[HN Gopher] Why are used cars so expensive right now?
___________________________________________________________________
Why are used cars so expensive right now?
Author : rmason
Score : 46 points
Date : 2021-07-25 20:39 UTC (2 hours ago)
(HTM) web link (thehustle.co)
(TXT) w3m dump (thehustle.co)
| jeffbee wrote:
| I like that everyone readily understands the supply/demand
| phenomenon as it relates to the price of used cars, but many
| people are unable or unwilling to grasp the relationship between
| the supply of new houses and the prices of used houses.
| JKCalhoun wrote:
| New car shortage was explained by a chip shortage. What is the
| reason new housing starts are not keeping top with demand?
| syshum wrote:
| Zoning and Price of Raw goods. For awhile lumber prices alone
| added an additional 15-30K to the cost of building a new
| home.
|
| This caused the builder to focus on building more higher end
| homes, so new homes in the 5-6x median income market were
| being built but the home in the 2-3x median income home that
| most people would buy (and should buy) was not cost feasible
| to build.
| pxeboot wrote:
| It can take years to get new housing developments approved,
| by the time they can start building, the demand may have
| leveled off or disappeared.
| thedougd wrote:
| Cheap money. Low lending rates are driving people to buy new
| (to them) houses. You'll also find unprecedented demand for
| renovations as people take cash out with refinances to fund
| their improvements.
| lapsed_pacifist wrote:
| Zoning which prohibits or heavily restricts multi-unit
| housing in cities, and material shortages and high prices for
| steel and lumber which impacts new single family homes.
| Lammy wrote:
| > What is the reason new housing starts are not keeping top
| with demand?
|
| https://en.wikipedia.org/wiki/Civil_Rights_Act_of_1968#Title.
| ..
|
| But especially since
| https://en.wikipedia.org/wiki/Equal_Credit_Opportunity_Act
|
| e: downvoters know I'm right ;)
| https://fred.stlouisfed.org/series/OEHRENWBSHNO
| https://i.imgur.com/kP8ugvH.png
| ebiester wrote:
| You add nothing to the conversation.
|
| Make an actual argument. Are you saying that the
| legislation reduced the level of housing created? Are you
| saying that redlining increased housing stock? Are you
| saying that black people having equal access to credit made
| white people less likely to build houses?
|
| Linking to Wikipedia with a wink and a nod to racism is not
| an argument. Be explicit with your argument here.
| Lammy wrote:
| There was an entire system built around keeping certain
| people out of many homes and many jobs as possible. When
| those things became unlawful, do you think the people
| responsible for the old system would immediately change
| their mind about the whole thing and give it up, or do
| you think they would find esoteric ways to maintain the
| same effect? Do you think they would admit it if they
| did? Learn to read between the lines of the world around
| you.
| jeffbee wrote:
| We could discuss and debate the various reasons, but at least
| we'd have a shared basis for understanding the issue. There
| are other people who say that up is down, war is peace, and
| that producing new houses somehow also raises the price of
| houses!
| wvenable wrote:
| What about land? My house is relatively inexpensive, the land
| it's on is worth like 10x as much.
| neogodless wrote:
| The supply for land isn't great. The demand tends to grow
| over time. If there was a "new land" factory it could help!
| steffan wrote:
| There is: (https://www.universetoday.com/144108/a-brand-
| new-island-in-t...) it's just somewhat slow by human
| standards.
| jlg23 wrote:
| Well, what about land? There ain't any new land. The supply
| is limited, well measured and it won't change much....
| exporectomy wrote:
| There's plenty of new land in America and most countries.
| It's unused because it's far away from where people
| currently want to be, but that could change depending on
| what society and industry needs. Maybe remote work will
| somehow really last and push people out of cities so they
| can buy an otherwise empty section of wasteland.
|
| Even within cities, it can be creates by zoning changes. My
| city recently relaxed density rules, effectively creating
| new land out of nothing in an instant. Developers are now
| building on that "new" land.
| paulpauper wrote:
| Almost everything is expensive now. Look how much assets in
| general have gone up: stocks, real estate, collectibles,
| commodities, and so on. College, healthcare, and insurance too.
| No reason cars should be an exception.
| holoduke wrote:
| Exactly. Nobody dares yet to tell it's inflation.
| gruez wrote:
| ...except BLS reported high inflation this month?
| brutus1213 wrote:
| I was looking at the market charts (NASDAQ) and was floored.
| How can people look at such a massive increase during a
| global pandemic and say this is normal growth? I mostly
| missed out on this entire expansion (we were saving to buy a
| house; had to keep the downpayment liquid as our housing
| market is stupid and requires people to go through a dozen
| bidding wars before you actually succeed).
| warent wrote:
| Objectively just about everything is abnormally expensive right
| now. Not just in the USA, but also Canada and Australia that I
| know of. Maybe other places as well.
| holoduke wrote:
| Same in Europe. Here in The Netherlands we pay 10 dollars for
| one gallon gasoline. Historical height.
| gedy wrote:
| Are the blue book sites up to date with these current trade in
| value trends, or is there a better place to reference prior to
| trade in?
