Does Norm's Rare Guitar Business Affect Vintage Prices?

[OldPup]

Who else wondered after watching the doc on Norm's Rare Guitars that Norm, God bless him, may have played an outsized role in driving up the prices of vintage instruments?

He has warehouses (plural) of vintage guitars in the LA area. This means he controls a portion of supply in a couple ways. He buys often, which buoys prices at the time of purchase, and it decreases inventory in a market of finite supply, for which there is already a niche customer base.

It stands to reason that he might buy the guitars in the best overall condition, which there are fewer of, making it easier to control a more substantial portion of available inventory. In the process, he developed a reputation as having a nicely curated collection, which he can charge an extra premium for. In LA, there is historically perhaps the greatest availability of clientele with substantial means to purchase them.

He has to hold the inventory because the demand isn't there to purchase what he owns. Therefore, the warehouses full of inventory represents false demand. Then he sells it off, bit by bit in a controlled fashion where he helps dictate price - again. Bonamassa says in the doc that Norm "foresaw" the price explosion. I am intrigued by the possibility that he helped create it.

All this makes sense in my mind, but in the interest of intellectual honesty (if such a term applies here), there are some significant unknowns. What is the true volume of vintage instrument supply? Is there a statistically significant number of purchases and sales needed to affect price marketwide? Has Norm's business, in purchase and sales, met that number requirement?

Thoughts?

 

[brookdalebill]

I’d “blame” “us”.
We (us?) players, and there’s zillions of us, demanded more cool old guitars than were readily available.
Even 50 years ago, we’d pay considerably more for the instruments our heroes played.
George Gruhn was one of the very first, in Nashville, and Guitar Resurrection, in Berkley.
Norman Harris, too.
Thankfully the big American guitar companies (Gibson, Frender, Gretsch, Martin) finally realized they needed to listen to their customers, and make the instruments people wanted.
Astute businessmen, like Norman sought out, and supplied those “vintage” instruments.
I’m kinda glad.
They made the instruments “we” wanted readily available, albeit for a premium price.
Now those prices are astronomical, and out of the reach of most players.
Thankfully, the reissues scratch that itch for most of us.

 

[andy__d]

I would argue it’s little different to other forms of antique dealer: part of the service they provide is to create a market. They buy from people (often people’s families) who have little interest in their relations old things, and offer a central hub where people who have a taste for older things can go to view a selection of wares: likely those same folk wouldn’t scour estate sales looking for “just the thing”, but would happily browse around a few antique shops and pick up something that appeals to them. I quite like wandering around our local antique store, and have bought a few things I’d never have found anywhere else (even though I would probably have paid less to the original owner that saw them as junk).

Dealers like Norms do indeed create the antique guitar market, by centralizing demand and supply to a single location. Does it drive prices up? Undoubtedly - but, they’re providing a service, and people are willing to pay for that service - both sellers and buyers. I’m sure you wouldn’t find a Stradivarius being sold on eBay or reverb privately: I don’t know anything about the high end instrument market, but I wouldn’t mind betting that for every Norm’s rare guitars there’s also the equivalent of a Vince’s Vintage Violins and Pete’s Precious Pianos out there selling high end vintage instruments to discerning orchestral players, so, maybe Norm inflated the market, but I don’t think it was a new idea, he just saw a niche in the already existing antiquities market, when electric guitars were too new to be thought of as antique (yet), and got in at just the right time, whilst the supply was large, and the demand was low.

 

[Holy smokes]

Possibly the blue book people would take notice I’m guessing. But a real driver is 25 million people getting their 401k. Some are suddenly multi millionaires looking to spread investing out into some fun .

 

[Engine Swap]

Supply+Demand

 

[notmyusualuserid]

I've got vintage guitars. They were new when I bought them

 

[bumnote]

Honestly I wouldn't be surprised if most of their sales isn't from vintage guitars, but just regular old used guitars, merchandising, etc.

I also wonder just how much they could influence prices for some guitars. There's very few Nocasters, 58 Bursts, etc. out there. What percentage are already in the hands of collectors? Try and overly inflate the price of 58 Bursts, collectors can sell for less to the same clientele. Try to devalue them artificially and someone would just buy their stock up and they'd be left with fewer when the prices inevitably went back up.

 

[OldPup]

Honestly I wouldn't be surprised if most of their sales isn't from vintage guitars, but just regular old used guitars, merchandising, etc.

I also wonder just how much they could influence prices for some guitars. There's very few Nocasters, 58 Bursts, etc. out there. What percentage are already in the hands of collectors? Try and overly inflate the price of 58 Bursts, collectors can sell for less to the same clientele. Try to devalue them artificially and someone would just buy their stock up and they'd be left with fewer when the prices inevitably went back up.

Good point about merchandising. I was recently in LA and really wanted to get by his shop to buy a t shirt. Too bad it didn't happen. Traffic in California is a thing!

