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It’s about equity and pickup trucks

They might not seem to go together, but the increase in home equity lines of credit and the surge in pickup truck sales bode well for the future because boat sales track with both.

As I drove down Fourth Street in St. Petersburg, Fla., last weekend, I couldn’t help but notice a half dozen major banks had their electronic signs inviting me to get my “low-interest home-equity loan here.” It drew my attention to the good news that home values must be rising again and the banks are hungry for this business.

The facts support it. The housing market is continuing to recover and homeowners are regaining the equity lost when home values collapsed. Moreover, we in the marine industry have always known it’s an important precursor to increased boat sales. Rising home values lift consumer confidence. Home equity lines of credit are a good method of financing a boat purchase (loan interest is usually tax-deductible.) What’s not to feel good about?

Nationwide, home equity lines of credit have jumped 20.6 percent from a year ago to the highest level since the 12 months that ended June, 2009. You’ll recall, that was the depths of the Great Recession.

Daren Bloomquist, vice president of Realty Trac, recently reported nearly 10 million homeowners now have at least 50 percent equity in their homes. They represent 19 percent of all U.S. homeowners. In addition, the number of homeowners with negative equity continues to decline. Many homeowners used the recession to decrease overall debt and increase home equity.

Even with the healthy increases in home equity lines of credit, there’s lots of room for more since the current numbers are still well below pre-recession levels when home values were skyrocketing and consumers were using home equity lines of credit to finance home improvements, boats, cars and so on.

Meanwhile, it’s the sale of pickup trucks that moved the big needle in auto sales last month. General Motors and Chrysler racked up 19 percent more sales than in September 2013. Total U.S. auto sales rose 9 percent to 1.2 million cars and trucks last month, reports Auto-Data Corp. That puts the industry on track for the projected 16.4 million total vehicle sales in 2014.

The significant overall boost in September featured increased incentives on pickups. For example, Chevy Silverado pickup sales increased a hefty 54 percent to more than 50,000 units. To do it, GM averaged nearly $5,000 in incentives per pickup, up 30 percent from a year ago, according to J.D. Power estimates.

Similarly, Ram truck sales rose 30 percent to 36,600 units, put into high gear when Chrysler increased Ram incentives to about $4,600 per pickup. It is also speculated that both GM and Chrysler were being aggressive to capitalize on Ford’s current closure of a truck plant for retooled to make a new aluminum-clad version of its most popular F-150.

From a boating perspective, pickups and SUVs (which also are seeing strong sales) are the top vehicles for towing boats. In fact, one recent commercial actually positions the pickup truck as the ideal way to tow a boat to and from water. So, the more on the road the better. And while incentives will likely be cut back some, thus slowing the sales pace, it all still helps make this a good time to be in the boat business.



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