Used Prices Are Low — For How Long?

Brokerage sales often foreshadow the health of the boat market, and recent activity suggests the market began to stabilize in June and July. During those months, more used vessels changed hands in the United States than in the same months of 2008, offering a potential early sign of recovery.

Members of YachtWorld.com (part of Dominion Enterprises, which also owns Soundings) reported an increase in overall unit sales of 10.5 percent in June compared with June 2008. While sailboat sales continued to decline, used powerboat transactions climbed sharply, particularly in the under-36-foot category. YachtWorld.com reported that the trend held in July as well, with total unit volume rising 8.4 percent.

For buyers, that means this fall may present attractive opportunities to purchase a used boat. “This is a 10-year low in the used-boat market,” says Chet Pawlowicz, president of Martin Bird Associates in Annapolis, Maryland. “The bottom has fallen out. I have never seen it this low.” He explains that asking prices are roughly 20 percent below where they were two years earlier, and many sellers are unwilling to reduce prices further, preferring to hold on to their vessels.

In a typical year, Martin Bird moves between 85 and 105 brokerage boats, both power and sail, primarily in the 30-to-60-foot range. Since the start of summer, Pawlowicz says sales volume has recovered to about 70 percent of normal. The strongest demand has been for Down East–style lobster yachts, trawlers, and cruising sailboats.

Boat builders have been helping dealers clear inventory so production lines can restart, and brokers are watching early sales closely for signs of a broader turnaround. “The used-boat market has been soft for the past five years,” one broker observed, so any sustained improvement would be welcome.

“It’s better than it was, for sure, but we don’t see any quick sales,” says Klaus Kutz of Passage Yachts in Alameda, California. He notes that knowledgeable buyers with patience and negotiation skills can still secure excellent deals. Glenn Walters of Eastern Yacht Sales in Portsmouth, Rhode Island, reports that July brought more transactions than the previous nine months combined. “There’s some pent-up demand,” he says. “Now is a great time to find the right boat at the right price.”

Brokers emphasize that experienced buyers who know what they want and do their homework can find standout boats, provided they are patient. Walters detects a renewed interest in sailing vessels, while powerboat demand appears strongest for smaller models.

Whether the uptick in brokerage sales continues into the following spring depends on several variables: consumer confidence, loan availability, and overall economic conditions. For buyers with solid finances and good credit histories, obtaining boat loans should not be problematic. That said, lending standards have returned to more traditional terms: expect to provide a 20 percent down payment and documentation of income and assets.

Most recent transactions have clustered in the $75,000 to $150,000 range, Pawlowicz says, and a notable number of buyers have paid cash. Some brokerages are also seeing seasonal shifts. Kathy Jordan of Jordan Yachts in Fort Lauderdale reports a strong second quarter, followed by a slowdown as hurricane season approaches and insurance rates rise. She adds that fewer European buyers are shopping U.S. brokerages — a change driven partly by currency shifts and by diminished consumer confidence overseas.

Buyers trying to gauge how much room there is to negotiate will find that discounts have widened but are not unlimited. Jeff Johnstone, president of J/Boats in Newport, Rhode Island, points out that where used J/105s historically sold for about 95 percent of the asking price, they now often sell for about 90 to 91 percent.

Quality and rarity matter. Boats built in smaller production runs tend to hold value better than popular models that flood the resale market; abundant models can be harder to sell because one owner’s quick price cut puts pressure on other sellers.

Still, low asking prices and a wide selection can favor buyers. “Low asking prices mean higher value for buyers,” Pawlowicz says. “A large selection means more choice. If someone wants a boat, they’ll get a boat.”