Will guitar prices go down after the pandemic?

[zoopeda]

Originally Posted by The Bard Rocks

My observation: When anything's price rises in response to a temporary difficulty, when that difficulty is resolved it may dip in price but only rarely to where it originally was. There nearly always is a rachet process to it.

It’s fascinating to read this thread now that it’s over a year old. A lot of the “it’s temporary” predictions have yet to come true. Fed recently announced rate hikes next year, indicating these prices may be here to stay. “New normal” as they say. But wages are up and unemployment is back down. The armchair economist in me thinks that means the rate of inflation will slow down soon, but there’s no way we’re going back to 2019 pricing.

[Ed66]

I'm no economist, but I do understand that increase in demand and decrease in supply leads to increasing prices; conversely the opposite leads to decreasing prices. I think the safe and generic trend would be to see a slight decline in prices over the next year both in the new and used market.

[captain_jack]

Originally Posted by Ed66

I'm no economist, but I do understand that increase in demand and decrease in supply leads to increasing prices; conversely the opposite leads to decreasing prices. I think the safe and generic trend would be to see a slight decline in prices over the next year both in the new and used market.

While I agree with the supply and demand piece of this, I'd be surprised if the list price for new gear ever goes down. IMO it's more likely that retailers will just be more likely to offer discounts on things that aren't moving. I do think think used prices will come down at some point, as right now in some cases they are barely below prices for new, which doesn't make sense when the market is functioning correctly.

[Wellington]

I hope so but I highly doubt it, it's like gas prices, once people get 'used to it' it will still sell.

[catndahats]

Fascinating a year later. And the effects on guitar prices (actually all consumer goods prices) are playing in front of our eyes. I reread my own post and kinda chuckled.

I've observed both new and used guitar prices launch skyward over the last 2-3 years, and particularly over the last year and a half on models/builders I follow. Less and less bargains out there.

We used to call it inflation, some say supply and demand, add to that devaluing the dollar. And although I have been called out on this forum for mentioning the part of higher prices being partially the effect of printing more dollars and dumping them into the market, and subsequently diluting the value of a dollar, and course of your dollar buying less is a huge part of the price increases in my opinion---maybe "bizarre" as one person called me. But I stand by it.

I've noticed far fewer "new" models listed on dealer websites in stock at any price, and that is because of the production shutdowns I think. Builders are still playing catch up on production.

On the used market, the builders and models I follow seem to be abundant and somewhat consistent in quantities listed on Reverb and dealer sites over the last 2 years. The only thing that has changed is skyrocketing prices on used...

Long story to say, the prices are not going back to pre-2019 prices on new guitars. They may slip back a little on used guitars if the demand drops, but again your dollar buys less so prices will remain high.

Be interesting to see if this thread pops back up in another year...hindsight is always more clear than a crystal ball.

Originally Posted by zoopeda

It’s fascinating to read this thread now that it’s over a year old. A lot of the “it’s temporary” predictions have yet to come true. Fed recently announced rate hikes next year, indicating these prices may be here to stay. “New normal” as they say. But wages are up and unemployment is back down. The armchair economist in me thinks that means the rate of inflation will slow down soon, but there’s no way we’re going back to 2019 pricing.

[bardsrback]

At the beginning of the pandemic I remember immediately receiving offers from dealers for 20% off just for adding a guitar to my list of followed guitars. They were very nervous at the start of this whole thing. I should have pounced on them all!

[LakewoodM32Fan]

It was a well documented phenomenon that "a lot of people picked up hobbies during the stay-at-home" and guitars was one of them.

It is another well documented fact that a lot of people give up on guitars (one article estimated 90%) within the first year, and so it stands to reason that eventually the second hand market will have increased inventory given the above point.

But where there is a disconnect between the above two points and what most in AGF are "hoping" for is the reversion of prices of the higher end models of The Big Three, and *any* models of the Boutique Four will come back down to pre-pandemic prices.

Here's a reality check. For all those who picked up guitar as a hobby during the closure, how many of them do you think bought Taylor 914s/Presentation, Martin Authentic Aged, or $5K+ Boutique Four models?

I'm sure some did, but I'd wager just a small fraction of the overall "new entries" to guitar. Those that did probably have lawyer/doctor/CEO money and even if they give up on the hobby...they likely don't need the money back.

So all this talk about "the high end guitars will come back down" or "the used market will be flooded with bargain priced Santa Cruz/Bourgeois/Collings" is, in my opinion, more wish fulfillment than anything.

That's not to say there won't be deals. For sure there will be some that for whatever reason decided to blow funds on a high end guitar that they shouldn't have (maybe they thought "hey it's the end of the world, why not splurge") and now that the world seems to be continuing they need to offload their high-end purchase to buy necessities or make rent. But I'm going to wager that's a relatively small amount of people.

I think more likely more are going to be in my boat, where I had the disposable income to buy some high end guitars, I wasn't new to guitar, and in my chase for "the one(s)" decided to sell off some guitars to fund purchases for new guitars.

Did I take a bit of a loss on all the ones I sold? Of course. It's only natural that used goods sell for less than new. But did I have to offer bargain basement prices for them? Not at all. In fact, even though I took a loss, it was mostly due to consignment fees. The stores I contracted with (and received good consignment rates from) ended up selling the guitars for 80-85% or more of what I paid for them.

