Is This Good News?

A 1958 Stratocaster is a wonderful guitar but it is by no means a rare guitar. There are a ton of them on the market right now and many seem to be priced in the Stratosphere (get it?). Supply and demand is like karma. Look out.

Prices are up. Sales are up. To a guitar dealer, you would expect this to be a good thing but I have my doubts. Here’s why. Asking prices are up. Way up. Usually, it’s the individual sellers who are out of touch with the market but even the dealers, big and small, have jacked up their prices with the kind of wishful thinking I usually reserve for widows and orphans (you know Grandad’s beloved, beat to hell ES-330 for $40K). Listen, I should be thrilled that asking prices are up as it allows me to get more for my guitars but I’m not because it makes it very hard for me to buy guitars at a price that will allow me to make a profit. I know boo-hoo, but it’s not just me. It’s you. I’d rather make a few thousand dollars selling you a fairly priced $30,000 guitar than make the same money selling you an overpriced $30,000 guitar.

OK, then what constitutes fairly priced? Hard question. If we use 2006-2008 as the theoretical top of the market, then we are in for trouble because we’ve gone past those numbers for certain 335’s. I acknowledge that collector grade guitars have gotten very hard to find and those prices will likely soar but most of the 335’s on the market right now are player grade to not quite collector grade. Bigsby’s, tuner changes, extra holes and incorrect parts don’t seem to make much difference lately. Everybody just asks what everybody else is asking with the attitude that “well, if dealer x is asking $35,000 for that piece of crap, I should be able to get at least that much for mine which is so much nicer.” Problem is that dealer x hasn’t necessarily sold that guitar for that inflated price but you don’t know that. You just know it’s gone and the selling sites don’t tell you final sale price in most cases. A fair price is what the guitar sells for (and yes, there are outliers).

I’ve written about this before. I call it a standoff. You’ve priced your guitar too high and I won’t buy it for that price. I will wait you out until you come back to earth (if you come back to earth) and ask a fair price. But, again, it’s not good for the market. These overpriced guitars will sit (and sit and sit) and more guitars will come on the market and they will sit and sit and then there will be a lot of guitars just sitting. While these overpriced guitars are sitting and sitting, somebody (like me) is selling guitars left and right by pricing them fairly. The problem is, of course, I can only price them fairly if I can buy them fairly and that has gotten to be difficult.

Now comes the hard part. How does this correct itself?-I say correct itself because there’s no way any individual can get the entire guitar selling public to do anything. In 2008, the entire vinatge market crashed to earth and, with very few exceptions, everybody got hurt. It did, however, fix the problem. We got close to this point in 2017-2018 and certain markets fell significantly due, mostly, to a glut of good vintage guitars for sale, especially 50’s and 60’s Stratocasters. This is probably how it will go this time, pandemic or not. So, who does this hurt? Market gluts are not democratic. Guitars with low production figures like 335’s and Les Paul standards and Customs tend to hold up pretty well. Higher volume guitars like Strats and Teles and Jr’s and Specials get hit pretty hard. Supply and demand is a cruel master. Even with the really high demand we’re all seeing during the current public health crisis, the supply is growing rapidly. Here’s a good example…there are 20 1958 Stratocasters on the market right now. They are priced from $20,000 to $35,000. I just sold one for $26,000 with no issues in 9/10 condition. That means a lot of them are overpriced-mine didn’t sell overnight-it took a few weeks. So who is paying $30K plus for them? Nobody. That’s who. Now let’s look at a lower volume but no less popular guitar-a 59 ES-335. There is one on the market. One. The demand is up but the guitars aren’t there. The law of supply and demand will straighten this out and he result will be good for some folks but not so good for others.

I’ve often made the point that rarity doesn’t count for that much in vintage guitars but even with that easily made point, the law of supply and demand still applies. A blonde 61 Byrdland is a really rare guitar but nobody is clamoring for one and the value remains stable. A 58 Stratocaster is not rare but lots of folks want them but with 20 to choose from, the smart buyer buys the one that is priced well. A 59 ES-335 is a lot rarer than a 58 Stratocaster and nearly as popular but with so few out there, you can guess which guitar will hold its value best when the market comes back to earth. Buy smart, people.

A 1959 Gibson ES-335 is one of the most collectible guitars there is. They aren’t rare but compared to that Strat up top, they are really rare. There is only one on the market as of today as opposed to 20 58 Strats. which one is going to sell and which one is going to sit (and sit and sit). Again, supply and demand is a cruel master. Just like karma.

One Response to “Is This Good News?”

  1. RAB says:

    Charlie, good perspective as always. If I were a vintage guitar dealer (and I was a modest volume dealer in the 1970’s) I, like you would price my guitars reasonably. I’d rather sell my guitars quickly and make a reasonable profit on each rather than have guitars sit and sit! Of course the difference between those days and now was the large supply of vintage axes available to dealers at reasonable prices. And it seemed most of those guitars were in very nice, original condition! The other element in the sales equation is the dealer’s reputation. There are certain vintage dealers I won’t buy from AT ANY PRICE and no matter how nice their inventory. I’ve been burned every time I was foolish enough to buy from those unfortunate dealers with non-disclosed “issues”. So I only deal with reputable dealers such as OK Guitars! Charlie, I’ve always been happy with our transactions and instruments, both buying and selling. Stay safe y’all and play yer git-tar! RAB

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