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Why are used cars so expensive right now?
- jeffbee 5y agoI 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 5y agoNew car shortage was explained by a chip shortage. What is the reason new housing starts are not keeping top with demand?
- lapsed_pacifist 5y agoZoning 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.
- andrepd 5y agoThat's a minor factor. It does not explain how this situation happens all over the world, even where there is no overzealous zoning or high prices of materials. The issue is cheap credit and the lack of an LVT that would avoid all the economical and ethical issues with land ownership.
- lapsed_pacifist 5y agoI don't know how your can say that an LVT avoids all economic and ethical issues with land ownership, that seems like a personal moral opinion. Especially since there's very few instances of an LVT on the wild. I'm sympathetic to Georgism, but you're making a very powerful and unsubstantiated claim.
- andrepd 5y agoYou're right, I didn't mean "all", I meant "some". I don't think it's a panacea at all, I just think it would be the most effect with the smallest disruption (in that it's simply a reform to be done inside the framework of free market, private property, etc).
- Lammy 5y ago> What is the reason new housing starts are not keeping top with demand? https://en.wikipedia.org/wiki/Civil_Rights_Act_of_1968#Title_VIII%E2%80%93IX:_Fair_Housing_Act https://en.wikipedia.org/wiki/Civil_Rights_Act_of_1968#Title... But especially since https://en.wikipedia.org/wiki/Equal_Credit_Opportunity_Act https://en.wikipedia.org/wiki/Equal_Credit_Opportunity_Act e: downvoters know I'm right ;) https://fred.stlouisfed.org/series/OEHRENWBSHNO https://fred.stlouisfed.org/series/OEHRENWBSHNO https://i.imgur.com/kP8ugvH.png https://i.imgur.com/kP8ugvH.png
- ebiester 5y agoYou 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 5y agoThere 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 5y agoWe 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!
- syshum 5y agoZoning 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 5y agoIt 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 5y agoCheap 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.
- wvenable 5y agoWhat about land? My house is relatively inexpensive, the land it's on is worth like 10x as much.
- neogodless 5y agoThe supply for land isn't great. The demand tends to grow over time. If there was a "new land" factory it could help!
- steffan 5y agoThere is: (https://www.universetoday.com/144108/a-brand-new-island-in-the-pacific-has-survived-5-years/ https://www.universetoday.com/144108/a-brand-new-island-in-t...) it's just somewhat slow by human standards.
- dionidium 5y agoYou can't make more land, but you can increase density by putting more units on the same plot of land. This is a totally natural way for cities to develop, but it's more or less illegal in the United States due to zoning.
- jlg23 5y agoWell, what about land? There ain't any new land. The supply is limited, well measured and it won't change much....
- exporectomy 5y agoThere'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.
- deleted 5y ago
- warent 5y agoObjectively 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 5y agoSame in Europe. Here in The Netherlands we pay 10 dollars for one gallon gasoline. Historical height.
- akulbe 5y agoSupply and demand. That, and electronics needed for new cars are in such short supply because of supply chain problems.
- theshadowknows 5y agoI’m considering buying a motorcycle in the next few months. I wonder if the same applies.
- xeromal 5y agoI 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 5y agoBoth 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.
- imglorp 5y agoAdding 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.
- ris 5y agoAn 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 5y agoI 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 5y agoThis is because doing it as images let you actually properly control the layout, unlike HTML and CSS.
- mjevans 5y agoI 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 5y agoI noticed the same when I attempted to search for text on the page, very disappointing.
- mypalmike 5y agoHuh, I didn't notice that initially. I wonder why it was done that way.
- 5y ago
- prpl 5y agoThe 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 5y agoThey 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 5y agoif you can do it with sneakers, why not cars too?
- gimmeThaBeet 5y agoThe 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.
- lazerpants 5y agoMy suspicion is that Kia/Hyundai's current marketing position is about capturing new car purchasers, not differentiating brands. Your average consumer will only drive a few cars before buying one, 3-5 maybe? So if you can own two of those slots with cars that are practically the same but somewhat different, you increase the chances that a consumer will buy one of your products because they are less likely to look at competitor's products. Curious what others think on this. Seems like a smart business strategy.
- emerged 5y agoIs it a good time to sell a used car and buy a new car? Or are the new cars equally as inflated?