| elliotec wrote:
| From what I'm seeing in relatively extensive research lately,
| the KBB doesn't seem to reflect the difference much, especially
| for trade-ins. It could be that dealers aren't willing to put
| up with the inflated prices for trade-ins, but either way
| you're almost guaranteed to get a hefty bit more selling
| privately.
| xeromal wrote:
| Now's the time to sell a car if you have an extra to spare. One
| of the few times in history when cars actually appreciate. A car
| I bought for 53k 4 years ago I could've sold for 55k last week
| until I got cold feet. lol
| toomuchtodo wrote:
| I've had folks who found out I'm about to take delivery of a
| Model Y offer me ~$10k over list if they can buy it immediately
| after I take delivery. It's insane.
|
| (we're keeping it of course)
| xeromal wrote:
| Haha. Mine is a Model S. It's my baby so of course I couldn't
| sell it. I had just posted it for shits and giggles at a
| ridiculous price but I guess people are desperate.
|
| I'll sell it once my Cybertruck preorder is ready! haha`
| [deleted]
| hellbannedguy wrote:
| I just noticed a '86 toyota truck on CL going with an asking
| price of $28,000.00
|
| I noticed it because I like their trucks, especially the 22r/re
| ones.
|
| It did have less than 30,000 miles though.
|
| Years ago I bought my first Toyota thinking it was junk. I was
| so wrong.
|
| (Anyone looking for a ride, I have this tip. When four door
| vehicles are aging out of what Uber demands, they price of the
| used vechicle goes way down. Look for vechicles that have aged
| out of the app, or close to it.)
| 01100011 wrote:
| Just did and got a good price. The only problem is I'll
| probably need to buy another once Covid calms down and we go
| back to work. I'm going to try to use public transit and
| cycling for a bit, but the reality is I'll need to get another
| car within a year. Hopefully someone has a small, cheap
| electric by then.
| valbaca wrote:
| tl;dr of the article is that the pandemic caused a major hiccup
| in the new-car pipeline: first people halted buying, that caused
| manufacturing to pause. Even when the manufacturing started
| again, the chip shortage came in.
|
| In general, it seems people started being more frugal and smarter
| with their money: people bought fewer new cards and people had
| few repos. Of course, what makes a car "used" is time, so fewer
| new cards last year also means fewer late-model used cards this
| year. Increased demand and decreased supply.
|
| All in all, I think it's a major correction of the prices of used
| cards. It never made much sense that a new car had half its value
| fall off when you drive it off the lot, but it was just an
| accepted fact and a reality (as all value is determined by what's
| agreed up on explicitly or implicitly).
| akulbe wrote:
| Supply and demand. That, and electronics needed for new cars are
| in such short supply because of supply chain problems.
| theshadowknows wrote:
| I'm considering buying a motorcycle in the next few months. I
| wonder if the same applies.
| xeromal wrote:
| I haven't noticed a major increase in used motorcycles, but
| your mileage may vary based on region. I'm in Socal. I don't
| think motorcycles are as complicated or chip based to
| manufacture and motorcycles are mostly a luxury item in the US.
| You'll be fine!
| jeffbee wrote:
| Both used and new motorcycle markets are incredibly tight, at
| least in California where I have been looking. I went to the
| Honda/Yamaha dealer in Berkeley and quite seriously there were
| _no_ bikes on the floor. Literally none. It looks from their
| website that they have a handful now, but none of the stuff
| they would normally try to have in inventory, like the Honda
| NC750, XR650L, CRF300L or other dual sports, so sports or
| supersports bikes, no Gold Wings.
| andy_ppp wrote:
| So cars, wood + building supplies, labour, food, shipping all
| dramatically increased. What's the best hedge against
| hyperinflation? Crypto? Ether?
| toomuchtodo wrote:
| Equities and real estate. Housing and cash flows never go out
| of style.
| throw123123123 wrote:
| This is not quite correct. In high inflation credit markets
| disappear. 80%+ of housing is bought on mortgages. If 80% of
| housing demand disappears you get a 2008.
| toomuchtodo wrote:
| The 2008 global financial crisis was due to a compete
| failure of risk management in originating mortgages and
| packaging them as mortgage backed securities. In short, the
| industry was scraping the barrel and shoveling shit to
| investors. "If they can fog a mirror, fund the loan" was a
| phrase common at Countrywide. Lending standards are
| comparatively tight now, no NINJA loans [1]. The credit
| market will tighten, but housing demand won't evaporate,
| and investors are starved for yield.
|
| In high inflation environments, you want to lever up with
| debt to fund investments because your debt will be inflated
| away over time while you capture cash flow or asset
| appreciation. High yield debt ("junk bonds") are also a
| great play for such a macro environment.
|
| [1] https://en.wikipedia.org/wiki/No_income,_no_asset
|
| (not investing advice, family members were involved with
| regulators and cleaning up after doing put backs for
| deficient notes)
| brutus1213 wrote:
| Interesting counterpoint .. you are right .. why would I
| lend you a dollar if I expect it to be worth a lot less in
| the future. Any data to go with this assertion? In Canada,
| average mortgages are just for 5 years - this is very
| different than the US. I suspect banks are taking very
| little risk in such a scheme. In the US, I believe banks
| sell mortgages off/get insurance via govt. schemes.
