THIS ARTICLE WAS ORIGINALLY WRITTEN IN 2020. MUCH HAS CHANGED! Therefore I’ve added an addendum.

We’ve all been watching it. It is clear that the resale values of used “production” fiberglass sailboats over a length of 20 feet or so are plummeting to new lows. Yet the prices of some smaller sailboats, if new or nearly new, are rising rapidly with inflation. Today you can buy five old 35-foot sailboats for the price of one new 15-to-21 footer. The question is… why?

BACKGROUND: The advent of fiberglass as a means of building sailboats began in the 1960s. Up until that time only fabulously wealthy individuals could afford a yacht. It took many months of work by highly skilled shipbuilders to build just the hull of a wooden sailboat, and this represented only a fraction of the fully completed yacht’s cost. But fiberglass cut the time to build each part that could come out of a mold – the hull or the deck – to maybe one week for let’s say a 35-footer. And the work could be done by minimum-wage workers who could be trained in a few hours to lay up a fiberglass hull or deck and the other parts. The vastly diminished prices attracted hoards of new owners to the pastime of sailing. And whole new things called “marinas” were built to store them… up until the advent of fiberglass yachts were kept on moorings.

The fiberglass layup process emitted a noxious chemical—styrene—into the atmosphere and the lungs of anyone nearby. But money was being made by the factory owners, the workers had jobs, and fun was being had by a whole new class of boat owners. What has changed today?

Remembering that prices are nothing but the product of the law or supply and demand, here is why a few small, new sailboats have high prices that are going higher, and many larger, old sailboats have prices that are low and going lower.

1. ENVIRONMENTAL CONCERNS. When fiberglass yachts first started to be built it was possible to do what is called “open layup.” The byproducts of curing polyester and vinylester resins simply flashed off into the air and disappeared. Today open layup is only permitted in small shops who squeeze under the radar of OSHA, and rightly so. It is still legally possible to lay up small fiberglass parts in a small shop with no nearby dwellings. But the larger factories that spewed out tens of thousands of affordable yachts and tons of styrene into the air are all gone. Factories that created the thousands of cheap yachts that are now for sale on Craigslist for next to nothing are now fond memories. But thank you PEARSON, O’DAY, CAPE DORY, MORGAN, IRWIN, CATALINA, CAL, SHANNON, SQUADRON, HINCKLEY, MORRIS, ALDEN, FRIENDSHIP, CABO RICO, and countless others for bringing the joys of sailing to many.

2. DEPRECIATION. In the early days nobody knew how long a fiberglass sailboat might last. We were all used to cars, which lasted ten to fifteen years and depreciated accordingly. I talked to a finance salesman once at an Annapolis Sailboat Show. He told me that his agency’s assumption (needed in the case of a possible repossession) was that a financed sailboat depreciated from its new price, to scrap value—near zero—in a straight line over ten years. Thus most used sailboats for sale now are selling at or below their scrap value. Since fiberglass is difficult to separate from the other materials like the keel, which if of lead has some residual monetary value, most used sailboats today are worth what the lead is worth, minus the cost of separating if from the hull. There is really no way to recycle the fiberglass. This is why a short drive from your home you will see many old fiberglass “yachts” in peoples’ backyards with “for sale” signs on them, that will in truth never see the water again.

2. MAINTENANCE. All material objects require maintenance. A washing machine or dryer or refrigerator don’t require much, an automobile quite a lot, but a sailboat—being immersed in a corrosive element and exposed to the summer sun—requires more maintenance than virtually any other man-made object. While it is true that one could at enormous expense maintain a sailboat in close to new condition, doing so would cost, for a more than ten year old sailboat, more each year than the product is worth. It’s one thing to spend $20,000 a year to maintain a brand new 35-foot sailboat that cost $250,000 at the latest boat show years ago. It’s quite another to spend $20,000 a year to maintain a ten year old sailboat that you bought for $25,000 or less. And in actual fact newer things require less maintenance than older things. So let me re-phrase that sentence. It’s one thing to spend $10,000 a year on a brand new 35-foot sailboat that cost $250,000 at the latest boat show. It’s quite another to spend $25,000 a year on a ten year old sailboat worth $25,000.

3. COSTS VERSUS INFLATION. Fifty years ago a boatyard worker might have earned $4.00 per hour and a boatyard’s entirely reasonable fee might have been $10 per hour to account for its investment in land, buildings, insurance, and employment costs… Social Security and Medicare matching, paid holidays and vacations, sick days, etc. Today a boatyard worker earns $20 to $40 per hour and sailboat construction or maintenance costs over $100 per hour south of Boston, $75 per hour up here in Maine.

