Boats - the newest economic proxy
The Big Picture highlights the New York Times piece on the booming business that is the boat repo trade as boat-owners, many who used cheap credit to buy their dreamboat, let their payments lapse in the face of rising credit and gas costs.
From the New York Times article on the newest economic proxy:
“Boating was traditionally the pastime of the well-off, but the long housing boom and its gusher of easy credit changed that. People refinanced their homes and used the cash for down payments on a cruiser, miniyacht or sailboat. From 2000 to 2006, retail sales for the recreational boating industry rose by more than 40 percent, to $39.5 billion, while the average loan amount more than tripled to $141,000.
Last year, as real estate faltered, the gears went into reverse. The number of boats sold fell 8 percent. Many boats are fuel hogs, and rising gasoline and diesel prices meant a weekend jaunt could cost hundreds or even thousands of dollars. Owners found they could not sell a boat for what they owed and could not refinance either.
Latrell Sprewell, the former NBA star facing foreclosure recently had his $1.2 million yacht repoed has to be one of the more famous boating delinquents.
This reminds me of one of the last times I was in Irvine, California, the center of the mortgage-lending universe, and I saw a huge car-carrier full of repo’d Ferraris, Mercedes and Porches being towed to impound. The same fate for the cars as it is for the boats, I’m sure.