Regarding the low inventory, I think in the early 90s a 59 LP ran around $10k? I don't truly know because I wasn't in the market. Today, they call sell for $500k. That's a huge rise. As Highgainer pointed out above, that could be due to 401ks maturing and having to put the money somewhere. However, the smaller the inventory, the easier it is to drive up prices.

 

[bumnote]

I was recently in LA and really wanted to get by his shop to buy a t shirt.

Funny you mention t shirts.

 

[burntfrijoles]

I have always assumed the target market for vintage instruments was broken down something like this:
-Rock, country, etc "stars"
-session players
-wealthy persons who actually play
-wealthy persons who cannot play but think it's cool
-collectors
-speculators

Most typical players are priced out of the vintage market other than those that have enough disposable income to allow such a purchase. I suppose one could borrow money to acquire one, similar to car, boat or motorcycle but the interest would be high even if you could find a financial institution to finance such a purchase.

Regarless, IMO it's a fool's errand to acquire a vintage instrument. In fact, it's total BS. How many of those guitars actually have the "magic dust" that sets them apart from a high quality modern made instrument? However, if you got the dime I'm sure Norm will find the time to take it. Knock yourself out.

If you're waiting for the bottom to fall out, good freakin' luck. I purchased an American Standard Strat between 1993 and 1995 for less than $600. The US inflation calculator projects that would cost between $1100 and $1200 in today's dollars but an American Professional II is listed as $1749 (on sale right now for $1569.

 

[Peegoo]

I don't blame Norman's, Gruhn's, Carter's, Dave's Guitars, David Brass (Vintage Americana), or any other vendor for the cost of vintage guitars. It's what the market bears and what customers are willing to pay.

Many shops have the *really* expensive guitars on consignment, so their inventory does not accurately reflect their investment.

 

[NickDG]

I've been to Norm's a few times, it's not far from me. And Norm's a great fellow. But, I tried to watch the documentary and realized it was just another advert for the store. I've already see enough of those on YouTube.

 

[OldPup]

I have always assumed the target market for vintage instruments was broken down something like this:
-Rock, country, etc "stars"
-session players
-wealthy persons who actually play
-wealthy persons who cannot play but think it's cool
-collectors
-speculators

Most typical players are priced out of the vintage market other than those that have enough disposable income to allow such a purchase. I suppose one could borrow money to acquire one, similar to car, boat or motorcycle but the interest would be high even if you could find a financial institution to finance such a purchase.

Regarless, IMO it's a fool's errand to acquire a vintage instrument. In fact, it's total BS. How many of those guitars actually have the "magic dust" that sets them apart from a high quality modern made instrument? However, if you got the dime I'm sure Norm will find the time to take it. Knock yourself out.

If you're waiting for the bottom to fall out, good freakin' luck. I purchased an American Standard Strat between 1993 and 1995 for less than $600. The US inflation calculator projects that would cost between $1100 and $1200 in today's dollars but an American Professional II is listed as $1749 (on sale right now for $1569.

I briefly owned a 65 Mustang in the early 90s though. I traded some crap gear for it at a guitar show. It was like a Korg G3 (or something), maybe a Death Metal pedal, and a Squier Strat. To be fair, those guitars are worth around $2k now, which is affordable for vintage guitars of that era. So it's not like I'd traded that stuff for a 65 Strat.

Also, I was the only one of my friends with a job one summer in high school and I bought my bandmate a 68 Drip Edge Bassman head a 2x15 cabinet for $150 (which he repaid) because nobody wanted vintage amps back then. They were seen as temperamental and unreliable at that time. It's interesting how differently they are viewed now and how prices have risen. Maybe the internet has helped determined gear nerds connect with resources to maintain them now, which makes them viable. Hence, the price increases. But hey, change is the only constant.

 

[FlarbNarb]

Vintage gear prices and tastes have been moving since that market started taking off in the 90’s. Norm’s really didn’t start the price thing nearly as much as successful artists looking to collect and lawyer/doctor types wanting some nostalgia. Remember the custom shops at Gibson and Fender not to mention Fender Japan we’re getting rolling in the 80’s. They were trying to counter the bad rap they were getting for the crappy quality they began churning out in 70’s. There was a time when “pre-CBS” wasn’t about style or cosmetics, it was about quality. That started the whole idea that the old gear was better gear. Japan was churning out reissues that were at least as good as the originals and certainly better than the US stuff. The custom shops were started to stop the hemorrhage of market share to Ibanez, Hamer, Kramer, Yamaha and Samick. So the custom shops were there making top quality replicas of their best models which got people interested in the used, now vintage, market. All of a sudden these seedy used music stores and pawn shops are being combed for the best of the old gear and they take notice of what people want and the next thing you know, Billy’s Loan and Pawn is now William’s Vintage Guitar Salon. Norm’s, Gruhn’s and Elderly Instruments just happened to first to market.

 

[netgear69]

Obviously, he has to make a profit, but say you had a 1950's blackguard in mint condition, would you take his instant cash offer?
Or sell it privately for what it is worth.
Therefore does he really dictate the vintage market.

