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Michael

Some people on this forum would buy the Brooklyn Bridge.

Hey man, that's some prime real estate there!

On the topic of Steinways gaining value and beating out inflation, I don't think I've seen many used Steinways sell for more than their original price. Near new (in the last 5 years) and/or freshly rebuilt ones do tend to sell in the $40-60K range, but that's still not above the price that their original owner paid for them. That's still quite close to their original price, but not above it. So they do hold their value better than say, a Kawai or Samick of comparable size/price. Now, I'm not really an expert on used Steinways, nor do I have my dad's financial smarts, but that doesn't look like an increase in value to me I'm probably wrong about that, though

Nobody "knows with 100% certainty" but there's a ton of historical data for similar transactions.

To the best of my knowledge all pianos, including Steinways, take the biggest hit in the first few years and usually sell for a loss compared to their original price during that period. In addition, the depreciation schedule in Fine's Piano Buyer shows that the depreciation for Steinway is only marginally less than other makes. If I remember correctly, this was also examined in detail in the Dummies(or Complete Idiots Guide) book on buying a piano where the author(a forum member)says that the depreciation for pianos is generally the same regardless of their make.

I think there is a sweet spot for selling pianos where many of them(and probably Steinway in particular because of their rapid price increases)can be sold for about what they originally cost. I'm guessing this might be after around 10-15 years, but some dealers might have a better estimate.

Most top pianos will sell for more than their nominal purchase price if you wait a while. How many will add 3-5% per year to their value beyond the inflation rate? Well, none. Pianos are a crappy financial investment. That's not their purpose.

Bob,
The action fitting procedure is designed to allow for about 2mm difference in string height from one piano to another. That is one of the reasons why the action mounting blocks are tapered and made over-long. So the action frame height can be fit to the string height. Of course for many years the NY Steinways ranged over about 4mm. But string height has always varied in Steinway pianos. And all factory fit actions over-center a little in the tenor and bass.

The last set of NY whippens, (repetitions they call them in NY), was a model of uniformity, every bit as good as the Renner part and maybe a little lighter. They also cost a lot.

If NY abandons the long standard voice up protocol-technicians can count on making more money 10 to 30 years from purchase-in hammer replacement. The voice-down hammers wear out faster.

Sorry to chase the OP OT.

Hello Piano*dad,

An alternative view. You are the economics dept chairperson, but I don't see it quite so badly if you actually "invested" in (not played and used) an S&S many years ago. Feel free to poke holes in the thinking:

100 y span taken to round-out short term macro factors:
Inflation , y2013/y1913 = $23.62/$1 =23.6
Ref:
http://www.usinflationcalculator.com/

Dow Jones Industrial y2013/y1913= $15000/$1786 = 8 MINUS taxes when DJI components change
Ref:
http://www.macrotrends.net/1319/dow-jones-100-year-historical-chart
Edit, inappropriate reference data

Steinway dealer Steinway M mahogany list price y2013/y1913 $69900/$930 = 75.2, > 3x inflation
Ref:
Mr Verhnjak old ads: http://www.pianoworld.com/forum/ubbthreads.php/topics/2113063/1.html
& Larry Fine's 2013 Piano Buyer

It is assumed that the old S&S is stored optimally, analogous to fine Burgundy, oil painting, etc., and professionally resold. Maybe a New Mexico basement at altitude? cool and relatively dry...
Yes there will be a dealer commission bring the investment to market. But you get better selected sound board materials in the old piano as availability of good materials continues to lessen. S&S at the NY Hall was selling an old A for way above the price of a new one, and people on this forum have written it sounds better than the new stuff. I played it to and tend to agree, but I am not that much of a connoisseur.


Best wishes-

Your DJIA numbers are already inflation-adjusted. So it's beyond keeping up with inflation.

Your S&S numbers are not inflation-adjusted. You also don't take into account to cost of storage and maintenance over 100 years.

Seems like a flawed comparison.

Good catch, Mr. peekay. Indeed the DJIA numbers seemed too bad. Here is the comparison again then. Stocks look better. I think storage costs could be made negligible with some knowledge however. The 100 y was just to get the long term trend line, the returns could be better or worst for more realistic shorter periods.

Best wishes-

100 y span taken to round-out short term macro factors:
Inflation , y2013/y1913 = $23.62/$1 =23.6
Ref:
http://www.usinflationcalculator.com/

Dow Jones Industrial y2013/y1913= $15000/$79.51 = 188.7 MINUS taxes when DJI components change
Ref:
http://www.scaruffi.com/politics/dow.html

Steinway dealer Steinway M mahogany list price y2013/y1913 $69900/$930 = 75.2, 3x inflation
Ref:
Mr Verhnjak old ads: http://www.pianoworld.com/forum/ubbthreads.php/topics/2113063/1.html
& Larry Fine's 2013 Piano Buyer

Hello everyone!I am very nice to see you all.And hope you have a good time.

I love what you did here phacke. I wonder how other brands would fair that have been around for a century. Is Steinway unique in beating inflation in their retail selling prices or has it simply become more expensive to make a great piano?

How would Mason & Hamlin, Bechstein, Bosendorfer, and others fair in this same comparison? I don't have the answer - just asking the question.

Ah, Phacke, my amusement for the morning!

Economists are often accused (and sometimes rightly so) of assuming their way out of problems.

zero storage costs? Hmmm. Space …. the final frontier. Climate controlled storage has a price in the market. One hundred years of it isn't free. Using your own space (if such a thing magically dropped in your lap) isn't free either … opportunity cost.

