Just a thought.

[StockHR]

Is it just me or does anyone else notice an ever increasing amount of boats for sale in and around their marina. You used to see just 1 or 2 for sale and now it seems that everytime I take a walk down one of the docks I notice another one with a brokers sign on the boat. Must be a sign of the times and boating getting more expensive every year.

Mike

[Mariner]

It might be just you, as I haven't actually noticed it myself. But it probably isn't just you, because it makes sense when you think about it in the bigger picture of the national economy and boat market.

Boats are big ticket items. They're rarely purchased with cash on hand. Even though the actual transaction may be cash, the money for the purchase usually comes from some sort of leveraged or liquidated asset, if not a loan directly. Three factors are consipiring to decrease the demand for boats:

Credit crunch: The decreased ability to borrow is leaving many people unable to borrow money, whether it be against the boat itself, or against other assets (like their home). The virtual disapearance of Home Equity loans is a major factor in this.

Housing bust: Over the last several years, much of the discretionary spending has been due to home equity liquidation. Wether it be from selling a home and reaping the profits, or from borrowing against the massive equity gains experienced in the wake of a buying frenzy, people were experiencing sudden wealth from housing appreciation. This gravy train has ended, and ended hard. Many people are finding themselves upside down in their homes or financially strapped by adjustable mortgage payments. This leaves less money for luxury items like yachts.

Strong stock market: So far this year has been a big one on Wall Street. And, although everyone seems to agree, there is a downturn on the horizon somewhere, it doesn't look too close yet. So investors are reluctant to pull their money out of a stock market that is making them rich. When we start to see the growth slow, we may see some of those gains reinvested in rewards (such as yachts) for their beneficiaries.

So, although I haven't noticed an increase in yachts for sale recently, I am certainly not surprised to hear that it is happening. The talk in the boat-building industry is all doom and gloom. They all see the writing on the wall; it's going to be a tough couple years for them, and many will likely fail.

[JackK]

Oh ya I agree. The boats that seem to be selling are priced agressively low. I've seen several in my marina that are still for sale from last year.

With financing rules tightening, many people who could have financed a boat a year or two ago just do not qualify now. That would explain the declining prices and increased inventory.

Is anyone seeing the vacancy rate on slips changing? It seems to be opening up a bit around me. When I bought the Albin in '03, I had to include the slip in the negotiations to get into the marina I wanted. Otherwise there was a long waiting list. I now see ads for open slips. Again - pricing may be the culprit.

As Mariner said, the equity just might not be in the average consumer's home to afford the nice to have rather than need to have boat.

Jack