A pair of Gibson Firebirds.

The Bottom
But if the guitar market finds itself 30 percent down from two years ago, and our own economy has yet to show firm signs of stability, let alone a recovery, what explains the optimism of a professional like Jim Singleton? Perhaps it’s because the market finally seems to be shaking it all out. Dealers have weathered the worst of it, and buyers are slowly but surely returning to the floors and shops, buoyed by several months of decent economic news (or at the very least, not terrible news) and low prices. The recent correction has generally been viewed by dealers as a good thing for the market, allowing some fresh blood to get into the vintage game and lowering the capital outlay required by dealers.

But considering how overheated the market became at its peak, it’s also fair to wonder if that market correction has completely run its course. Even Singleton will tell you he has no crystal ball. Although the signs are beginning to point upwards, no one can really say whether the market has hit its bottom, or if it’s yet to come. There’s no strong consensus on either side, and what you’ll hear from a dealer is highly dependent on how he reads the data. Even among Dave Crocker and John Brinkmann, two people with a vested interest in seeing things go upward and quickly, opinions seemed to differ on the state of the vintage market.“It looks good to me,” Brinkmann says, with very little hesitation. “I’m up.”

Crocker hedges his answer a little bit: “I think it’s still healthy, but we’re making some major, major adjustments. A lot of it is due to the economy, but I think part of it is due to the fact that we saw meteoric, explosive growth that wasn’t healthy for the industry.”

Dave Rogers

Dave Rogers of Dave’s Guitar Shop represents another of those dealers cautiously watching for things to turn. While he came to the Chicago Guitar Show with enough guitars to fill a dozen tables (more reissue stuff than true vintage, it should be noted) and his area commands a steady flow of foot traffic, he’s maintaining a sense of caution and patience for the free hand of the market to do what it will.

“The vintage market really peaked about two years ago,” he told me. “It got so crazy and inflated—bursts selling for $400,000; blackguard Teles selling for $60-$70,000—it just had to correct itself. And it is correcting a little bit, but I don’t know if we’ve found the bottom yet. The prices still have yet to really find themselves, and once they do, I think they’ll be a little lower than they are now.”

Jimmy Wallace

“I think it’s leveling out. People are fighters, and once everybody has kind of moved through the stuff that they were pretty deep in, both on the public end and the dealer end, then this thing will level itself out and become healthy again,” says Jimmy Wallace, of Jimmy Wallace Guitars and the Dallas International Guitar Festival, echoing much of the same sentiment. “In the end, if anything,the good out of this is that it will make it easier to do business from an operating capital standpoint, because I don’t have to go spend $50,000 for a maple-necked Strat. It’s hard at first, but once it readjusts itself, I think we’re going to be okay.”

That adjustment has taken longer for some dealers than others. Like homeowners realizing their $400,000 mortgage is now only worth $290,000, some dealers are reluctant to realize a huge drop in the value of their assets. It’s resulted in a kind of pricing paralysis by some retailers, and it has manifested itself into a waiting game between buyers and sellers that has muddled signs of a bottom.

“A lot of the dealers are still asking prices that maybe would have sold two years ago, but nobody’s buying today,” says Zachary Fjestad of Blue Book Publications and PG’s “Trash or Treasure” column. “I think a lot of the dealers got pretty far in. They never thought there was going to be a market correction, and they don’t want to reduce their prices because that shows that everything is negotiable again.”