Shearing the sheep

[bgum]

I really feel sorry for those new RVers who have recently purchased or who plan to purchase an RV. The prices are far in excess of value. We are not in the market for ourselves but was thinking of buying a teardrop for our daughter and son in law. Just to get them out of a tent. Trailers that had been listed at $12 grand are nearly $21 grand. A teardrop mind you. Even the used units are out of sight. As in the past when this bubble burst a lot of dealers with go belly up and there will be a glut of used units f s b o where maintenance has not been performed. Nature of the beast.

[NJRVer]

The will be SOME sort of tanking happening after the election.
It doesn't matter who wins.
If current president wins he will shuffle his cabinet and stock market gets jitters.

If new president comes in, new cabinet gets put in too and stock market gets jitters.

Seen it happen after every election since I started voting back in '76.

[CavemanCharlie]

wing_zealot wrote:

dedmiston wrote:

wapiticountry wrote:

dedmiston wrote:
It's reminiscent of the housing bubble. Shame on the lenders for lending at those prices. Especially now with interest so low, it seems like the lenders are just asking for trouble but with little upside. On the one hand, they'll get low interest payments from the borrowers, and on the other hand they'll be facing tons of repos that will just end up going to auction.

It's not a lender's job to determine fair market values. Unless the Dealers are putting guns to the heads of the customers they are responsible for their decisions. How would you feel if you went to Ruth's Chris, had a nice steak dinner and your credit card denied the transaction because they felt you should have went to Sizzler.
Is there actually any evidence prices have risen or is it just speculation. Have the MSRP of rigs actually risen dramatically or are dealers just not discounting as deeply as they have done in the past? Just because an RV listed for a price 5 years ago doesn't mean a similar RV today will be the same price. Prices do rise over time.

Yes, except... :B

So yeah, I'm totally a free market guy, but the steak analogy kind of falls apart since it's a durable good with a residual value. Ruth's Chris doesn't have to worry about you eating a third of the steak, loosing your job mid-meal, and then them having to repo the unused portion of your steak.

I wasn't so much criticizing the banks for lending too much money to gullible people as criticizing them for making risky loans that are likely to blow up their books when the borrowers start to default and so many repossessed RVs flood the auctions.

The attraction of the lending kind of made more sense to me back when the rates were higher and the lenders got so fat, but now with rates so low, I don't see how it could be worth the risk. I guess they have to sell new business though.

But your argument falls all apart if the economy doesn't tank, sales remain strong, and borrowers don't default on their loans.

The economy ALWAYS tanks !! It may not be today, or tomorrow but, it will again someday. Though, You could be right that maybe it won't tank until people have their RV's paid off. Hopefully they are paying them off quickly and not with loans that have the RV wore out before it is paid off.

[down_home]

On RVs at least Motor Homes the MSRP is much higher than you can purchase one for. as much s 45%+ in some cases..from experience. Financing which most people have to do is way out of line. Our Credit Union two years ago quoted us 3.9%. When we got serious, earlier this year, it was over 6%. That's with right at 800 on wife's and over for mine. We refinanced our home from 3.7% to 2.9%. If I had don it months earlier we could have gotten 2.25%. Not thinking far enough ahead, we culd have rolled a new Mh into the ref. Prices on homes in Tn are now doubling and more in the last two or three years especially in outlying areas of the cities. We count our blessings we got our new home when we did. already over twice what we paid offered by a r4eal estate who would do some things and sell it for much more.
The cheapest way appears, if it fits you situation, is to roll a Motor He in to your mortgage. at our age don't liek bills but it will be paid off in ten years max. Our Mh is over ten years old and Banks don't want to loan money on them.
Dealers take and sell them to Wholesalers,if they take them in trade. Doesn't matter that your RV is better than the new ones. I won't go into the whys.
So we are keeping ours and updating and so forth even though we would dearly like to have a larger unit with two full wall slides and all the niceties that have come along since we purchased this one. its paid for and I like that a lot more than payments. We usually spend all our time away from it anyway.

