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Is that an Elephant in the Room?

In the pre-pandemic world, I usually had two or three 59 ES-335’s in stock at all times. Sometimes a blonde or two as well. Now, they’ve become as scarce as $6 a pound lobsters. The top price for a sunburst 335 in recent years was around $45,000 for a near mint stop tail. There are none on the market at all right now and I wouldn’t be surprised if they hit $100,000 in the next year.

I called it a bubble. Then I called it a bubble again. Then, in June, sales dropped when everybody thought the pandemic was in the rearview mirror. Folks were back outside hiking, biking, going to the beach and the guitars that had been their link to sanity sat unplayed. Then the delta variant happened and folks had to reconsider their actions. And the guitar market restarted with a vengeance. All in the space of around 6 weeks.

Sales of vintage guitars (well, the ones I was selling, anyway) were up by more than 50% during the worst of the pandemic-that’s volume, not prices. Then, in late May, sales stopped. I didn’t sell a single guitar for three weeks. That had never happened in the nearly 20 years I’ve been doing this. I thought the bubble had burst. Prices didn’t drop but they never drop all at once as sellers don’t want to accept the possibility that their guitars are worth less today than they were yesterday. But it looked a lot like the feeding frenzy was over. Except it wasn’t. Prices are up year over year by at least 20% on the most collectible guitars. Inventory is way down (possibly due to the spike in sales from the pandemic) and high quality collector grade examples have all but disappeared (the Neil Schon auction last July notwithstanding).

I didn’t think it could last and I dug my heels in and tried to keep my prices down and tried to buy at the prices I was buying at pre pandemic. But folks weren’t selling at those prices any more. Potential sellers go to Reverb.com and look at what similar guitars are listed for and assume that’s what they’re selling for and price their guitars accordingly. That’s the recipe for a bubble and that’s what it looked like. Now, a lot of the really crazy high stuff is sitting unsold-there is more inventory now than there has been recently-but some of the really high priced stuff is disappearing. Are the sellers negotiating or are the guitars selling at those unprecedented prices? Reverb doesn’t make it easy to know what guitar sells for what price. Their graphs of sales of a particular guitar don’t take condition into consideration so they are mostly worthless.

So, I started paying up to get some inventory and selling at my usual margins hoping I wasn’t being taken in by the folks selling at prices that were unimaginable just a year and a half ago. I’m sorry to report (am I?) that this market has legs which means it isn’t a bubble at all. Guitars are selling and folks are paying more for them. I think that if the pandemic were to magically end (“it’ll be like a miracle…”) then the market would stabilize but I don’t think it’s going down any time soon. I don’t the pandemic is going away any time soon either.

Let’s assume this thing is going to last another year. The economy will undergo a lot of changes but essential goods and services have already found new ways to exist and even thrive. The housing market is up. The stock market is up. The guitar market is up. Folks who can afford vintage guitars still have plenty of money but they have fewer places to spend it. That’s one of the drivers of this market. There are lots of things to spend your money on but few of them are as gratifying as a vintage guitar. That’s what gets me out of bed in the morning and that’s what might keep you from staying in bed all day.

Finally, something I’ve been telling my customers for years…vintage guitars are undervalued. If a 58-60 Les Paul is a $200,000-$400,000 guitar and they sell with some level of consistency and frequency, then a 58-60 ES-335 should be a lot more expensive than it currently is. A flame top Les Paul is arguably prettier to many but is it a better guitar than a 335? You know what I think. So, are you actually paying an additional $200000 for some figured wood? I’ve had a few flame top 335’s and they don’t go for much of a premium over plain ones. Yes, many of your guitar heroes played Les Pauls but you aren’t 15 any more and you know you don’t play like Page and you never will. I can understand the investment side but that might be what makes a 335 something to consider next time you have some spare cash you don’t know what to do with. I can see 59 335’s crossing the $100K mark within a year. There were only 600 made (including blondes) . I can see blondes closing in on $200K. Eighteen months ago, a 59 ES-335 was $42,000 (for a nice sunburst stop tail. Now, good luck finding one at any price. I saw a 58 recently listed for $60K and it’s gone. I’ve had 8 ’59 335’s so far this year. All sold in less than a week after listing. Five of them never even made it to the listing stage. I had buyers waiting for them. Still do.

For the longest time a 61 ES-335 was considered a compromise…a guitar for folks who had to have a dot neck but couldn’t afford to get in the game at the 58 or 59 price level. A few years ago, this guitar sold for $20,000. Now, it’s going to cost closer to $35,000. And if you want a red dot neck, it’s just about the only way to get one. There is one 58, 6 ’59’s and 21 ’60’s.

One Response to “Is that an Elephant in the Room?”

  1. RAB says:

    Charlie, I agree with your ES price forecast. I paid $300 for my first red ‘61 335, Bigsby with Custom Made Plaque, black pebble case. S/N 16800 IIRC. Paid $400 for a red ‘59 345, black Varitone ring, stop tail. Serial number A31411. Both circa 1976…get the guitar you love, the pain of price will fade over the years. Making or not making money on the guitar as a player shouldn’t be your primary interest unless you’re only in it for the money. Then you’re just an investor so maybe consider Bitcoin or futures instead…

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