 

[Papanate]

I’d “blame” “us”.
We (us?) players, and there’s zillions of us, demanded more cool old guitars than were readily available.
Even 50 years ago, we’d pay considerably more for the instruments our heroes played.

I’m sorry to tell you this - but Vintage Guitars are a limited resource - so millions of people don’t buy them because they aren’t there to go around.

 

[brookdalebill]

I’m sorry to tell you this - but Vintage Guitars are a limited resource - so millions of people don’t buy them because they aren’t there to go around.

They’ve always been a limited resource.
I’m certain Norm’s business is not mainly dependent on vintage instrument sales, anymore.

 

[OldPup]

Vintage gear prices and tastes have been moving since that market started taking off in the 90’s. Norm’s really didn’t start the price thing nearly as much as successful artists looking to collect and lawyer/doctor types wanting some nostalgia. Remember the custom shops at Gibson and Fender not to mention Fender Japan we’re getting rolling in the 80’s. They were trying to counter the bad rap they were getting for the crappy quality they began churning out in 70’s. There was a time when “pre-CBS” wasn’t about style or cosmetics, it was about quality. That started the whole idea that the old gear was better gear. Japan was churning out reissues that were at least as good as the originals and certainly better than the US stuff. The custom shops were started to stop the hemorrhage of market share to Ibanez, Hamer, Kramer, Yamaha and Samick. So the custom shops were there making top quality replicas of their best models which got people interested in the used, now vintage, market. All of a sudden these seedy used music stores and pawn shops are being combed for the best of the old gear and they take notice of what people want and the next thing you know, Billy’s Loan and Pawn is now William’s Vintage Guitar Salon. Norm’s, Gruhn’s and Elderly Instruments just happened to first to market.

This is a really interesting take on rising vintage prices and the broader context. I would enjoy reading a blow-by-blow article of how all of this developed.

 

[FlarbNarb]

This is a really interesting take on rising vintage prices and the broader context. I would enjoy reading a blow-by-blow article of how all of this developed.

I think it would be interesting to talk to a few of these fellows and get an idea of how their individual stores got into the vintage market to begin with. I mean, really this very small group of independents became THE authorities of the used and vintage market. Even to the point that some of them offer appraisal services! How crazy is that!

 

[Mike Eskimo]

Who else wondered after watching the doc on Norm's Rare Guitars that Norm, God bless him, may have played an outsized role in driving up the prices of vintage instruments?

He has warehouses (plural) of vintage guitars in the LA area. This means he controls a portion of supply in a couple ways. He buys often, which buoys prices at the time of purchase, and it decreases inventory in a market of finite supply, for which there is already a niche customer base.

It stands to reason that he might buy the guitars in the best overall condition, which there are fewer of, making it easier to control a more substantial portion of available inventory. In the process, he developed a reputation as having a nicely curated collection, which he can charge an extra premium for. In LA, there is historically perhaps the greatest availability of clientele with substantial means to purchase them.

He has to hold the inventory because the demand isn't there to purchase what he owns. Therefore, the warehouses full of inventory represents false demand. Then he sells it off, bit by bit in a controlled fashion where he helps dictate price - again. Bonamassa says in the doc that Norm "foresaw" the price explosion. I am intrigued by the possibility that he helped create it.

All this makes sense in my mind, but in the interest of intellectual honesty (if such a term applies here), there are some significant unknowns. What is the true volume of vintage instrument supply? Is there a statistically significant number of purchases and sales needed to affect price marketwide? Has Norm's business, in purchase and sales, met that number requirement?

Thoughts?

Variously :

Norm bought the vast majority of his vault stash a while ago . In some cases when the now $75,000 guitar was $5,000.

I’ve watched a bunch of those vault, YouTube clips that he started putting up during the pandemic and he was obviously very astute and had willpower because those things would walk through his door and he realized - this is the best one of these on the planet , I better put it away. Even something like a mint condition matching headstock candy, apple red Jaguar. Stick it in the vault forget about it and 25 or 30 years later a thousand dollar Jaguar is now worth $15k.

The thing people forget is that the vast majority of vintage guitars are in private hands .

Civilians , not guitar stores or even collectors.

And the majority of those civilians are old and getting older.

I’m still not convinced there’s enough buyers (Millenial/Gen Z) to absorb all those guitars when those guys (boomers/old Gen X ) really start “leaving” (dying).

And what plans/lack of plans the boomers have in place for their vintage instruments when they’re no longer here .

Best case scenario for the market, is that they sell them all before they pass. They are in charge of the sale. So they’re going to get as close to market price or even above than you could possibly get.

Worst case scenario for the market is they leave them to a clueless family member who sells them for nickels on the dollar.

And then there are the false collectibles .

Guitars that have never been anywhere close to a blue chip collectible but that have been buoyed up in value by the overall market (pandemic) . Sparkle Goya anyone ?

But I don’t know if the OP is familiar with the big vintage guitar net work all over the country but norm is one of many stores.

I have many other thoughts, but I’m tired and my back hurts