Jim Singleton (left) and George Tsantis (right).
The Fall
But before we explore that optimism, we should take a quick, cursory step back, if only to truly appreciate how the vintage market got to its current point. Although vintage guitars have been generally considered a good investment vehicle since the mid-1980s, when baby boomers re-entered the market after some time away, the last eight years of the market turned into a frenzy. With the advent of truly easy money in real estate, stock markets that seemed impervious to gravity, and low-interest home equity lines of credit that never seemed to dry up, the vintage guitar market represented a prime opportunity to increase returns and diversify portfolios with similarly little risk. A market long dominated by players and aficionados of great craftsmanship, the vintage world quickly went mainstream.

“The people buying guitars were no longer musicians. They were doctors and lawyers and brokers. The guitars got too expensive for real players to buy,” recalls Kevin Borden, resident PG vintage expert and long-time dealer. “It got insane. There were certain areas of the market that were, quite frankly, 100 percent overvalued.”

The passion part of this passion market was replaced with excessive speculation, done on behalf of more and more outside investors. Musicians had long evacuated for safer, more reasonable territory. Prices lost their footing in logic, and were increasing almost daily. George Gruhn wrote in a 2005 newsletter: “While many dealers and collectors seem to be of the opinion that prices can only go up, it is my opinion that feeding frenzies do not necessarily result in either the best decisions or long term stability.” And even though trusted sages like Gruhn were sounding the warning bells, they were unable to sway a market captivated by $50,000 Strats, $200,000 Les Pauls and no end in sight. It was a party, and the party was good.

Of course, all good speculative bubbles have to come to an end, but the vintage market crash, along with almost every other collectible market, received a great deal of help from a faltering US economy. As the housing market began its painful cratering in mid-2007 and accelerated into the fall, the vintage market quickly followed. It was a logical, expected reaction, according to Jim Singleton.

“A large segment of [vintage] buyers held real estate,” Singleton explained, “so when the real estate market was strong, the money was there and they were investing in guitars and antique cars and baby boomer stuff. When that money dried up, it affected this market and every other market. Just about every nonessential luxury market has gone down.”

1964 Fender Jazzmaster, $9500
Looking back through sales records from 2007 and 2008, Borden is blunt in his analysis of how sharp and how quick the ensuing correction was: “The market started to turn to crap in fourth quarter of 2007. It was an odd market, a soft market in the first half of 2008, and it just became horrendous around September of last year. Take [’59 Les Paul] bursts—a good friend of mine had one at the 2008 Dallas show that he couldn’t sell for $190,000, when he had it marked the year before for $350,000. The entire Les Paul market took a hit because players don’t have $200,000 to spend on a guitar. Another case in point would be pre-CBS Strats. You had clay-dot, spaghetti-logo Strats previously selling for $30k; you can’t give those away at $16k right now. The more common stuff is taking a beating.”

Granted, this is fairly rarified territory we’re discussing, examples of golden-era guitars that have spent lifetimes under beds and inside collections. It would be unfair to use adjectives like collapse or implode to describe the vintage market’s last years. “When I think of those words, I think of 1990, when the vintage car market dropped by 90 percent,” says Borden. The truth is that there have been plenty of bright spots in the interim. Flat tops and archtops have remained fairly steady investments, increasing modestly year over year, and sales of guitars up to the $3000 price point have remained healthy through the entire debacle. Likewise, on the extreme top end of the market, owners of original korina Explorers or pristine 1959 bursts are still receiving top dollar for their instruments. But for anything else in between, even tangentially related to modern rock n’ roll—beautiful, vintage electric guitars that were once within reach of musicians but became the province of investors—the downward correction was very real.