made fancy spreadsheet, only to find out i can't upload it. Nor do I really want to pm a bunch of people. Wish I could post the excel file.

I was surprised that even with 0% down you have a bit of equity.

[ffmedic74]

Scott... See your pm

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[xrichard]

Hey Scott, I think "Boat net cost" calculation is low by $10k...

[Bevostein]

Definitely low. A nicely optioned boat is going to add $23ish to the $165K base

Base is 165K. Easily hit $23K in options.

$6K for bimini
$12K for "elite" stereo with transom remote
$1.5K for covers
$3K for miscellaneous (ladder, bow filler, battery charger)

Then what you do with gel coat colors and lighting is on top of that

[Tallredrider]

Scott is totally right, IMHO, if the current trend continues indefinitely. The selling value will drop precipitously if there is a market collapse, and that equity line will plummet into the negative range. That is what happened to folks in 2008-9.

I don't think we are riding a bubble right now, meaning that it pops and lots of people get caught thinking Scottb's spreadsheet would be realistic forever. I am confident that there will be minor corrections and boat sales and prices will decrease, but nothing like the huge drops that happened 10 years ago. If you applied that spreadsheet, even a small percentage climb in interest rate and a small percentage decline in used boat values carry you into negative equity territory in a hurry.

[Adrenaline1]

Tallredrider I think you are correct. I think the question right now is if/when the housing bubble busts again since they are tied together. So what are the thoughts on the housing bubble?

[Tallredrider]

Tallredrider I think you are correct. I think the question right now is if/when the housing bubble busts again since they are tied together. So what are the thoughts on the housing bubble?

I am no real estate expert, but I think much of the current housing boom in certain areas is because of how cheap it is to borrow money. Now that interest rates are climbing, a 400K home mortgage is going to cut into the 120K boat loan funds. At some point, the home equity lines that also have funded many boats will dry up. Our homes cannot escalate in value indefinitely at the rate they have been. I don't think anyone rational foresees a major downturn, but a slowdown has to happen, IMHO. If it slows down gradually enough for production to keep an equilibrium, boat prices will not suffer so much. If it hits hard and fast, then we take a beating.

All of this is barring a major catastrophe, like war, or severely damaging financial policies.

I am not sure when our huge national debt will come calling, but increasing interest rates are going to make just servicing the debt more expensive. There seems no political will on either side to cut benefits or raise taxes, but common sense tells everyone that is what will eventually be what has to happen.

[GMLIII]

I am no real estate expert, but I think much of the current housing boom in certain areas is because of how cheap it is to borrow money. Now that interest rates are climbing, a 400K home mortgage is going to cut into the 120K boat loan funds. At some point, the home equity lines that also have funded many boats will dry up. Our homes cannot escalate in value indefinitely at the rate they have been. I don't think anyone rational foresees a major downturn, but a slowdown has to happen, IMHO. If it slows down gradually enough for production to keep an equilibrium, boat prices will not suffer so much. If it hits hard and fast, then we take a beating.

All of this is barring a major catastrophe, like war, or severely damaging financial policies.

I am not sure when our huge national debt will come calling, but increasing interest rates are going to make just servicing the debt more expensive. There seems no political will on either side to cut benefits or raise taxes, but common sense tells everyone that is what will eventually be what has to happen.

On a side note to this thread comparing home pricing to boat pricing , I just received my Virginia personal property tax on my 2017 G23 last week and it is more than my annual real estate tax on my 3 bedroom townhouse with a pristine water front view of the mountain at Smith Mountain Lake in Virginia . Bedford County in Virginia reams you on your Big Boy Toys big time . LOL

[Infinity]

I personally don't think we are too far away from another correction, I already see it starting to happen. Historically, when short term interest rates rise...its coming. Some "experts" are predicting that over the next 6 - 12 months....home rates could be around 7-8% and we will see some decent size jumps in rates soon. That will make a big difference for most people since money will "buy less" due to the payment that results from higher rates. Who knows how it will really play out tho I am confident it will happen, even if it takes longer than is being suggested. I have hope that it wont be nearly as bad this time around.
I am thankful that I have closed all all the deals I intend to for the next 5yrs or so with house at 4% and 2 vehicles at 1.99%. I have strong equity in all 3 and nothing else I have is financed so if I do get in a bad position, I am able to sell something to get myself out of a bind. I was in a MUCH different position in 2008 and to boot....was a high end, custom home builder and did a lot of spec homes in vacation areas (2nd/3rd homes for most people which is always the first thing to go when things get bad). Since it was so easy to walk into a bank and 100% finance with nothing but a signature if you had good income, I had no equity in anything and had foolishly maxed myself out thinking things would never change, lol. You feel a lot more invincible when you are younger and have not personally gone thru something like that yet. I learned a lot of valuable lessons from that experience, totally changed the way I look at things. I plan to use the next downturn (whenever it happens), to my advantage. Life changing experience to be drowning in debt during an experience like that and watch other, smarter people, making moves to grow themselves cause they saw it coming and put themselves in a position to snatch up things for pennies on the dollar from dumbasses like myself. Its a main reason why I decided to keep my 2014 rather than upgrade to a new boat this year (not that new boats are bad at all for everyone, if I could have afforded it comfortably, I would have done it), it would have just put ME in a tenuous position if things did turn down, so I chose the safer path. Not the same choice I would have made 10yrs ago.
Apologies, I got a little off track there, I like to remind myself what I went thru occasionally so I don't make the same mistakes again. While its still embarrassing to admit the position I put myself in, if I inadvertently remind someone else to question a decision they may be about to make and double check their own numbers....its a bonus.

[Wake.BC]

Prices are crazy. Our first house was less than our current boat. Heck we can buy a vacation house in Costa Rica for the same amount and money for boat gas would easily cover flights.


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[krt]

Even the market crash in '08 didn't impact boat prices, did it??

Well, back in 2008 I bought my 08 210 with a list price of $78.5K for $53.6K (price included trailer). I would say that it did?