The Guitar Bubble?

[Engelmann]

"The guitar bubble will burst like every other bubble that inflated assets way beyond their real value. Remember the real estate crash, it will happen to guitars, Brazilian will be the first to come crashing down." - Some dude on the Collings forum.

Discuss.

[Ramesses]

There will be a bunch of boomers passing their guitars on within the next 20yrs or so. It happens with all kinds of things that was popular in the past. My grandmother has a bunch of depression glass that isn't worth close to what she payed for it as people her age die and their glass enters the market. Not to mention changes in demand etc.

[swsman]

Like all things it is cyclical, don't see anything near what happened in real estate repeat within guitar market.
There will be some cherry instruments out there for sale, in due time. Repeats with every generation.

[bho]

I think the vintage guitar market is here to stay and, if anything, prices for those instruments will continue to rise.

The broader higher priced guitar market may face a bubble of sorts because there are SO MANY excellent builds to choose from, from large brands to solo luthiers, that I can't imagine all of them will always find buyers in their price range.

[Bowie]

I've been saying this lately. Look at the age of the collectors right now. When the baby boomers are done buying guitars and start selling them off, the market will be saturated. The generations following them will be less inclined to buy acoustics because acoustics weren't as integral to the music they were raised on. People will still want them, but the boutique market will soften considerably. It always does when it comes to collections. You needn't look further than cars and motorcycles for an example. All those unique, custom made jobs are relatively unwanted whereas the big names and traditional designs hold true.

Whenever you're on a bubble, people tend to think it's "too big to fail".

[sbeirnes]

Originally Posted by bho

I think the vintage guitar market is here to stay and, if anything, prices for those instruments will continue to rise.

The broader higher priced guitar market may face a bubble of sorts because there are SO MANY excellent builds to choose from, from large brands to solo luthiers, that I can't imagine all of them will always find buyers in their price range.

I disagree. The baby boom generation has been driving up the price of vintage/high end guitars for the last 25 years. As the BBs start to need money in old age, or die, their toys will be sold off at deep discounts.

Wait 10 years and see if I'm right.

[Von Beerhofen]

I haven't bought 5 very expensive guitars to start caring about a bursting bubble. I've bought them to be able to enjoy playing high end guitars for a change, before I croack. The prices I've paid are just what they are today and these are established by the dealers and manufacturers.
I don't think my guitars will be inherrited by my family or friends, it's more likely that they'll end up in the hands of the Government since no will was made. Anyway, whatever happens to these guitars, or the bubble, is totally uninteresting to me, but perhaps the Government should be worried when it bursts with these guitars in their posession, or whoever else posesses them.
Maybe I'll even donate them to some charity when it's become impossible to play them, and I hope for that charity that by the time that happens the bubble will remain intact so they can cash in. If not then that's just too bad but it'll have no further impact on me.
You can wait for another 10 years before buying the guitar of your dreams, not knowing if their prices will ever come down or you can just try to acquire them right now, knowing that in history prices of goods have always gone up as compared to the buying power of a currency.
If you're worried then you can limmit the dammage by only buying used, these tend to loose a lot less on value.

Ludwig

[Presc]

It definitely fits the bubble criteria in that (to most observers) prices are outstripping any intrinsic value. So value is only propped up by the belief that someone else will value a vintage/braz instrument as much or more than the buyer himself does.

One difference is that ultra-high end guitars are a very niche item and are generally only purchased by those who can comfortably afford them and have wealth that is well insulated from economic cycles. That limited buyer base will always be there.

So here's my question - if the bubble didn't burst with everything else in the post-2008 mess, then what does it take for it to happen?

[Ramesses]

From my experience, good guitars value stays constant relative to inflation. The exception seems to be design changes. Like the move away from red spruce or the bracing move away from the soundhole.

I don't know the exact prices guitars used to cost. But lets just say a $400 guitar in 1968 is equivalent to $2700 in current money because of inflation.

[kydave]

I think folks other than American Baby Boomers have had a lot to do with driving up the Vintage Guitar (both acoustic and electric) prices...

[bho]

Originally Posted by sbeirnes

I disagree. The baby boom generation has been driving up the price of vintage/high end guitars for the last 25 years. As the BBs start to need money in old age, or die, their toys will be sold off at deep discounts.

Wait 10 years and see if I'm right.

My thought regarding vintage guitars is that they are treated to some degree as works of art and collected because they appreciate in value. Not all, of course, but many.

[JP McD]

This has already happened on the electric side of things. If you want to hear some sob stories talk to some high-end vintage electric dealers. The top of the market ('59 Les Paul bursts) lost more than half the value since 2008. '53 Teles are down to $25 grand. Acoustics are holding their own, but that's bound to change. I know of a guy who is rumored (by credible sources) to sitting on 25 or more pre-war dreads. That guy is going to die some day and those guitars will be out there on the market. As has been mentioned, the boomers have taken a lot of great guitars out of the supply, but they'll be back!

[DRodgers]

If she busts, I hope I'm in a position to go all in.

[Ramesses]

Originally Posted by kydave

I think folks other than American Baby Boomers have had a lot to do with driving up the Vintage Guitar (both acoustic and electric) prices...

The baby boom happened in most western countries. This is why the 60's happened, there was a glut of young people that lowered the average age

[kydave]

Originally Posted by Ramesses

The baby boom happened in most western countries. This is why the 60's happened, there was a glut of young people that lowered the average age

That is immaterial to what I was talking about. There are some very wealthy younger people overseas spending some serious coin on American vintage guitars.