[JAC1982]

We bought ours in mid-April. I had seen it at an RV show at the beginning of March and then we went to the dealer to talk numbers a week later but they didn't offer us a great deal, especially on our trade. Then about a week after that is when things started hitting the fan w/ Covid, and the stock market crashed. The salesman called us up and said they were basically panicking at the dealership and started renegotiating. We got a far better deal than we would have if we bought it a few weeks before, or waited until about May. Even Keystone threw in some cash to the deal to get us to where we wanted to be. And yup, we financed it. We can well afford it (DINKs under 40) and figure if everything really goes to hell, we'll sell our house (which has tons of equity) and live in the camper LOL!

I'm a member of a few Montana groups on Facebook. What some people are trying to get for their used 2018/2019 units is insane.

[wapiticountry]

dedmiston wrote:

wapiticountry wrote:

dedmiston wrote:
It's reminiscent of the housing bubble. Shame on the lenders for lending at those prices. Especially now with interest so low, it seems like the lenders are just asking for trouble but with little upside. On the one hand, they'll get low interest payments from the borrowers, and on the other hand they'll be facing tons of repos that will just end up going to auction.

It's not a lender's job to determine fair market values. Unless the Dealers are putting guns to the heads of the customers they are responsible for their decisions. How would you feel if you went to Ruth's Chris, had a nice steak dinner and your credit card denied the transaction because they felt you should have went to Sizzler.
Is there actually any evidence prices have risen or is it just speculation. Have the MSRP of rigs actually risen dramatically or are dealers just not discounting as deeply as they have done in the past? Just because an RV listed for a price 5 years ago doesn't mean a similar RV today will be the same price. Prices do rise over time.

Yes, except... :B

So yeah, I'm totally a free market guy, but the steak analogy kind of falls apart since it's a durable good with a residual value. Ruth's Chris doesn't have to worry about you eating a third of the steak, loosing your job mid-meal, and then them having to repo the unused portion of your steak.

I wasn't so much criticizing the banks for lending too much money to gullible people as criticizing them for making risky loans that are likely to blow up their books when the borrowers start to default and so many repossessed RVs flood the auctions.

The attraction of the lending kind of made more sense to me back when the rates were higher and the lenders got so fat, but now with rates so low, I don't see how it could be worth the risk. I guess they have to sell new business though.

Maybe you want your bank to decide if you are getting a good price or making a good decision, but I prefer to make my own choices and then live with the consequences. Contrary to the views of some, not everyone is teetering on bankruptcy. I would venture to say the RVs being sold right now are being sold to people who are more qualified than ever to take on that financial obligation. Many of those sales are to people who chose an RV because their other vacation and travel options were unavailable. An argument can easily be made that buying a $20,000 travel trailer is a better investment than spending that $20,000 taking the family to Hawaii or Europe. The impulse RV purchase and trip made because everything else is closed will likely be the cheapest vacation season many families have had in years.

[Grit_dog]

I think you meant fleecing the sheep, not shearing it... lol

[bgum]

That's my reason for feeling sorry for the new buyers. It appears ,based on history, that there will be two results. Either a default by some or a few stuck with a upside down purchase that will eventually be sold as a big loss.

We haven't seen the term "upside down " lately but it's time to dust it off.

[dedmiston]

wing_zealot wrote:
But your argument falls all apart if the economy doesn't tank, sales remain strong, and borrowers don't default on their loans.

Yes. You're 100% right there. Hopefully I'm wrong.

My main point was to compare the low upside to the lenders because of low interest rates with the risk of inflated prices during this temporary boom.

But yes, hopefully the markets remain strong and there aren't a lot of defaults.

[wing_zealot]

dedmiston wrote:

wapiticountry wrote:

dedmiston wrote:
It's reminiscent of the housing bubble. Shame on the lenders for lending at those prices. Especially now with interest so low, it seems like the lenders are just asking for trouble but with little upside. On the one hand, they'll get low interest payments from the borrowers, and on the other hand they'll be facing tons of repos that will just end up going to auction.