Now that doesn't mean the buyers only got a 15-20% off new price. In the interim being buying and selling, all of the makers increased their prices. So the buyers got a discount of closer to 35% given that you couldn't buy those guitars new for what I paid for them.

That's just my anecdotal experience. But my overall point, that there isn't this large army of people who bought $5K+ guitars on a whim and are suddenly in dire financial straits and need to sell them off at half the price in a hurry, just doesn't exist. Sure a few may fall under this category (we live in a 330 million people, some will have made that bad decision) but it's nowhere near enough to establish an overall "market trend of severe declination".

Now if the country crashes into another Great Recession, that's another matter.

[Stonehauler]

A lot of the reason is that people were not going on "experiences" aka, going to Disney, a cruise, travel (both intra and inter national). Many got to work from home, saving significant amounts per month. In other words, they had excess money.

For instance, my wife got to work from home for her job, saving us 2-3k a year, not counting on wear/tear reduction on the car, probably extending out ownership out another 2 years with just maintenance vs having to make payments That saves more money. This allowed people who would normally spend money on vacations to acquire some expensive hobbies. Woodworking, music, computer gaming, boating, etc. I don't see people getting rid of a lot of those fairly quickly. Even if they don't use them, I expect most to keep them, telling themselves "they will pick it up again sometime"...I don't see a doctor or lawyer selling an instrument, rather I see them hanging it on a wall as a decoration if nothing else...

[czgunner]

This is a free market economy. If people are willing to buy at a price, that price will stay the same. If not, the price drops or the goods don't sell. The usual result is a company failing.

[Jeff Mc]

I think guitar prices are sticky in a downward direction and I don’t think guitars are all that price sensitive anyway. Most of the ‘small’ luthiers that I follow have raised their prices and have long wait lists. Makers like Collings have raised prices and the Austin dealers have hardly any stock and their guitars often sell before they even receive them. Maybe dealers for the biggies will go back to offering more discounts but now have limited stock and I am guessing that other than people on guitar forums, folks that go into a guitar retailer figure the price is the price and don’t negotiate.

It seems like most makers have raised prices so if you decide you want/need a D18 and Martin dealers no longer offer a discount and Martin competitors have raised their prices as well do you walk away for a couple hundred bucks?

I am betting against prices going any way but up.

[kanikapila]

Originally Posted by wguitar

I do believe that with the increased number of guitars purchased during the pandemic that there will be tons of great deals on used guitars at some point -- mostly beginner and intermediate-level guitars. Just my 2 cents.

Cheers!

Would agree with this forecast.

Just another 2 cents- which should be enough to purchase a Peloton bike soon

[Kerbie]

Originally Posted by kanikapila

Just another 2 cents- which should be enough to purchase a Peloton bike soon

Or a share of their stock.

[Jeff Mc]

I think guitar prices are sticky in a downward direction and I don’t think guitars are all that price sensitive anyway. Most of the small luthiers that I follow have raised their prices and have long wait lists. Makers like Collings have raised prices and the Austin dealers have hardly any stock and their guitars often sell before they even receive them. Maybe dealers for the biggies will go back to offering more discounts but now have limited stock and I am guessing that other than people on guitar forums, folks that go into a guitar retailer figure the price is the price and don’t negotiate.

It seems like most makers have raised prices so if you decide you want/need a D18 and Martin dealers no longer offer a discount and Martin competitors have raised their prices as well do you walk away for a couple hundred bucks?

I am betting against prices going any way but up.

[JB200]

It's not just guitars, it's everything hobby related as far as I can tell. Anything firearms related is way up. My brother is into boats and he bought a fishing boat for $25k about 5 years ago and used the heck out of it. He just sold it for $32k within 2 hours of listing it in the off-season. The downside of course is that the one he'd like to upgrade to used to be ~$50k just before the pandemic, and they're $65k if you can find one, and no use showing up trying to "talk someone down." Lucky for him he's got a lot going on so he sold his and will do the upgrade in a few years, so he's HOPING the market cools a bit. My wife likes handmade Native American earrings(she's native herself) and at a few hundred a pop, they usually sell out in minutes. One of the sites also does custom hats at ~$800 a pop, same thing every time they release a batch they are sold out in 5 min.

[Mbroady]

Are you in the market for a new or used guitar?

Not me, nope, not at all…ha, who my kidding, always in the market….
Almost 2 years after this thread was started and it seems that prices have not come down at all. In fact they continue to go up.

New guitar prices are up 25%, sometimes 30% more then the pre-pandemic days. Factor in that there are no more cross-state-lines tax free purchases (not rally tax free but…wink wink) and your paying as much as 35% to 40% more for the same guitars.

For example, in 2019-20, with the standard discount, you could walk away with a new D-28 for around $2200. These days $3200 is the asking price, plus tax. Discounting seems to be a thing of the past (what retailers are offering deals).

Even used prices are a good amount more then new prices from a few years ago (are they selling?)

Not sure what I’m in the market for but the market does not want to cooperate with me/us…...