A View from Here

Bill's Sisson's weekly Trade Only blog

Will stimulus package spur boat sales?

While thinking about what I was going to say in today’s blog, associate editor Melanie Winters said she talked to someone at the Miami boat show who thought the rebates from the federal stimulus package would help consumers come up with a down payment for a boat.

I shrugged at that idea. As I told Melanie, it looked like the rebates would just about keep families afloat, never mind buy a boat. Melanie was more optimistic.

I did some research and found a headline in the Seattle Times that caught my attention. It read “Stimulus package opens window for high-end housing.”

Well, I immediately thought, that means the package can also open a window for buying a boat.

I read the story and learned that the publicity, alone, of the stimulus package was enough to spur a couple to look at buying a more expensive home, rather than buying a condo. The couple learned they could get a 30-year fixed mortgage for less that what they were paying on their homeowner’s dues.

A mortgage company said it has been receiving a steady stream of inquiries from clients.

The change in loan limits allows Fannie Mae and Freddie Mac to purchase the mortgages, encouraging them to write more mortgages because they can easily sell them to the housing agencies.

Under the newly enacted economic stimulus package, the companies will be permitted to finance loans as large as $729,750, up from $417,000, in an effort to stabilize the housing finance sector. The new loan levels vary based on each market’s current home prices.

In Southern California, the limits were raised to the maximum $729,750 in Los Angeles, Orange and Ventura counties, to $697,500 in San Diego County and to $500,000 in Riverside and San Bernadino counties.

Maybe there is hope and potential boat customers who have been shying away from making such a large purchase may not be so skittish, after all.

Having said that, I think the stimulus package cushions the blow for the middle class, but as one economist notes, a rise in the unemployment rate is likely in the next six months. Consumer spending is still low and the subprime lending crisis is ongoing.

Let’s see how all this plays out in the marine industry.

Share your thoughts; that way we can engage in a lively dialogue.

- Lois Caliri
Editor

Comments

5 comments on “Will stimulus package spur boat sales?

  1. Doug Dailey

    I am also a little less optimistic that the money received from the 2008 Economic Stimulus Package will used as a down-payment on the purchase of a new boat.

    After working the Seattle Boat Show and attending the Miami Boat Show this year, my observations show that the interest in the higher-end/custom boat segment seemed to be more active that the first time buyer segment.

    I don’t think that a check in the amount of up to $600.00 (or up to $1,200.00 for a couple) will have any influence on a potential boat buyer who is looking at a $200k + purchase.

    Time will tell if indeed families will allocate their checks to purchasing a new boat or maybe just pay off a credit card.

    Perhaps some of the $50 billion or so that is to be set aside to cover help for businesses that invest in new plants and equipment may work its way into the marine industry.

  2. Lee

    I don’t think it will spur the boat business for the initial reason you gave. When a survey was done on any network, overwhelmingly people answered, they would pay off some debt, and put the rest into savings. Which won’t do a thing for the economy. It was a bad idea to give this money out. I’m probably in the minority, as I am ready for a new flatcreen TV for my house and my boat ;)

  3. John Wisse

    I agree with Doug and Lee. Folks that get a little extra rebate cash from the federal government will use it mainly for household bill payments. To spur economic stimulus to buy that new boat — well, the Feds would need to be adding an extra “0″ to those tax rebates.

  4. Dixon Kendall

    Believe the majority of middle America will take the 6-1200 hundred to Walmart and buy some stuff made in China. The Chinese have to be ecstatic over this windfall as will be the management of their chain of outlet stores. 12 hundred isn’t much to get excited about – maybe a boater will spend some fix up money on his existing boat or buy some gas to get somewhere where it will float but I seriously question if the people who are really in need of these funds are to be found in a boat yard.

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