It's not a lender's job to determine fair market values. Unless the Dealers are putting guns to the heads of the customers they are responsible for their decisions. How would you feel if you went to Ruth's Chris, had a nice steak dinner and your credit card denied the transaction because they felt you should have went to Sizzler.
Is there actually any evidence prices have risen or is it just speculation. Have the MSRP of rigs actually risen dramatically or are dealers just not discounting as deeply as they have done in the past? Just because an RV listed for a price 5 years ago doesn't mean a similar RV today will be the same price. Prices do rise over time.

Yes, except... :B

So yeah, I'm totally a free market guy, but the steak analogy kind of falls apart since it's a durable good with a residual value. Ruth's Chris doesn't have to worry about you eating a third of the steak, loosing your job mid-meal, and then them having to repo the unused portion of your steak.

I wasn't so much criticizing the banks for lending too much money to gullible people as criticizing them for making risky loans that are likely to blow up their books when the borrowers start to default and so many repossessed RVs flood the auctions.

The attraction of the lending kind of made more sense to me back when the rates were higher and the lenders got so fat, but now with rates so low, I don't see how it could be worth the risk. I guess they have to sell new business though.

But your argument falls all apart if the economy doesn't tank, sales remain strong, and borrowers don't default on their loans.

[Lwiddis]

“criticizing them for making risky loans that are likely to blow up their books...”

Don’t banks sell those loans after the deal? But still “service” the payments? So long as a bank can sell the loan paper they’ll make the loan.

[dedmiston]

wapiticountry wrote:

dedmiston wrote:
It's reminiscent of the housing bubble. Shame on the lenders for lending at those prices. Especially now with interest so low, it seems like the lenders are just asking for trouble but with little upside. On the one hand, they'll get low interest payments from the borrowers, and on the other hand they'll be facing tons of repos that will just end up going to auction.

It's not a lender's job to determine fair market values. Unless the Dealers are putting guns to the heads of the customers they are responsible for their decisions. How would you feel if you went to Ruth's Chris, had a nice steak dinner and your credit card denied the transaction because they felt you should have went to Sizzler.
Is there actually any evidence prices have risen or is it just speculation. Have the MSRP of rigs actually risen dramatically or are dealers just not discounting as deeply as they have done in the past? Just because an RV listed for a price 5 years ago doesn't mean a similar RV today will be the same price. Prices do rise over time.

Yes, except... :B

So yeah, I'm totally a free market guy, but the steak analogy kind of falls apart since it's a durable good with a residual value. Ruth's Chris doesn't have to worry about you eating a third of the steak, loosing your job mid-meal, and then them having to repo the unused portion of your steak.

I wasn't so much criticizing the banks for lending too much money to gullible people as criticizing them for making risky loans that are likely to blow up their books when the borrowers start to default and so many repossessed RVs flood the auctions.

The attraction of the lending kind of made more sense to me back when the rates were higher and the lenders got so fat, but now with rates so low, I don't see how it could be worth the risk. I guess they have to sell new business though.

[wapiticountry]

dedmiston wrote:
It's reminiscent of the housing bubble. Shame on the lenders for lending at those prices. Especially now with interest so low, it seems like the lenders are just asking for trouble but with little upside. On the one hand, they'll get low interest payments from the borrowers, and on the other hand they'll be facing tons of repos that will just end up going to auction.

It's not a lender's job to determine fair market values. Unless the Dealers are putting guns to the heads of the customers they are responsible for their decisions. How would you feel if you went to Ruth's Chris, had a nice steak dinner and your credit card denied the transaction because they felt you should have went to Sizzler.
Is there actually any evidence prices have risen or is it just speculation. Have the MSRP of rigs actually risen dramatically or are dealers just not discounting as deeply as they have done in the past? Just because an RV listed for a price 5 years ago doesn't mean a similar RV today will be the same price. Prices do rise over time.

[TomG2]

It is called inflation. The government prints money and dumps it into the economy. It will have an effect. It is beginning to show up here and there. The national debt is now beyond belief.

[schlep1967]

Same issue with houses right now in our area. I'm seeing $225,000 properties selling for $300 to $350,000 within 3 days of hitting the market. The bubble will burst again.