Luxury Yacht Market Suffering with Luxury Home Markets

Luxury Yacht repos on the rise

The Luxury yacht market is suffering along with the housing market, and foreclosed yachts are piling up alongside the condos in Florida. The listing for a recent attractive property swallowed up by the crisis appeared to be a sea-front condominium: two bedroom/two bath, outdoor grill, water views, elegant and spacious. Satellite television and temperature-controlled wine cabinet included. But it was a 60-foot (18.3-meter) yacht, docked amid a crush of other luxury marine toys at a Fort Lauderdale boat yard.

"We're busting at the seams," said Jason Lessnau, recovery manager for National Liquidators, the largest marine repossession company in the United States.

The longer the mortgage crisis lasts, the more yachts end up in his boat yard — double and triple parked.

"Our sales numbers are up, our recovery numbers … every single number you can think of is through the roof for us right now," he said, with one exception apparently – prices. Prices for luxury yachts have fallen around 50% in the space pf a few months and many of these repossessions are ending up being shipped to Europe. That cannot continue for much longer as the European market is beginning to feel the effects of the financial crisis – with Feretti yachts going broke just last week.

Many boat owners made the same mistakes as homeowners, over-extending themselves with cheap loans on over-priced boats. Easy credit brought carefree spending and no-money-down loans for maritime toys, and many found themselves underwater (sic) in very short order.

Boat owners usually fall behind on their payments when they are hit by job loss — another side-effect of the economic downturn — or divorce. Like car loans, boat loans allow the bank to recover its collateral if the owner defaults.

"We're seeing more 60- and 70-footers (18.3 and 71.3 meters) and a few in the mega-yacht field, 100-plus (30.5 meters)," said Toney.

About half of repossessed boats are turned over voluntarily by owners, sometimes stripped of valuable equipment, like radar systems. The other half are 'involuntary' transfers, meaning repossession teams tow them away quietly in the wee hours of the morning. Florida's twisting canals make great places to hide a boat. and Repos teams usually arrive in low-profile dinghies at night to avoid detection.  A seasoned repossession crew can tow a boat off a dock in under a minute, before the erstwhile owner is even aware they are there.

National liquidators have a huge list of boats for sale here.