Oh, I think you would also have to pay for insurance. If you don't, you bear more risk. Fires burn down houses, even ones with Steinways in them. Risk is cost.

Hey Rich, don't pianos depreciate if they are stuck in a basement for 100 years …

[just got an image of the usual fright movie in which someone hears a noise in the basement, grabs a candle, and …. oh, the horror]

Speaking of more realistic comparisons, pianos are bought to be used. So, if you had dumped $930 into some package of assets that paid a 3.5% real return on average, that basket would be worth around $29,000 today (in 1913 dollars). What does the hulk of a 1913 sell for to a rebuilder today? Wild guess … under 15K in today's dollars.

That's not a good "financial" investment. But it might have been one heck of a purchase.

The ground is not covered in $20 bills for us to find with no effort. There is a reason for this. Even if the federal reserve periodically dropped money by helicopter all over the streets, it would tend to get picked up pretty quickly. Point: obvious profit opportunities don't tend to last. People pick up the bills. How many Steinways are sitting unused in perfect climate-controlled storage in order to beat the crap out of financial markets 30-40 … 100 years in the future. Not many, I'll warrant. No bills waiting to be picked up.

There have been times and places where people did use real goods in place of financial assets in order to store their wealth. Back in the 1970s in places like Brazil one could see lines of 30 VWs all in a neat row on large farms and estates. Financial markets were in a state of collapse because of hyper-inflationary policies pursued by populist governments. Wealthy people turned to a crappy second best way to keep some asset value. What they couldn't spirit out of the country or turn into gold they used to buy autos, which even if they depreciated in the climate, held their value better than cash which collapsed by the day.

I wouldn't be surprised if some people in those circumstances converted some of their wealth into unused Steinways!

It may or may not be relevant, but Bosendorfer are owned, I understand, by Yamaha.
Bosendorfer may change (or be changed) but Yamaha's(foreseeable)future seems assured with the company's going from strength to strength !
rk

How would they have fared, I wonder?

Do you, does anybody, have any figures over the past, say, 125 years for the price of a Steinway D at actual and "present" values compared to commodoties such as a loaf of bread or whatever yardsticks are used for this sort of thing?

Please rephrase my question as appropriate to fit in with economics terminology!

One of the secondary reasons I bought a new Bösendorfer over a new Steinway (the primary reason is that it sounds and performs better) is many of the outrageous statements Steinway and its dealers make.

For example:

http://www.steinwaypianos.com/kb/resources/investment





These statements are pure nonsense. A 50 year old piano of any make isn't worth much as a performance instrument without a minimum of $20,000 of work. (It may still make a nice piece of furniture to put your family picture frames on.)

Bösendorfer doesn't do any of this. Maybe its because people who have the cash to buy one know a thing or two about what an "investment" is.

I'm 50 years old now; if in 25 years, I'm still in need of a "performance instrument", I fully intend to ditch my then worn-out Bösendorfer and get a brand new, top of the line something else (or pay the $$$ to have it restored to new specifications).

This is not an "investment". It's like a car. They wear out. After a point, it's better to discard and replace. Steinway's Concert Bank pianos are pulled out of service after 8-10 years, and then buffed up and sold to people who just want a huge "Steinway" in their living room.

Here's another way to look at the "piano as investment" nonsense.

Let's make the silly presumption that a piano didn't depreciate at all no matter what you did with it (stored it, played it, whatever).

So, you put $930 into your new beast in 1913. Today, a new one sells for 70K, and so your perfectly un-depreciated one sells for that as well. Silly, I know. Work with me.

OK, your total annual rate of return is roughly 4.3%. A lot of that "return" is just inflation. So let's subtract out the average inflation over the same century. That will give the "real rate of of return." Well if you do that, your real rate of return on this "asset" that is stored without cost, risk, or depreciation is about 1.1% per year. The real rate of return on financial assets over the same century was quite a bit higher.

All we have really shown is that the selling price of a new Steinway has gone up a little bit faster than the inflation rate. That's it. A lot of things have gone up in price consistently faster than the inflation rate, and a lot of things have gone up more slowly in price than the inflation rate. Top shelf pianos, actually, are one of the few durable goods whose price has not gone up more slowly than the inflation rate. This is because there has been much less mechanization of the manufacturing process than in, say, the making of automobiles.

For pianos as financial investments I tend to think of true collectibles such as one-of-a-kind art case pianos.


M.

Absolutely true. One of a kind art cases are unique items.

Since the supply of stock Steinways continues to grow-collectability does not factor into rational pricing.

The present musical utility is the biggest factor in determining price for a used Steinway or other fine piano. If it plays and sound wonderful, and no mechanical weaknesses are present, the rational value comes from comparing the used one to new similar models.

That is why properly rebuilt Steinways are the main competition for new Steinways. They can represent the best value. The really good ones are priced a little low in todays market due to the weak economy. So if you find one today and you agree with Mr. Paulson's "Bullish" buy of the company-you are a savvy investor-just on a slightly smaller scale. And with todays low interest rates-a "leveraged" purchase of a perfectly rebuilt Steinway, will be your best musical investment.

And one might add changes in design and materials.

Last Christmas there was an amazing kingfisher blue Rolls Royce Silver Ghost, "the best car in the world", sitting outside The Bull in the village.

They don't make them like that no more, they don't.