Times Change – Markets Rise & Fall
For more than 150 years, every handmade Steinway has increased in value.
Since 1853 Steinway has been setting the standard for uncompromising quality. Steinway pianos have been built to a standard, not a price. A Steinway piano is not only an incomparable musical instrument, but also an investment instrument. Owning a Steinway piano is a rare opportunity to invest in beauty, craftsmanship, endurance, performance, and joy. The fact is, “… a 10 year old Steinway in good condition, usually sells for about 75% of the current retail price, which goes up about 4% each year.” – Reuters, November 2003.
Here is a testimonial from one of our Steinway Representatives:
I got your email. Welcome home. I hope you will stop in the Gallery the next time you come home for the weekend.
We’ve not talked since you were in Europe so I have never told you the story of my Steinway model M. On Dec.17, 1969 my father had heard from my mother (an extraordinary pianist) “I really wish I had a Steinway.” for the last time. He told her to go out and buy one. I have the bill of sale showing that she paid $4,250 for the piano. I have the piano today and it is magical.
The cabinet model is known as a Mid-Century Contemporary and has round legs and is simple in its design. I have since found out that it was produced between 1953 (my year of birth) and 1973 with a total of about 4,000 made in that period. The style is not particularly my preference but, hey, it was my mother’s.
I was in New York last month at the Steinway factory for training, a phenomenal experience in itself. During our 3 days of training and orientation, they presented material about the Steinway line of special order and limited edition pianos, some of which are one-of-a-kind. You really should go to www.steinway.com and explore that link. Upon returning home, I decided to view a DVD about this line of pianos and, low and behold, my piano was pictured. After inquiring at the factory about it, not only did I find out that it is available still on a special order basis, but that they are building one for someone right now (it takes a year to build a Steinway grand piano). The price tag? $75,900. A traditional M in ebony satin today is $61,800. Since Steinway dealers do not engage in the practice of marking up its products for the sole purpose of showing a big discount. That is the price across the whole country.
Why am I telling you all of this?
On March 31, 2013, I retired from a successful 30-year career as a financial advisor. One can safely say that I understand appreciation and rates of return, so I ran the numbers.
For my piano, the compound rate of appreciation retail-to-retail works out to be 6.77%. Since my piano is estimated to have a market value of $50,000 (2/3 of the price of a new one), the retail-to-market calculation works out to be 5.51%. The traditional design of a model M in 1969 was approximately $3,700. Running the same retail-to-retail calculation over the same 44-year period yields a very similar appreciation rate of 6.61%. Assuming the same 2/3 relationship, the market value of a traditional M bought in 1969 would today be around $40,000. That translates to a rate of return of 5.56%.
What is my point, you ask. This is my point. My father had money and he was smart with his money. He bought a Steinway. People with money who are smart with their money should own a Steinway grand piano. It is sort of an alternative investment. Now is when I run the risk of putting you to sleep.
During the period of 1970-1985 which, if you are anywhere near my age you will remember for the high rate of inflation we experienced, the retail price of that same M rose from $3700 to $15,900, a compound rate of 10.21%. If you think current monetary policy will eventually result in high inflation, which many believe is the case, now is the time to buy and perhaps not in 2-3 years.
I realize this is long-winded and I am assuming it all makes sense to you, but I really believe there are compelling reasons not to wait. I would enjoy discussing it with you and getting to know you better. After all, your mother bought my Baldwin.
I look forward to meeting you in person soon.