The average American's largest investment is a home, as they gain value over time. But what about houseboats? It's a different story for watercraft.
Houseboats usually depreciate, just like powerboats, sailboats, RVs, and cars. This is especially true in the first few years after production. However, there are ways to reduce depreciation, and some houseboats even gain value over time.
In this article, we'll cover the difference between appreciating and depreciating houseboats, along with why depreciation tends to occur. Additionally, we'll go over several steps you can take to reduce the depreciation of your houseboat.
We conducted our own research to determine if (and how much) houseboats depreciate throughout the different stages of their existence. Additionally, we referenced statistics on houseboat sales using new and used watercraft pricing guides.
Appreciation vs. Depreciation
What's the difference between appreciation and depreciation, and which is better? Appreciation is when something gains value over time, and depreciation is when something loses value over time.
Appreciation is good for owners, as it allows them to sell an asset for more than they bought it for. Depreciation is good for buyers, as it allows them to get a high-quality product for a lower price. The effect of appreciation and depreciation are integral to the new and used houseboat market.
What Kind of Boats Appreciate?
Many people believe that boats are always depreciating assets, regardless of their type or condition. And while this statement is a good generalization to keep first-time boat buyers out of trouble, it is not an accurate representation of the entire boat market.
Many vessels, including houseboats, can appreciate in value over time. Vessels that are rare and desirable, especially classic boats, can appreciate significantly (especially after restoration). Think vintage Chris Craft runabouts, for example.
In some cases, this is true even if you adjust for inflation over a 50 or 60 year period. Age doesn't necessarily play a factor, as some modern boats with high desirability appreciate if demand outstrips supply. This is especially true in recent years.
Are Houseboats Depreciating Assets?
Generally speaking, houseboats tend to depreciate over time. The effect of depreciation is most dramatic in the first few years after purchase and again over the next decade or so. Like RVs, houseboats are large specialized items that really only do one thing.
And given that it's a self-contained living space with bathrooms, beds, and kitchen appliances, many people simply prefer to have one brand new off the lot. A houseboat could depreciate as much as 10% to 20% in the first couple of years, and then many more percentage points afterward.
When a houseboat has reached the age of about 20 to 30 years old, one of two things occurs. They are either totally unserviceable and need to be scrapped, or they are well-preserved and might increase in value. By this time, the majority of the original value is gone.
What Causes a Houseboat to Depreciate?
Houseboats depreciate for the same reason that many other boats do, and they're also plagued by some of the negative stigmas that affect the used RV market. Here are the top reasons why houseboats tend to depreciate over time.
Age
Age is a primary contributing factor to depreciation, as a used boat simply isn't as valuable as one that's never been slept in, moved, or knocked about. That said, the effect of depreciation on boats tends to level out as they get older, reducing the effect over time.
Condition
Next to age, condition is the biggest contributing factor to houseboat depreciation. This is for the simple fact that houseboats can be pretty gross if they're not taken care of, and they can also be relatively dangerous.
Boat maintenance is notoriously expensive. When customers are considering a purchase, they like to believe they won't be burdened with constant recurring expenses that are beyond what one could reasonably expect. This is why houseboats that look nicer and have been taking care of tend to fetch a higher price.
Obsolete Equipment
Houseboats that aren't the latest and greatest models don't have the latest and greatest tech and equipment. This is especially true when comparing older vessels to brand new boats, as the effect compounds over time.
A houseboat built in the 1980s is not significantly different from a houseboat built in the 1990s or one built in the 1960s, for that matter. After the mid-2000s, when manufacturers began loading houseboats with tech, the effects of obsolescence became dramatic.
Some computerized systems installed in early 21st-century houseboats are totally unusable now due to old software and loss of support. As a result, you're likely to see significant depreciation between the houseboat built in 2005 and one built in 2025.
Energy Efficiency
What does energy efficiency have to do with houseboats and depreciation? Quite a lot, actually. Many early houseboats lack any sort of insulation, which can make them uncomfortable in extreme weather.
Additionally, the energy efficiency of modern diesel engines in motorized houseboats is leaps and bounds better than it was even a couple of decades ago. This means that the owners of newer houseboats are almost sure to save significant amounts of fuel compared to their older counterparts.
Why spend more money on fuel when you can get a nicer boat with better tech and more comfortable living conditions? This thinking, while justified, drives down the prices of houseboats as they age.
Fluctuations in Demand
Demand is a major driver of all economic markets, and the houseboat market is especially susceptible to its effects. The houseboat market itself is very 'niche' and relatively small. As a result, small fluctuations in houseboat demand can have significant impacts on prices.
In times of low demand, houseboats can depreciate rapidly. But if demand is high and supply is limited (which it almost always is), the effects of depreciation are less pronounced. Houseboat prices have been on the rise recently, which is evidence of this effect.
Build Material
What material is your houseboat made out of? There's a good chance it's fiberglass. But not all fiberglass is the same. The tensile strength and quality of fiberglass boats have improved significantly over the last five or six decades, and this affects the longevity of the hull, deck, and cabin structure. As a result, newer boats with higher quality materials are likely to sell for higher prices.
The one exception is the very oldest fiberglass boats, as many people and informed buyers have realized that the earliest vessels have much thicker hulls. This is because early fiberglass boat builders didn't have enough experience with the material to know how much (or how little) was necessary for strength.
Depreciation of New vs. Used Houseboats
Where does houseboat depreciation hit the hardest? The answer is simple, and all we have to do is consider the used car market to understand why. The person who takes the most painful depreciation hit on a houseboat is usually the person who buys it new. As soon as you 'drive it off the lot,' you lose a significant amount of value.
Once the 'new' is gone, so is the price boost that new vehicles hold over identical models from the previous year. Used houseboats depreciate more in the long term but less rapidly than in the short term. This is usually much easier for buyers to absorb, as it takes many years for a houseboat to reach its lowest value.
Minimizing Houseboat Depreciation
So, if you buy a houseboat, what can you do to reduce the amount of depreciation that you'll need to absorb? The easiest thing to do is to avoid buying a brand new houseboat and selling it immediately after. If you're not sure that you'll like the houseboat lifestyle, try an inexpensive used one first and give it a try.
If you already own a houseboat, keep it in the best possible condition. Regular maintenance, such as cleaning the fiberglass hull and maintaining the gel coat, can make an enormous difference when you try to sell the vessel.
If you have an older houseboat, you might even make a profit if you put in the work to clean up and restore it. You can also reduce depreciation if you update your boat with the latest safety and navigational equipment.
How to Use Houseboat Depreciation to Your Advantage
Depreciation is usually a headache for houseboat owners, but houseboat buyers can use it to their advantage. This is especially true if you're in the market for a fancy new houseboat with all the latest perks and features. If you have your eye on a recently built houseboat, you can save a significant amount of money by finding the oldest similar model on the market.
For example, instead of buying the 2021 model, find a similarly configured 2018 houseboat and purchase that instead. There's a good chance it hasn't been used much (if at all), and you can save tens of thousands of dollars off the sticker price of the newest model.