- deleted 5y ago[deleted]
- bobobob420 5y agoTalk to some dealerships, some are buying 1 year used cars and giving new cars at discounts
- chrisan 5y agoyou 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
- cdstyh 5y agoYes you can. You just have to shop around. I got well below MSRP out the door a few months ago.
- elliotec 5y agoNew 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.
- SkyPuncher 5y agoNew cars aren't nearly as inflated, but the higher starting price of a new car means the absolute change is still more than a use car.
- paulpauper 5y agoAlmost 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 5y agoExactly. Nobody dares yet to tell it's inflation.
- brutus1213 5y agoI 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).
- mox1 5y agoI think most would agree we are in bubble-ish territory, but what do you do? Most advice says 2 things. 1. impossible to time the market. 2. time in market beats all things. So you can't just pull your money out. Even with a 20% correction tomorrow, your still going to be up on the year. Going to bonds to get 1-2% isn't helping much. There is nowhere left to put money. Be nervous a year from now when the bubble talk subsides as the NASDAQ continues to grow :)
- gruez 5y ago...except BLS reported high inflation this month?
- anonu 5y agoHigh demand and low supply due to supply chain slowness doesn't immediately translate to price inflation. Prices go up in this scenario but the question is if it's just temporary (meaning supply eventually meets demand or demand goes away over time) or it is in fact permanent inflation.
- gedy 5y agoAre 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 5y agoFrom 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 5y agoNow'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 5y agoI’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 5y agoHaha. 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 5y ago[deleted]
- francisofascii 5y agoKnow a guys who just sold his Tesla to a dealer for $50k. Same price he paid. He owned for for 2 years and suffered $0 depreciation. Replaced with a cheaper car.
- 01100011 5y agoJust 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.
- adventured 5y agoIs Covid going to calm down, what comes after Delta?
- andy_ppp 5y agoSo cars, wood + building supplies, labour, food, shipping all dramatically increased. What’s the best hedge against hyperinflation? Crypto? Ether?
- toomuchtodo 5y agoEquities and real estate. Housing and cash flows never go out of style.
- throw123123123 5y agoThis 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 5y agoThe 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 https://en.wikipedia.org/wiki/No_income,_no_asset (not investing advice, family members were involved with regulators and cleaning up doing put backs for deficient notes)
- throw123123123 5y agoYour debt gets inflated away gradually while your asset crashes today. If housing went down 30%, virtually all debt in housing sold in the last few years would be underwater, which tends to increase delinquency ("they can take the house back"), which then makes the bank eat that loss and having toxic assets. The core issue is that debt is always risky.
- textech 5y agoHow were rental car companies able to sell 770k+ cars last year? Where did that demand come from and who bought those cars?
- brutus1213 5y agoI 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).
- valbaca 5y agoAccording to the article, people who typically buy new cards started buying used.
- valbaca 5y agotl;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).
- golemiprague 5y agoI think there are another two reasons not mentioned in the article. One is the surge in electric car sales, many people are still on the fence and want to wait a year or two before they decide if they want to move to an electric car. That's why they don't sell their own car yet. The other reason is that in a certain time during the last 20 years there was a sweet sport of car reliability when cars were not too sophisticated but also got rid of all their childhood deficiencies and they can simply go forever. All those corollas and their ilk are just there and not going anywhere so people has no reason to buy new cars instead of those.
- mgarfias 5y agoInflation and the fact that new cars are super hard to come by. I just bought a new truck, I was able to get the allocation as I have a friend at the dealer. I got the only allocation they were getting this summer, and I’ve been waiting since March.
