Piano Sales and the ‘New Normal’

Piano sales are back. Sort of.

“As the housing and stock markets improved, pianos have experienced a revival,” noted a report in the Chicago Tribune from March 23^rd of this year. Hal Leonard’s Larry Morton was quoted in that same article: “The sales of new acoustic pianos, particularly grand pianos, have always been driven by people buying new homes… It’s part of the experience of having a house, not unlike buying furniture, in some ways.”

All of this not only makes sense to those in the MI industry, but it just stands to reason: Increased housing sales (and car sales, and general retail sales figures) speak to a growing – or at least stabilizing – economy and greater disposable income. Families concerned about making next month’s mortgage payment aren’t apt to throw down a few thousand dollars on a grand piano, after all.

The current market, both for home and piano sales, is one settling into the “new normal” – we’re not neck-deep in the recession anymore and some of the more extreme purchasing trends from a few years ago have faded away. “One of the main stories of the real estate recovery – cash-rich investors buying up single-family homes for rock-bottom prices –  could be coming to an end,” Fortune magazine observed in a report from last spring.

Indeed, in 2015 first quarter home ownership rate actually fell to its lowest level in 25 years according to a report from the Census Bureau released in late April. If, as the Tribune article maintains, piano sales and home sales go hand-in-hand, then that can’t be good, right?

Well, as with all multi-layered metrics, it’s not that simple.

Existing home sales did, in fact, jump more than six percent in March – the largest monthly increase in sales since 2010. However… that same period (March, 2015) saw an 11.4 percent drop, month over month, of new home sales.

So… things are better? Worse?

“The [existing home] sales are back around five million and something, which is sort of like normal,” says David Blitzer, chairman and managing directory of S&P Dow Jones Indices. “New home sales are a whole different story. They are running maybe half of what they should be.”

Right. Thanks for clearing that up.

What it all boils down to, of course, is disposable income. Pianos don’t represent as big of a financial commitment as cars, which don’t represent as much of an expense as homes, but these are all – to some extent, anyway – big ticket items. The housing market and the piano market are driven (of course) by the overall health of the economy. If it seems there are so many conflicting and contradictory opinions about the health of the piano market (see our retailer survey on page 36), ask yourself: what’s the consensus on the job market? Most report that employment is up, but wages are down. While it’s generally agreed that we’re out of the worst of the recession, folks are hardly dancing in the streets or singing praises of the current administration – or really any branch of a seemingly irreparably broken government.

So, piano sales are up. Just as overall home sales are on the upswing. It’s just not the big rebound everyone’s been hoping and waiting for. And in the new normal, maybe it’s best to realize that waiting for that big, clear, uncomplicated “everything is great now!” moment is a pipe dream.