4. MAINTENANCE COST VERSUS SIZE. A brand new, smallish yacht requires very little maintenance. A coat of varnish on the brightwork, a yearly coat of bottom paint. And rent of a small patch of covered winter storage space. For a 15 to 18 footer, maybe $2500 per year. Of course if you are handy and have a garage there is no storage fee, and a can of varnish and bottom paint might cost you $200. The winter work list on a 35-footer can stretch into hundreds of manhours per season. In a city that might mean 100 manhours = $10,000. For an older 35-footer, whose work list expands with age, $10,000 to $25,000 per year. One way or the other you pay – very little for an old 35-footer at first, but a whole lot every year thereafter; A lot of money upfront for a new 15-footer, and virtually no money every year for a decade afterwards.

3. IN THE WATER FEES. A big sailboat will most likely be kept at a marina slip. $5000 per summer, maybe. A small sailboat can be kept on its trailer in the garage and launched when needed, or on a mooring or if you are lucky, or alongside your waterfront float, at little to no cost.

4. TIME REQUIRED TO GO FOR A SAIL. Big or small, when the whim overtakes you to go for an afternoon sail, the time to drive to the marina or yacht club, and perhaps take the launch out to your boat, is the same. But once you get aboard it takes a few seconds to hoist a small boat’s sails, and maybe a quarter to half an hour to get going in your 35-footer. This latter disincentive is one reason you see so many big white boats sitting unused in marinas on sunny summer weekends, and so many small sailboats actually out sailing.

5. SINGLEHANDING. Most larger boats can only be used if you can find crew. Most small boats can be easily singlehanded. The law of supply and demand means prices of boats that can be singlehanded will be higher than those that cannot be. (Small boat prices have morphed higher as large boat prices have plummeted).

6. CONSUMER PRODUCTS VERSUS WORK OF ART. Factory produced “yachts” were nothing more than very large consumer products. They call washers and dryers and refrigerators, “white goods”, and mass-produced sailboats were nothing more than very large and expensive white goods. They’re even – most of them – white in color. The few small sailboats available new on the market today are invariable hand-built works of art, produced by skilled artisans and often trimmed out in rare tropical hardwoods and even in some cases sporting masts and booms of varnished spruce or incredibly strong and light carbon fiber. Consumer goods always depreciate in value; works of art tend to appreciate in value.

7. ENVIRONMENTAL CONCERNS. Most people who enjoy outdoor sports these days are also supporters of an ever cleaner environment. Meaning they are against open layup fiberglass production with its degradation of the upper atmosphere and the lungs of its workers. They know that the byproducts of epoxy resin are less harmful than those of polyester resin. They know that wood is an environmentally superior construction material to glass and resin. They know that small toys (yachts are playthings… toys) are less environmentally destructive in their fabrication than are large toys.

8. MATERIAL COST INFLATION. For the decade 2010 to 2020 at least there had been little inflation, until the advent of Covid. But that has now abruptly changed. Our central bankers have responded to a pandemic by throwing care to the winds and “creating” lots of fake money. The result has been the same as it has always been. Double the supply of money, and after a year the price of everything will have doubled, and nobody will be any better off despite the good intentions. Our central bankers have “printed” approximately 30% more money, in an attempt to soften the blow of “shit happening”. But fact is, you can’t. In fact inflating the currency always creates a worse situation than maintaining a stable currency and letting things adjust automatically. So inflation is back.

9. RECYCLING UNWANTED “YACHTS”. It is difficult and costly to dump or recycle scrap yachts. In fact if we are to get rid of all the unwanted production “yachts” sitting in backyards new ways will have to be found to separate the fiberglass from the metals, and someone—presumably the last owner—will have to be forced to pay for it. Which is why so many old former yachts are “for sale” on Craigslist. Putting a price on the thing, although a cheap price, might fool someone into thinking it is an asset rather than a costly liability.  Someone will ultimately have to pay to have the thing hauled away and recycled.

10. CHARTERING. Time was when the only way to see some of the magical places in the world—the Caribbean, Seychelles, Tahiti, Croatia, Bora Bora—was to buy a yacht, learn celestial navigation, find a way to spend months or years without working (rob a bank or inherit lots of money), and fight down seasickness as you thrash your way day after day down to the tropics. You had no alternative than to pay a lot of money for a proper, big, offshore sailing yacht. Then someone invented chartering. You covered the miles by the thousands in a comfortable seat near the front of a marvelous aluminum contraption sipping cocktails at 580 miles per hour. Then took command of a larger and newer yacht than you could ever afford to own, and after a week of fun in the sun gave it back to the charter company to fix all the things that went wrong. What wrecked the idea of the personally owned large yacht more than any other factor, leaving only the more sensible day-sailing yachts viable for personal ownership, was chartering.

