- The demand for boats and yachts has been at full throttle since pandemic lockdowns began.
- Four marine surveyors told Insider the frenzy hasn’t slowed and that they have to turn away jobs.
- New buyers are willing to pay millions above asking price, but they may have buyer’s remorse soon.
When the pandemic lockdowns began in the US in March 2020, Kells Christian from San Diego worried he would have to find a new job. He had appraised boats and yachts for more than 30 years, and his work dried up.
By April, he realized that his fears had been unfounded. Homebound Americans started buying boats and yachts in droves so they could have fun outdoors while socially distanced. 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 powerboats sold, according to the National Marine Manufacturers Association. Sales in 2021 also surpassed 300,000 units, the trade group estimated.
A record 887 superyachts were sold last year, up 77% from 2020, according to the shipping-data provider VesselsValue.
This sales surge led to more work for boat and yacht surveyors, whose appraisals are used by insurance companies, buyers, brokers, and banks extending loans. Both of the part-time surveyors Christian worked with pre-pandemic left to set up their own shops.
“COVID gave them way more business than they needed to work for me,” Christian said.
Insider spoke with four surveyors who said this boom is unlike anything they've seen and that they can't keep up with demand.
"I'd have to say the past two years have been the most interesting I've ever experienced, and I never want to go through it again," said Dylan Bailey, who has surveyed boats since the mid-'90s.
Valuations are up by double-digit percentages, and buyers aren't balking
Before the pandemic, Christian would tell clients that brokers warning they had backup offers were just employing a sales tactic. Now he tells them to believe it.
New boat listings often get four to five backup offers at or above full price within a day of listing online.
Steve Marshall, a Miami-based yacht surveyor with Patton Marine, estimates that valuations have increased by about 20% from 2019.
"There's a lot of people who have made a lot of money in the stock market at the minute, hence the flippant use of profits to pay $15 million or $20 million more for a yacht than they should be paying," said Marshall, who does appraisals for Bank of America and HSBC.
He recently valued a yacht that was off the market at $165 million, and the owner got an unsolicited offer for $180 million from a buyer who wanted it immediately.
Daniel Gorman, a surveyor based in Long Beach, California, consistently tells buyers that they are overpaying, but it doesn't sway them.
"For almost the whole last year, the conversation was, 'You know you're overpaying by about 20 to 30 grand because of the market?' They say, 'I know, but I need a boat,'" he told Insider of powerboat customers.
The surveyors compared 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, though, is that boats depreciate after delivery and are expensive to maintain.
"It's kind of turning into the housing market, which makes no sense because a boat is a liability, not an asset. You're not making money on a boat," said Gorman, who jokes that "boat" stands for "bust out another thousand."
New buyers want bigger and more lavish boats and are also wrecking them more often
Marshall has noticed that clients are buying more superyachts. He's surveying more boats in the 50- to 70-meter range since the beginning of the pandemic than ever. Customers are also clamoring for more lavish features, such as 10-meter pools.
A lot of the recent buyers also never owned a boat before and are getting in accidents. One of Bailey's clients, transplants from California, ripped the boat's keel — the beam along the middle of the boat — unfamiliar with East Coast sandbars.
In response, insurance companies have hiked their premiums and are imposing new requirements such as training with a licensed captain for 20-plus hours.
This wave of boat novices has led to the increasing popularity of joystick steering systems, which can cost more than $10,000.
"I was literally on a 55-foot yacht the other day, and the owner said, 'Let my 4-year-old dock it or otherwise we're not buying it,'" Gorman said. "This kid spun the boat around and put it at the dock like a video game."
Surveyors are turning away work, even when buyers offer more money to squeeze them into their schedules
Surveyors are used to getting only one to two weeks' heads-up from clients to value a vessel, but with bidding wars becoming the norm, deadlines have gotten even tighter.
All the surveyors who spoke with Insider said they have gotten offers of more money to see them faster. Christian, whose fees vary per service but can cost $150 per hour, has been offered three times his normal rate to skip the queue. Marshall raised this firm's fee for the first time since 2012.
Hiring more surveyors to take on more assignments is not an easy task, as most are 65 or older, according to Gorman, who is 33 years old and works with his father.
And there isn't a pipeline of trade-school students to hire as there is with other trade professions. There's only one school, the Chapman School of Seamanship near Stuart, Florida, that has a program for small-vessel and yacht surveying. Most learn through an apprenticeship, and few young people are interested, Christian said.
Boats will become a buyer's market again, and today's buyers should beware
Surveyors said they haven't felt demand slow down and predict the buying frenzy will continue into the third year of the pandemic. Sales for boats in 2022 are expected to top last year's by as much as 3%, according to the NMMA.
But inevitably the market will cool down, the surveyors said, when buyer's remorse sets in. Yearly maintenance costs 10% of the vessel's value.
"Everything's going to be super cheap because there are a lot of things people don't realize," Gorman said. "You're still paying property tax on a boat, insurance. You have to have a bottom cleaner and boat washer. All these monthly expenses add up real quickly."
Still, Christian understands why buyers are not waiting for the market to calm down. He is looking to purchase a boat for himself.
"It is a terrible time to buy, but what am I going to do?" he said. "I'm not going to get an extra 20 years because of COVID. I got to live my life."