- Demand for boats and yachts has been at full steam since the pandemic shutdowns began.
- Four maritime experts told Insider the frenzy hasn’t slowed down and they have to turn down jobs.
- New buyers are willing to pay millions above the asking price, but they may soon feel remorse.
When the pandemic shutdowns began in the United States in March 2020, Kells Christian of San Diego worried that he would have to find a new job. He had appraised boats and yachts for over 30 years, and his work dried up.
In April, he realized his fears were unfounded. Homebound Americans have started buying boats and yachts in droves so they can enjoy themselves outdoors while socially distancing. A booming stock market and low interest rates also made boat purchases more attractive. Sales hit a 13-year high in 2020 with more than 310,000 motorboats sold, according to the National Marine Manufacturers Association. Sales in 2021 also topped 300,000 units, the trade group estimated.
A record 887 superyachts were sold last year, up 77% from 2020, according to shipping data provider VesselsValue.
This increase in sales has meant more work for boat and yacht inspectors, whose appraisals are used by insurance companies, buyers, brokers and lending banks. The two part-time investigators, Christian, worked with the pre-pandemic left to set up their own stores.
“COVID gave them way more business than they needed to work for me,” Christian said.
Insider spoke with four investigators who said this boom was unlike anything they’d seen and they couldn’t keep up with the demand.
“I have to say the last two years have been the most interesting I’ve ever had, and I don’t ever want to go through them again,” said Dylan Bailey, who has been studying boats since the mid-1990s.
Valuations are up double-digit percentages and buyers don’t mind
Before the pandemic, Christian would tell clients that brokers warning them they had relief offers were only employing a selling tactic. Now he tells them to believe him.
New boat listings often receive four to five backup offers at full price or above within a day of listing online.
Steve Marshall, a Miami-based yacht inspector with Patton Marine, estimates valuations are up around 20% from 2019.
“There are a lot of people who have made a lot of money on the stock market by the minute, hence the flippant use of profits to pay $15 or $20 million more for a yacht than they should be paying,” said Marshall, who does valuations for Bank of America and HSBC.
He recently appraised a yacht that was no longer on the market at $165 million, and the owner received an unsolicited offer of $180 million from a buyer who wanted it immediately.
Daniel Gorman, a surveyor based in Long Beach, Calif., constantly tells buyers they’re paying too much, but that doesn’t sway them.
“For most of the last year, the conversation has been, ‘You know you’re overpaying about $20 to $30,000,000 because of the market?’ They say, ‘I know, but I need a boat,'” he told Insider of powerboat customers.
Investigators likened the boat market to the housing market, with buyers willing to pay well above the asking price and engaging in bidding wars. The big difference, however, is that boats depreciate after delivery and are expensive to maintain.
“It’s sort of becoming the housing market, which doesn’t make sense because a boat is a liability, not an asset. You don’t make money on a boat,” Gorman said, who jokes that “boat” means “bust out”. another thousand.”
New buyers want bigger, more plush boats and also destroy them more often
Marshall noticed that customers are buying more superyachts. He has been inspecting more 50-70 meter boats since the start of the pandemic than ever before. Customers are also clamoring for more lavish features, such as 10-meter pools.
Many recent buyers have never owned a boat before and have accidents. One of Bailey’s clients, California transplants, tore the boat’s keel – the beam amidships – unfamiliar with the sandbars of the East Coast.
In response, insurance companies have increased their premiums and are imposing new requirements such as training with a licensed captain for more than 20 hours.
This wave of boat newbies has led to the growing popularity of joystick steering systems, which can cost upwards of $10,000.
“I was literally on a 55ft yacht the other day, and the owner said, ‘Let my 4-year-old tie it up or we won’t buy it,'” Gorman said. “This kid turned the boat around and docked it like a video game.”
Surveyors refuse work, even when buyers offer more money to fit them into their schedules
Surveyors are used to only getting one to two weeks’ notice from clients to appraise a vessel, but with bidding wars becoming the norm, deadlines have become even tighter.
All investigators who spoke with Insider said they had received offers of more money to see them faster. Christian, whose fees vary by service but can cost $150 an hour, was offered three times his normal rate to skip the line. Marshall raised that company’s fees for the first time since 2012.
Hiring more surveyors to take on more assignments isn’t an easy task, as most are 65 or older, according to Gorman, who is 33 and works with his father.
And there is no pipeline of trade school students to hire like there is for other professions. There is only one school, the Chapman School of Seamanship near Stuart, Florida, that has a small ship and yacht survey program. Most learn through an apprenticeship and few young people are interested, Christian said.
Boats will once again become a buyer’s market, and today’s buyers should beware
Surveyors said they hadn’t felt demand slowing down and predicted the buying spree will continue into the third year of the pandemic. Boat sales in 2022 are expected to exceed last year’s by 3%, according to NMMA.
But inevitably the market will cool down, experts say, as buyer’s remorse sets in. Annual maintenance costs 10% of the ship’s value.
“It’s all going to be super cheap because there’s a lot of stuff that people don’t realize,” Gorman said. “You always pay property tax on a boat, insurance. You have to have a bottom cleaner and a boat washer. All those monthly expenses add up very quickly.”
Still, Christian understands why buyers aren’t waiting for the market to calm down. He is looking to buy a boat for himself.
“It’s a terrible time to buy, but what am I going to do?” he said. “I’m not going to be 20 years older because of COVID. I have to live my life.”