11. IS SAILING DEAD? The good news is, no it is not, far from it. It is true that many exciting and far cheaper sports have been invented that compete with sailing and appeal to the handsome young buck bursting with testosterone and his female counterpart. Windsurfing, ocean kayaking, kitesailing, standup paddleboarding, the list goes on and on. But the challenge of making a vehicle move silently and at no environmental cost through the water using nothing but the power of nature itself, even contrary to the very direction of the wind, will always be fascinating. And the closer you can get to the interface between land and sea—the waterfront—for which wealthy folks now must now pay millions of dollars—the better, and you do so at absolutely no fee.

12. DO ALL SAILING YACHTS DEPRECIATE? No, thanks to the law of supply and demand. Antique yachts appreciate reliably in price, because the supply decreases with time while the demand increases. Old wooden yachts disappear from the market, because many of them are not properly maintained. But the remaining ones gain in value. As an example an authentic Herreshoff 12½ sold new in 1937 for $750. I just sold my 83 years old (it, not me) Herreshoff for $29,500…  today’s average selling price (not asking price) for an authentic 12½ in good condition. No investment I ever made… stocks, bonds, real estate, annuities.. has come close to appreciating so much in value.

THE EXCEPTION TO THIS RULE:

The few fiberglass yachts that were built in low volume, custom production to exceptionally high standards, retain good value if properly maintained. These are the Morris Yachts, Hinckleys, Aldens, Cambrias, and many of the custom designed and built yachts from the famous yards, usually of welded aluminum. These yachts cost, when built, at least triple the cost of a Morgan, Catalina, or Irwin. But the payback is that today they have retained ten times the value of the high volume nautical “white goods”and that value is going up. not down, thanks to inflation..

13. WHAT MAKES SENSE TO OWN TODAY? First of all, forget the money. Own what you think will most enhance your leisure life. Although you might always keep in the background the fact that retention of value is not at all a bad thing. Own a yacht that you will actually use, and enjoy its use. If there is a racing class that is popular where you like to sail, and you enjoy racing, your choice is easy. There is safety in numbers—the simple fact that a race committee raises a flag for that class every Saturday vastly reduces its rate of depreciation. Realize that yachts that were built to high standards at multiples of the “production yacht” price retain a high proportion of their original cost. Examples are the Morris Yachts, Aldens, Hinckleys, Alerion Express 28s, Center Harbor 25s and my own recent designs the Pisces 21, York 18 and Levant 15, whose superiority and value for money are reflected in the long waiting times currently required to achieve delivery or short times on the brokerage market. Likewise the Doughdish and Cape Cod Shipbuilding 12½s and Marshall catboats if ultra-shoal draft is an issue for you, and authentic Herreshoff Manufacturing Company 12½s and Beetlecats if you can afford the formidable yearly costs of maintaining a wooden boat. Seek out the small yachts that are easily gotten going and put away, inexpensive to maintain, and can get you close to that million-dollar shoreline. Or if your dream is to head offshore, jump on any Morris or Hinckley or Alden that pops up on the brokerage market – they tend to be snatched up in a week.

SEPTEMBER 2023 UPDATE.

Interesting to re-read this three years later. Some corrections are needed!

When originally written, inflation in the general economy was hovering about 1.5% year on year. Inflation in the yacht building field was much higher- around 5%.

For various reasons inflation has reared its ugly head with a vengeance. This has caused a revision to my above comments to be necessary.

Much that has been said above still applies, to MASS-PRODUCTION yachts. They are still consumer products at the end of their usable life and therefore of little to no value.

However, it does not apply to the few very high quality designs built to last at least 100 years by Tom Morris and a few other custom-quality, low volume builders.

It has come to my attention over the last three years that virtually none of my designs remain on the brokerage market. In 2020 one would see at least 10 Chuck Paine designs on YachtWorld and a few more on other brokerage sites. When one pops up today it is immediately bought, at higher prices than were the case in 2020. It is clear to me that people who wish to retain their savings are buying good quality used yachts as hedges against inflation, not just for recreational use.

There is also “scarcity value” to anything that is both intrinsically desirable, and rare. The alternative to buying, for instance, a 30- year old used Frances 26 on the brokerage market for between $70,000 and $30,000 depending upon its condition, is to build a new one at today’s prices, which would cost $550.000. At that latter figure climbs, the prices for good condition used models does also.

I believe that the recovery in used yacht prices is forced by the current high level of inflation. Our government has chosen as governments sadly often do, to devalue the currency (inflate). So everything- including used yachts- is being bought with a new, lower value currency.  And remember- yacht construction inflation is between two and three times general inflation and has been for many years.  So while the general inflation level has jumped from 1.5% to 6 to 8%,  yacht inflation has jumped from 5% to something more like 20% yearly.  For at least as long as central bankers lack the spine to bring inflation under control, expect used Chuck Paine designed yacht prices (and equivalent quality yachts from other designers) to climb at significant rates.

I hope this is helpful.

Chuck Paine