| granshaw wrote:
| https://www.lynalden.com/inflation/
| paulpauper wrote:
| Stocks, real estate are the best imho. Crypto has too much
| volatility, low correlation. BTC fell in half. not a reliable
| hedge.
| imglorp wrote:
| Adding to the remark in the article about new and used cars being
| linked at the dealers: many new car dealers do not shop at
| auctions. They only buy used trade-ins partly to help encourage
| new car purchases ie the "four square" calculation they use.
|
| So when their new car supply is interrupted upstream, that also
| interrupts their flow of used cars, so some dealer lots are a
| little thin on both new and used inventory at the moment.
| textech wrote:
| How were rental car companies able to sell 770k+ cars last year?
| Where did that demand come from and who bought those cars?
| valbaca wrote:
| According to the article, people who typically buy new cards
| started buying used.
| brutus1213 wrote:
| I think it was because people freaked out on public transit. In
| fact, there is a run on getting licensed to drive (have
| multiple co-workers trying to book appointments; they used to
| rely on public transit but realized it was suboptimal during
| covid). I recall it was very expensive to buy a bicycle in my
| city this time last year (those had a dual purpose -
| exercise/outdoors + transit).
| ris wrote:
| An article as a series of images. Without even any alt text. I
| don't think I saw things as bad as this even back in 2006.
| tokamak-teapot wrote:
| I was just reading it (on mobile) and thinking that it's
| perhaps the easiest to read and clearest article I've seen for
| a very long time. Something to do with the headings and short
| explanations, the visual layout and the simple but not _too_
| simple charts. 10/10 for me - but I don't need the alt text, so
| I'm not disagreeing the images should have those, especially as
| they are important to the flow.
| user-the-name wrote:
| This is because doing it as images let you actually properly
| control the layout, unlike HTML and CSS.
| mjevans wrote:
| I think I'd prefer web browsers to understand LaTeX, or a
| similar open and free as in both liberty and beer standard.
| Maybe SVG for webpages with URI remote resources would be a
| good alternative, just something else.
|
| I do love simple webpages with minimal resources that don't
| get in the way of my own preferences and device rendering
| needs in their quest for pixel perfect publication. HTML
| and CSS are supposed to be meta-languages that describe to
| a client how data is structured and simple style elements
| (that might get over-ridden!).
| stangles1 wrote:
| I noticed the same when I attempted to search for text on the
| page, very disappointing.
| xeromal wrote:
| I love the layout. 10x better than most of the blogs posted
| here.
| mypalmike wrote:
| Huh, I didn't notice that initially. I wonder why it was done
| that way.
| prpl wrote:
| The Kia Telluride is selling for quite a bit more than MSRP,
| used. Apparently dealerships are asking for more than MSRP new
| and that is part of it (in addition to/because of low
| availability)
| cooktheryan wrote:
| They have been saying that since the car released. Kia has been
| playing NY nightclub bouncer with the availability and enjoying
| the extra $$ they get on top.
|
| Of note drive an Optima so not a super Kia hater just what they
| have done with the release of this model
| forgotmypw17 wrote:
| if you can do it with sneakers, why not cars too?
| gimmeThaBeet wrote:
| The thing I find oddest about that, is I always hear about the
| Telluride, but the Hyundai Palisade rarely comes up. I couldn't
| figure how they could differ enough to cause such a disparity.
| I assume in reality, Palisade pricing has to be similar, right?
|
| Now I say that, but I also think I can answer my own question.
|
| Mainly, I would say I'm hilariously confused by how Hyundai
| positions Kia and Hyundai. Like on paper it I thought that Kia
| is supposed to be the sportier one, and Hyundai (nominally)
| luxury. But when I was shopping, both had really confusing trim
| levels, and Hyundai was especially odd because you really had
| to trim up to get what I would call a luxury car, leather
| upholstery was the big one.
|
| The marketing seemed to try and paint Hyundai as like refined
| style, but the actual car features of the two brands just made
| me hella confused. I think it's safe to say Hyundai/Kia made a
| lot of strides, they could use some work there.
| emerged wrote:
| Is it a good time to sell a used car and buy a new car? Or are
| the new cars equally as inflated?
| bobobob420 wrote:
| Talk to some dealerships, some are buying 1 year used cars and
| giving new cars at discounts
| chrisan wrote:
| you certainly won't be finding a deal new. friend of mine's
| father owns a group of dealerships in the town, they have
| people going to other dealers paying MSRP just to have
| inventory on their lots and sell for more obviously
| elliotec wrote:
| New cars are not nearly as inflated. The answer to the first
| question is yes, it's a very good time to sell old and buy new.
| One stipulation is that ordering a new vehicle with
| specifications they don't have on the lot will take in the
| realm of 6 months. Pretty big trade off, but I'm about to deal
| with this myself and can afford the time difference.
| [deleted]
___________________________________________________________________
(page generated 2021-07-25 23:02 UTC)