Mike Joyce
“The Housing Bubble Has Fully Corrected”
And what does that mean in the world of yachting?
When I read that statement from a trusted news source, Trend Magazine, it really snapped me to attention because I know how closely the boating industry is connected to the housing industry.
You see, the boating industry, myself included, was shocked to find out just how closely the boating industry mirrored the housing industry during this “Great Recession” that began back in 2007.
I bring this up because there have been some very positive changes in the housing industry that are now showing up in the boating industry. My wife, Jan, is a broker with Intercoastal Realty, the waterfront specialists here in Ft. Lauderdale, and their numbers have been surging up every month for the past six months.
Have you been postponing your decision to buy a boat, hoping to avoid getting in just when the market takes another drop? I don’t blame you. Making a timing mistake like that could be expensive when you are talking about buying a yacht because you are talking about a serious investment and who wants to find they made the wrong decision and lost thousands or even hundreds of thousands of dollars?
The Trends Magazine article on real estate, which snapped me to attention, makes the surprising prediction that housing is now once again a good investment:
“Since the peak of the housing bubble in June 2006, prices have been steadily falling. From June 2007 to December 2008, the national average home price declined by a 13.8 percent average annual rate. Since then, the average price has been slipping by an average of 4.4 percent per year. As a result, housing prices are now at levels not seen since October 2002.
For any type of investment, prices are determined by a complex mix of factors. In the case of the housing market, the primary factors are underlying fundamentals, investors’ access to capital, and investor psychology.
When the house of cards collapsed, just as the Trends editors forecast it would, housing prices, access to capital, and investor confidence all plummeted. However, we are now at the precise point when housing is becoming a sound investment again, for three reasons:
1. The underlying fundamentals show that prices are finally returning to the level at which homes can be bought at a good value.
2. Investor psychology has not yet caught up to this new reality. Put simply, most people still haven’t overcome the trauma of seeing their property values collapse as though their homes were built on quicksand.
3. Even though credit remains tight, there’s a benefit to the scarcity of this resource: The competition for choice properties is virtually non-existent.
The combination of these three factors means that there are plenty of bargains for people who are both ready and able to buy, and yet relatively few people are willing to take advantage of the opportunity. Supply is up, demand is low, and it’s a perfect buyer’s market.”
What I am telling you, and all my friends and Hargrave owners, is that we are seeing similar positive changes in the underlying conditions in the yachting industry.
Banks are back in the game big time with financing readily available at 20% down and the lowest low rates in decades. In fact, banks are now able to turn around jumbo loans in a week or less if you have all your paperwork in order.
Yacht prices have declined across the board during this recession (no more selling a boat for 100% of what you paid after using it for it five years, remember those good old days??) and whether you are talking about a 13′ Whaler or 130′ motoryacht, sellers are now onboard with the new reality and ready to reach out once again to help put deals together.
The supply of vessels on the used market is relatively high at the moment because so many buyers are hesitant to take that last step so you can still find the boat of your dreams at a price you will be happy to pay. And if you prefer the idea of a new boat with full warranty and all the latest technology onboard, then prices are really attractive right now for the same reason.
Why not call Mike DiCondina or Pete Colagiovanni today? Give them fifteen minutes to walk you through what’s happening in the market and explain why this summer may be the right time to finally start living your dream.
There is an old adage along the waterfront that, “There’s a time to fish and a time to mend nets”, and you were certainly right to wait out this downturn, but I think when you get done talking with Mike or Pete you’ll agree that the time to start fishing again for your dream boat is now.
A fifteen minute phone call could wind up saving you $250,000 or more.
Michael Joyce / CEO
