The Current State Of The 2022 Watch Market
It’s not difficult to observe that the 2022 watch market has been volatile to say the least. We’ve experienced massively inflated watch prices that are swinging downward even faster than when prices went up. At the moment there is a perfect storm of external forces like inflation and confidence in the global markets combined with internal forces such as grey market investors and artificial choking of supply that could crash the watch market in 2022.
On the surface all of that may sound like a bad thing but ask yourself, “Who is this bad for”. One could argue that the factors that caused this bubble are going to be the ones who get hurt the most, therefore ejecting them from the market. That leaves the average watch collector who stayed patient over the last 3-4 years in the best position because they will now be able to wisely buy watches, like Rolex, at authorized dealers or buy pre-owned watches at reasonable prices.
It’s funny how history repeats itself and anyone with a memory can easily spot it. Just like in the housing crises in 2008, the watch market has been rising and has continued to rise with many in the market acting like that will be its perpetual behavior. As always there will be an eventual correction and if that happens in an unstable market, crashes are likely to happen.
At the peak of the watch craze in the 2022 watch market, stainless steel Rolex watches are being sold for 3x MSRP, stainless steel Patek Philippe Nautilus is selling for 5x-30x MSRP, and there are too many other models to list. In this article exploring the fall of the 2022 watch market, we’ll name the different forces that are having an impact on the current watch market and where we see, in our opinion, the market heading toward.
External Forces Effecting The 2022 Watch Market
The following are external causes to the fall of the 2022 watch market.
- Stock Market
- Inflation
- Government Restrictions
- Monetary Relief Programs
Stock Market
The overall confidence of a persons financial situation plays an important role when spending larger sums of money. When the value of portfolios are sharply declining for most across the world, making that decision to buy a $15,000 watch becomes pretty clear. In our opinion, the stock market is the biggest external influence on the watch market.
Inflation
A persons purchasing power plays a large role when choosing between wants and needs. As inflation continues to spiral out of control, our currencies are worth less. This makes the divide between choosing between wants a needs much clearer and thats evident with where we are in the 2022 watch market. Inflated prices, partly due to inflation, have become so high that the free market is starting push back by reducing the demand of the watch industry.
Government Restriction
During the recent pandemic travels restrictions were largely enforced across all nations governments. For many in the middle to upper class that meant no vacations, which resulted in extra money accumulating in peoples bank accounts. It was evident that a lot of that money that would have otherwise been spent on other things made its way to the luxury goods market. Now that government restrictions have been removed across the world, people are traveling again and not continuing to increase the demand for wristwatches in 2022.
Monetary Relief Programs
You can call it whatever you’d like but the monetary relief programs were a form of free money for many people who didn’t actually need it. We’re not talking about people who are struggling to get by but rather a large portion of the country who received funds who would have otherwise not have needed them. All that extra cash contributed to inflation and increased demand across many sectors, which includes watches.
Internal Forces Effecting The 2022 Watch Market
The following are internal causes to the fall of the 2022 watch market.
- Outside Investors
- Choking Supply
- Wise Money
Outside Investors
When industry sectors became unknown during the pandemic and lockdowns of 2020, investors looked to alternative places to get a return on investment. The luxury goods market was early identified as a sector that sharply rose once people weren’t allowed to spend their money in ordinary ways. This attracted many outside investors who didn’t care about the watch community but rather how profitable it could be for them. Now that the market has experienced a draw back, the outside investor is now becoming a victim of his own success. It is believed that many have over leveraged themselves and now have to dump inventory to meet upcoming obligations or to cut their losses. This economic behavior typically leads to runs or deeply discounted inventory quickly.
Choking Supply
Whether it be outside investors, legacy jewelry stores, or personal watch dealers; there have been clear signs that sellers have been choking supply of many popular watches. You might wonder why would someone do this. The reason is because once you restrict the supply, demand and prices will rise with the hopes that the model being restricted will now be considered an “investment watch“. When this is done of a massive scale the results are stainless steel watches selling for triple MSRP and zero watches of some brands, like Rolex, being in any of their authorized dealers. Now that prices have started to fall, dealers are opening up supply which naturally creates a windfall of prices because everyone has inventory that needs sold before the prices gets too low.
Wise Money
This internal force to the 2022 watch market makes me the happiest. It appears that buyers are finally starting to wise up and not play into the hands of the pre-owned market or authorized dealer games. It takes two to tango and when buyers finally have enough of overpaying, it will naturally drive prices lower. Now lets wait and see how far buyers can drive prices down with the action of inaction when it comes to buying certain watches.
Why A 2022 Watch Market Crash Is A Good Thing
At the height of the 2022 watch market, the conditions were not sustainable. Collecting turned to investing and prices became out of control. I believe I speak for many watch enthusiasts that we would rather operate in a watch market that we could buy the watches that they want without waitlists, being asked to buy other watches to get the ones we want, or paying inflated prices on the used market. We can all go back to collecting and buying the watches that we want with the hard earned money we saved.
What we expect is that this whole experience leads to brands understanding their products demand in better ways. For years they’ve seen the stress test of the prices of their products and can internally justify expanding production if need be.
Commonly Asked Questions
Will watch prices continue to fall?
Watch prices are expected to decline in 2022 because of the current state of the economy and the pressure on dealers to shed themselves of inventory.
Will the grey market go away?
No they grey market wont go away. There will always be a market for pre-owned watches and the grey market can be very helpful to moving supply across the globe. The behavior of the grey market is expected to change though reflecting more honest pricing and inventory controlling habits.
How soon until we see Rolex in cases at AD’s?
We predict that late 2023 Rolex watches will start to become more available in cases at Rolex authorized dealers. Rolex has been optimizing their production and hopefully by then outside investors will find other places to park their money which should all lead to a more stable market for Rolex buyers.
Is now the best time to sell a watch?
It depends if you bought it as an investment or something to enjoy. If someone bought it as an investment, in our opinion, we believe the prices on hot models are only going to decrease so now might be a good time to sell. If someone bought a watch for enjoyment, only they’ll know when it’s time to sell.
