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Sales of Pleasure Boats Buoyed by Soaring Home Values

Buyers flock to the L.A. Boat Show. California purchases rose about 8% last year to $540 million.

January 30, 2006|Richard Verrier | Times Staff Writer

As his 3-year-old son grabbed the helm of an 18-foot sports cruiser, David Yates checked out the power boat's plush white leather seats.

Yates didn't know whether he'd buy this particular boat, which had a list price of $21,000, but he was pretty sure of one thing: He wouldn't be at the Los Angeles Boat Show if not for the housing market.

"We couldn't have afforded to come here before, but now that my house has doubled in value, we have an opportunity to take out a second mortgage," said the 48-year-old Burbank resident, who is a manager for a cabinet manufacturer. "At least we're in reach of being able to buy a boat."

Yates had plenty of company during the event at the Los Angeles Convention Center, which drew an estimated 25,000 lookers and buyers over the weekend. California's hot real estate market has helped power a rise in boat sales by allowing people to borrow against the soaring value of their homes to buy boats and other big-ticket items.

In California, retail sales of recreational boats -- from runabouts to $4-million luxury yachts -- rose about 8% last year to a record $540 million, continuing a growth trend over the last five years, according to the Southern California Marine Assn. A similar increase is expected in 2006.

Though some economists worry that too many people are overextending themselves, the boating industry considers itself lucky that business is humming despite high gasoline prices.

"A lot of people are taking money out of their homes and buying different things, and one of them -- fortunately -- is boats," said Dave Geoffroy, executive director of the marine association, the organizer of the L.A. Boat Show.

Aside from the real estate market, the $33-billion-a-year U.S. boating industry also has been helped by improved technology that makes it easier to dock boats, more-reliable engines and favorable demographics. Many baby boomers, for example, are buying big boats as second homes.

"Clearly, the baby boomers becoming empty nesters is a big part of what's fueling the growth," said Thom Dammrich, president of the National Marine Manufacturers Assn. in Chicago. "Instead of driving four hours to their summer home, they drive to the marina and they've got their second home on the water."

Although boat manufacturers are mostly concentrated in Florida and the Northeast, California is one of the top markets for boat sales.

And nowhere is that more apparent than at the 50th annual L.A. Boat Show. This year's show, which runs through Sunday, drew about 300 exhibitors, up 10% from last year, with more than 1,000 boat models.

J.R. Means III, president of Bayport Yachts of Newport Beach, sold three boats totaling $1 million by Sunday morning. His luxury boat business was up 20% over last year, he said, aided by soaring real estate prices in Orange County.

"Where else can you buy a beachfront condo home for less than $1 million?" he said, pointing to a 43-foot Carver yacht equipped with flat-screen televisions, a dishwasher and a washer and dryer. "The real estate market boom has been extremely helpful to our business."

To be sure, some dealers worry that boat sales could fall if real estate values drop, which happened in the early 1990s.

"I'm moderately concerned," said Michael Basso Jr., general manager of Sun Country Marine, which sells family boats and has locations in Castaic, Dana Point and Ontario.

He noted that half his buyers last year paid in cash, often from money they pulled out of their homes.

Still, Basso is happy with business, having sold 23 boats Saturday alone. "People are still buying."

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