8 ms·

So new cars are going to be come more expensive due to supply limitations and in turn used cars will continue to become more expensive as they can rise to a cer

So new cars are going to be come more expensive due to supply limitations and in turn used cars will continue to become more expensive as they can rise to a certain % of the new car price. At the same time housing prices continue to sky rocket. Seems like not a great time for someone just stepping into adulthood and financial responsibility.

ipqk 5y ago
The difference being that lots of people want to keep those inflated housing prices high (nimbyism), whereas nearly everyone wants car prices to go back to normal.
- yalogin 5y ago
  Car prices won't go back to normal again though. They will come up clever financing schemes to make people pay but the prices will never be reduced.
  - wyager 5y ago
    This is mostly just a reflection of the fact that the value of the dollar has declined precipitously over the last 18 months. Dollar prices are sticky, so it can take a bit of a shock for inflation to “kick in”, but we’ve had plenty of shocks to go around.
    - jondwillis 5y ago
      I'll add a bit of a pedantic point: the dollar hasn't really lost any value _against other currencies_ (DXY) over the past year. In fact, it is a little higher. It has lost value against lots of commodities and "real" goods.
    - smeyer 5y ago
      I don't think it's fair to attribute "most" of this to inflation. Car prices have been rising much faster than many other components of CPI, so even in real rather than nominal dollars cars are getting more expensive.
      - wyager 5y ago
        The stuff people actually care about has been rising faster than CPI. Cars, housing, meat, metals, lumber, etc. are all going through the roof. Inflation is a vector, and any reduction to a scalar involves taking the dot product of that vector with a weight vector. Under my personal weight vector, and I suspect most people’s weight vector, inflation is a lot higher than CPI.
        wonderwonder 5y ago
        Food prices are insane right now. I used to leave the grocery store with a spend of ~$90 now I average ~$120. Its anecdotal but it adds up.
  - JackPoach 5y ago
    There's huge inflation in many things related to making cars (chips, steel, shipping costs as many cars are still being shipped across the ocean, labor costs, etc.). We are likely to be in the very beginning of significant inflation cycle, with probably double digit inflation which will eventually drop to 4-4.5%. I wouldn't expect to prices to drop any time soon, nor have 2% inflation. My bet is that fewer and fewer new cars will be sold in the next few years (3-5) with prices rising 4-10% each year.
    - ptero 5y ago
      It's not just cars, the prices are rising across the board (not evenly), so we have pretty high inflation if you add in the items official estimates excluded.
  - tms2x2 5y ago
    When do we get 30 year loans to buy a car?
- beached_whale 5y ago
  I would say it is more self perpetuating. With housing prices growing as they are, people are saving less for retirement and putting that money into their house with a plan to cash out, move to the country, and retirement.
- dalbasal 5y ago
  Nimbyism exists, as do more concrete constraints in urban locations but... The way house prices work, often, is more or less banks determining prices via mortgage eligibility. Banks agree that a house is worth X. They lend X. That becomes the price. Buyers tend to be available. People are so quick to see that credit expansion fuels price inflation in other areas, even the economy at large, but somehow diminish or ignore this with housing. Obviously, supply constraints avoidable or otherwise, affect supply. In any given year though, the supply of housing does not change a ton. Where they do, you don't tend to have wild inflation... though you do often see bigger houses. It's impossible to decouple housing from monetary policy. Housing is one of the few ways that buying power gets from A to B, where B is not a financial institution or direct spending.
- sandworm101 5y ago
  >> whereas nearly everyone wants car prices to go back to normal. There is a significant voice that would like to price cars out of private ownership. Traffic, pollution, safety, urban sprawl ... pick your evil and someone wants to eliminate private cars for that reason. I regularly read about how the next wave of cars will all be somehow "shared", that we will whistle and they will appear at our doorsteps ready to carry us off to our 9-to-5 jobs in shiny glass office towers. I just don't see that happening anytime soon. Total conversion to electric cars in 10 years, maybe. Conversion to total ride-sharing and/or mass transit, doubtful in 30.
  - nsizx 5y ago
    That's like 0.1% of people
    - razius 5y ago
      The 0.1% that matter.
- ThePadawan 5y ago
  I live in a country with a working public transport system. I'd prefer it if ICE cars were as expensive as possible in order for the planet not to burst into flames.
- wonderwonder 5y ago
