August 2015 – Vintage Guitar Supply and Demand

posted in: Opinion | 0

If you’ve followed my recent posts, you’ll know that I have been looking around for cool and rare American vintage electric guitars (and basses) again recently. Nothing new in the way of CRAVE Guitars stock to report this month, so it is an opportunity to reflect and pontificate, as well as to share my biased opinion on our shared hobby again.

As part of my on-going research, I regularly check a well-known auction site beginning with ‘e’. One thing that I have noticed is that many prices are now escalating at least back to where they were pre-recession and often higher. The rate of increase also seems to be accelerating but inconsistently so, which makes the market uncertain. While the general upward trend might be good news for investors at the genuinely rare instrument end of the market, it is also putting some great, and even some ordinary, vintage guitars beyond the means of your average amateur collector or re‑seller. It seems predictable that fickle speculators will soon jump on the bandwagon (again) and what would otherwise have been considered run-of-the-mill instruments will hit stratospheric levels (again). The dreaded ‘boom and bust’ cycle looms ugly (again), which isn’t good for anyone. The upper extremes are more to do with damnable greed and detestable avarice – commonly called rampant capitalism – the economic law of supply and demand in a free market. At more modest levels the pressures are seemingly more complex.

Another thing that I’ve noticed is that, while the ‘common’ models are still relatively numerous, some of the more esoteric, niche guitars are often nowhere to be seen these days. This may suggest that people are hanging onto their valued old guitars, rather than putting them out to the unpredictable market, especially risky in an online auction environment. The result of this anomaly is that prices are increasing due to an artificial rarity factor – the supply dries up while the demand increases, making some less popular instruments disproportionately and unsustainably pricey. To test out this hypothesis, I have been looking for some slightly more unusual instruments and they can be really hard to find, resulting in some diverse and frankly crazy price differentials, especially compared to new guitar prices. However, you can still get a nice late vintage guitar (which will go up in price in the medium to long-term) for less than a new one (which is likely to depreciate for the next 20 or so years). That, at least is still good news for many of us preferring used instruments.

So… my next step was to look further afield. When comparing the UK with the US and Canada, there is, understandably, more choice in that much larger continent (and birthplace of our beloved classics). At first glance they can seem to be offered at an attractive price. However, when taking exchange rates (currently not good for importing from the US into the UK), international delivery, import duties, national taxes, handling fees and insurance (if you can afford it!), importing isn’t the bargain it first seems, especially as HMRC has tightened up the process significantly compared to a few years ago. Other markets, like mainland Europe, Australia, Japan, etc. are relatively inconsequential to the US/UK trade. Asian and Russian trade is certain to increase. In summary, importing is still worth a look though, as long as you do your research first. The Epiphone Olympic below was my last costly import from Canada.

1966 Epiphone Olympic
1966 Epiphone Olympic

 

Coming back to that well known auction site for a moment, the word ‘auction’ seems to be largely a misnomer these days. Actual auctions where you can bag yourself a bargain vintage guitar are now a frustrating rarity. ‘Buy It Now’ (BiN) seems to be the default option for most high value sellers. This means that many a cheap purchase can turn out to be risky and ‘Best Offers’ are rarely a source of great joy. Also, that heart thumping, sweat inducing, adrenalin pumping rush of the last few minutes…and seconds of a bidding frenzy for a desirable vintage guitar that you really, really, really want seems to be becoming a thing of the past. That’s a shame if you ask me, as a lot of the fun has gone by the wayside. BiN prices often seem to be set high initially and guitars sit there until the ‘real’ market value catches up, so there are quite a few that hang around until people see them as affordable. My inference is that, while it may be fine and convenient for one-off purchases, it is no longer a great source for a fledgling business enterprise on a tight budget, as precious net profits can rapidly be eroded. This applies to both buying and selling. This is probably similar to other ‘collector sectors’ such as classic cars, so I guess we adapt and move on.

Fender and Gibson still dominate with Gretsch and Rickenbacker hot on their tails, as well as early PRSs. Don’t forget other classic brands like Danelectro, National, Vox, Guild or Burns. Japanese originals from Yamaha and Ibanez are increasingly collectable too. There are plenty of whacky vintage guitars from minor brands, often long since demised, Supro, Silvertone, Teisco, Harmony, Kay, etc. that can prove real bargains if you’re careful. If you are into acoustics, Martin is still probably the most reliable bet.

So, where does this leave us in the post-recession world? Not as much choice when buying and what there is, is of variable value. The desirable instruments that we might aspire to are becoming increasingly exclusive again, except for the affluent in the vintage guitar community. Looking to the future, prices look set to rise inevitably and keep rising inexorably thereafter, until the next bubble bursts. The high end (i.e. occupied by the super-rich) will carry on regardless of global economics but that’s hardly the rarefied atmosphere us ordinary mortals will ever find ourselves in. There are bargains out there but, as ever, you have to seek them out and auction sites are as good as any other source. If you’re after a return on investment on a newer guitar, you may have to wait a while, so why not enjoy playing them in the meantime? In conclusion, if you want to get your hands on a lovely vintage guitar at a reasonable price and if you can find a good one, go for it while you can. Good luck. Thanks for reading this article.

© 2015 CRAVE Guitars – Love Vintage Guitars

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