The following is the first in a series of quarterly commentaries on the Vintage Guitar Market by Tom Peterson, our resident guitar expert here in dbTwang.
How much is my old guitar worth?
Everyone wants to know the answer to that question—now more than ever—and today the sad answer is, “Not as much as it was a year ago.” Seriously, we’ve experienced a worldwide asset deflation, and vintage guitars are certainly no exception. According to Vintage Guitar magazine’s price index, the broader market is down 13% from a year ago, and 23% over the last two years. In fact the editors of that publication have even invoked the dreaded ‘b’ word.
While the parabolic price acceleration and subsequent collapse at the high end of the market could certainly be described as a bubble, the guitar market is very segmented; some guitar values have virtually crashed, while others have held up relatively well and still others continue to rise.
Over the past several years a pattern emerged whereby a certain guitar would become the darling of the market (often due to a hot band showing up with one on MTV), and prices would explode as dealers and collectors raced to snap up anything that was available. Once prices got high enough and stabilized, everyone moved onto the next thing. This is typical heady market behavior, whether stocks, guitars, real estate, or tulips.
The most classic example of this would be 1950’s Les Paul Juniors, which went from around $2-3000 in 2004 to upwards of $10k a couple of years later. Interestingly this little bubble burst in 2006-7, well before the subprime debacle unfolded. Subsequently Juniors went back down to a more reasonable level of $5-8k, well before the rest of the market came down; when that happened, though, Juniors held their own, and I would fully expect that they will be the first to rise once the economic weather clears.
So what’s hot and what’s not?
If you’re selling, everything’s ‘not’. As the world scrambles to raise cash, supply has suddenly outstripped demand, and the spread between bid and ask has widened severely. In other words if you have to sell a guitar right away, don’t expect to get anything close to the prices they’re asking on Denmark Street. While some dealers have lowered prices in line with the market, others have not, and are either waiting patiently for the recovery, or quietly selling well below their advertised prices. While it might upset some people to hear me say that, it’s no secret, just market forces at work.
Still, some sectors have performed better than others. The very top end electrics (late ‘50’s Les Pauls, V’s, Explorers and 335’s, clean ‘50’s and early ‘60’s Fenders, etc) have gotten pummeled, which is no surprise given the massive price spike in recent years. Martins continue to perform steadily, and have actually increased in value over the past year. Vintage Gibson acoustics—one of the hottest sectors before the fall—have also held values well. Not surprisingly ‘70’s Gibsons and Fenders, which had experienced big gains despite variable quality, have also suffered setbacks.
Fortunately here come the Americans once again to save us all. (Sorry, that’s just a quick dig at my euro pals). The recovery in American looks as solid as ever and is expected to continue. Theoretically this should lead the rest of the world out of the dark. While guitar prices along with those of other hard assets (real estate, art, antiques, etc.) would generally be lagging indicators, US guitar prices appear to have stabilized, and barring another shoe falling, the next direction should be up.
Don’t hold your breath, though; like real estate, any general rise will probably not start for a year or two, and we won’t see the highs again for 5 or 10 years. However if you’re looking to buy the low, this is probably it.
Tom Peterson has been playing and trading guitars for 20 years and runs Kilkenny Vintage Guitars based in Thomastown, County Kilkenny, Ireland
www.dbtwang.com – Protect and Share your Guitars
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