- France_is_bacon 5y agoCash is being pumped into our economy, therefore, people want to buy more stuff, because now they can "afford it." So now with more competition for goods and services, prices go up because there is more money than there are goods and services. I work with businesses in the trades (auto repair, plumbers, HVAC, insulation, etc) and they are all at full throttle, and cannot handle any more work. So those companies are going to start raising their prices. But this happens in all areas of products and services. There's just not enough stuff. As a result, there's inflation. Inflation is the decline of purchasing power of a given currency over time. I lived through the 1980s, where there was an inflation rate of 16 to 18%. This means, let's say you have $10,000 in the bank, in 1 year, the purchasing power is $8,200. The next year it will have the purchasing power of $6,724. The third year your original $10,000 will be worth $5,513. Your bank account will still be $10,000, it's just that you'll only be able to buy $5,513 worth of products and services, on the average. The way to protect oneself is to buy stuff, and not keep any cash in the bank account. If you purchase $10,000 worth of canned food today, the value of it will remain the same over time, because you purchased, oh, let's say 10,000 cans of food, but in 3 years, you would only be able to buy 5,513 cans of food. So you get rid of cash as fast as you can. But instead of buying food, which you might do, you also buy houses, cars, anything. Because those things, when you sell them, will be the same price. If a can of peas goes from $1 to $3 over 3 years, you can sell your 10,000 cans of food for $30,000, if you could, so you still have the same amount of purchasing power. It's not the worth of the things that changed, it is the worth of the money to buy the things decreases. This is well-known, so people with a lot of money are buying second houses or anything else to get rid of cash. So the world is awash in cash, but runs out of stuff to sell, and prices go up. It is a vicious circle, and keeps spiraling out of control, and eventually you can get into hyperinflation, where you can have $1 trillion dollars to buy a loaf of bread. Here is a list of countries that have experienced hyperinflation: https://static.seekingalpha.com/uploads/2012/7/14/426795-1342256308950108-Economics-Fanatic.png https://static.seekingalpha.com/uploads/2012/7/14/426795-134... Most recently, Zimbabwe had hyperinflation and here look at the money supply: https://static.seekingalpha.com/uploads/2012/7/14/426795-13422563628257763-Economics-Fanatic.png https://static.seekingalpha.com/uploads/2012/7/14/426795-134... They just started printing more and more money, until it got out of control. In Venezuela in 2016, inflation reached 1,000,000%. This means that if it took $1 to buy a loaf of bread in 2015, a loaf of bread would cost $1,000,000 in 2016. And so, the government would be forced to print $1,000,000 bills. In April 2019, the International Monetary Fund estimated that inflation would reach 10,000,000% by the end of 2019. Here is a real 50 trillion bank note from Zimbabwe due to their hyperinflation: https://cdn.shopify.com/s/files/1/0251/2392/products/zimbabwe-banknotes-50-trillion-front.jpeg?v=1375448742 https://cdn.shopify.com/s/files/1/0251/2392/products/zimbabw... This is the exact same thing the USA is doing with unemployment benefits, and people make as much or more than in their jobs, and they don't have to pay rent at all, so all that money goes into all kinds of stuff. The USA is effectively printing up money. Will the USA end up like Zimbabwe? Almost guaranteed not to, as we have a lot stronger economy, but no one knows the future with certainty.
- kbob 5y agoThe semiconductor fabs didn't shut down last year, did they? If we've run out of so many chips, there must be a glut of some other chips that nobody wants? Are distributors holding zillions of unsellable obscure level shifters or CPLDs or something?
- pontifier 5y agoProbably the fabs that made these chips haven't made them for years. They probably cranked out billions of them 20 years ago then converted to producing something more valuable. We've probably run out of new old stock and nobody wants to go back to making these cheap chips.
- ChrisArchitect 5y agoclickbait explainer spam from thehustle how about something like this arstechnica/Financial Times post about the inflation impact from June https://news.ycombinator.com/item?id=27422182 https://news.ycombinator.com/item?id=27422182
- JuliusPullo 5y agoI would pay a premium for NOT having all the extra electronics --a computer that controls the computer of the computer, a large TV on the dash, a car that only the dealership can fix because they are the only ones who have the equipment to read the codes, everything by wire...I prefer a car that lets me stranded in the road for something I can usually figure out and repair myself, instead of a car that just stops running and has to be towed directly to the dealership for service.
- andrewmcwatters 5y agoI agree, but also hold an extreme view on the other end. If you’re going to put tech in a car, I want that crap to be Tesla-levels of tech. Not this half-assed 6” “infotainment” crap. Find a way to slap a straight up automotive grade 23” 144hz touchscreen in there. Or at least do what Tesla did and say screw it and use one that isn’t. Really push the envelope or don’t bother at all. I expect more from BMW, Daimler and Volkswagen but they produce absolute garbage. Audi owner here.