As the news media over the past few weeks focuses almost entirely on the nation’s downward spiraling economy, it’s only natural to wonder how it will all affect the world of boating. When banks tighten the knot, many squirm.
And it seems that these days, for boaters, the banks are not only tightening, but some are heading out of Dodge altogether. Several local brokers in the Marina del Rey area have mentioned out loud that a stalwart lender in the Southern California area has decided to only lend into what it calls “footprint” districts — areas where it has a physical presence.
The virtual disappearance of this lender has made both loan brokers and yacht brokers more vividly understand the reality of the economic condition. When financing options reduce, deals are that much harder to close. The trickle-down quickly moves to marinas, service personnel and retailers.
“We’re hoping another bank steps up and replaces” this one, said one broker who asked to remain nameless. “We’ll see.”
While this bank has not officially gotten out of the boat loan business in indirect territories, it has certainly suspended its efforts.
Some lending establishments are reportedly out of the business altogether.
For local brokers like Gerry Purcell, who has been selling boats in the area for over 30 years, it’s cause for concern, but not panic.
“This is like a throwback to the ’50s and early ’60s, when we weren’t such a financially overextended society,” said Purcell. “It will have a good effect on people in terms of the value of what they got versus what they want.”
But while Purcell doesn’t hesitate to wax philosophical, he is also quick to acknowledge that these are and probably will continue to be trying times for those in his line of work.
“Financing is a big issue,” said Purcell. “Banks aren’t crazy about financing boats unless the person has a really great credit score and then some banks want the boat to be ten years old or newer.”
It’s these restrictions that will likely lead to fewer sales in the mid-to-high price ranges and the elimination of potential owners that could have qualified in the past.
Another element that plays negative in the scenario is the growing number of repossessions banks are seeing. The representative for one bank acknowledges that there have been more repos recently than she has seen for a long while:
“There have been a lot more [repossessions], which isn’t totally surprising, given the economic situation that we’re in,” she said. “I would say that if people have to decide between their homes and their boats, they’d obviously choose their homes.”
On a more enthusiastic note, the economic turn has, according to Purcell, reduced what he calls “looky-loo” window-shopping. He is seeing more cash buyers and clients with solid credit.
“There are positive aspects to it,” Purcell said. “I like that people are being more realistic about what they’re doing.”
Another possibility in this economic slide is that slip demand in Marina del Rey will decrease and the potential for price gouging based on overwhelming demand, that some boaters are concerned with, will be minimized. Already, a walk around the docks and a visible increase in empty slips provide evidence that people are tip-toeing away from the constant and persistent costs of slip fees and boat maintenance.
Purcell, who has seen the market at its best and worst, says, “My guess is that the selling market, on all levels, will pick up slowly after we get through this slow season because there are a lot of boats that are now on the market that weren’t before. People will find a way to keep going and have their recreation.”