  I don't think it's necessarily NIMBY or at least my understanding of it that makes people want to keep housing prices elevated. If I buy a house at an inflated price, I want the house value to continue to rise as a large degree of my financial security is tied up in that house. My ability to refinance, take cash out and eventually even sell that house are tied to it continuing to escalate in value. In the US this is particularly true as so much of out net worth is essentially our home value. As inflation increases and peoples ability to save is even further reduced this will become even more of an issue.
  - BurningFrog 5y ago
    NIMBY-ism doesn't make people want housing prices to rise. The wish to inflate housing prices causes NIMBY-ism!
teorema 5y ago
Not really a great time for anyone really, at least from the vantage point you're referring to.
- dahfizz 5y ago
  If you're an established adult who owns a house and two cars, your assets have skyrocketted. You're having a great time.
  - codesnik 5y ago
    how? can you capitalize on that upside somehow? sell them, live in a tent until prices are down?
    - mlac 5y ago
      Yeah they are not liquid assets… my concern is if one of my cars dies…
      - dahfizz 5y ago
        Trade it in. You'll still pay MSRP on the new car, but you will get way more for your trade in than it is worth.
    - dcolkitt 5y ago
      You can pull out home equity in a cash out refinance. Borrow at 2.5%, then roll that into index funds averaging 8%, and turbo-charge your retirement goals.
      - i_haz_rabies 5y ago
        "put it all on black!"
        bluGill 5y ago
        yeah. That might work out, but my investments are diversified more. I have real estate in the form of my house. I have stocks and bonds in my 401k. I have government in my social security. They are completely separate, so if any one fails I'm still okay. (well if the government fails I'm probably in trouble no matter what, but social security is limited at best)
gonzo41 5y ago
Spend 5K on a really nice commuter electric bicycle. You'll be doing a solid for the Environment and you'll have an EV that makes you fitter.
- carlmr 5y ago
  My problem with dropping 5K on a bike is that they get stolen
  - deleted 5y ago
    [deleted]
  - dont__panic 5y ago
    In the US city that I live in, cars get stolen an awful lot too. And not just puffers (cars left with the keys in the ignition to warm up on a cold day) -- I've heard of plenty of locked recent-year cars stolen from private locked garages with no keys at all. I believe car theft is up at least 500% from pre-covid. And that's to say nothing of the opportunistic catalytic converter thefts if you park your car on the street overnight.
    - carlmr 5y ago
      Where I live I'd guess the rate is 100 bikes stolen for every car. With a bike you don't expect it to be there after locking it in the street for more than 15 minutes. I don't know anybody personally whose car was stolen.
    - paunchy 5y ago
      Most of these thefts utilize "relay attacks" that simulate the key being in close proximity to the car, using directional antennas to interrogate the key that's sitting in the house and then relay it back to the car. The solution is to disable the proximity feature, but that's inconvenient.
  - rcMgD2BwE72F 5y ago
    In France, all bikes must now be marked to prevent theft https://www.bike-eu.com/laws-regulations/nieuws/2021/01/france-makes-bike-marking-mandatory-to-protect-against-theft-10139561 https://www.bike-eu.com/laws-regulations/nieuws/2021/01/fran... Is there similar plans in the US or at least some states?
ren_engineer 5y ago
but stop and think for a second about all those short term profits Wall Street made by outsourcing all of our crucial manufacturing! Those congressional bribes don't pay themselves either! /s the worst part is our government is rewarding them for bad behavior, the article mentions the billion dollar chip subsidy program. So these companies made money outsourcing and will now make more by bringing it back. Instead they should put a massive tariff on any chip not made in the US. Companies that invested here would be rewarded for loyalty
- dcolkitt 5y ago
  What short term profits? The car industry has among the lowest margins in the entire economy. Moreover the chips were never outsourced. Toyota never made its own chips, nor is it feasible to. You seem to have some sort of idealized view where a company internally manufactures everything it needs starting from raw materials. That’s not how it works, and that’s never how it worked.
  - ren_engineer 5y ago
    "silicon valley" is the name because of all the chips that used to be made here, US used to lead the world in chip manufacturing Toyota is just a symptom, every other car manufacturer and other industries are facing shortages as well. The US economy is now strangled because our supply chain got outsourced for "efficiency" that didn't account for potential disruptions
    - lotsofpulp 5y ago
      > Instead they should put a massive tariff on any chip not made in the US. Companies that invested here would be rewarded for loyalty Voters would have rewarded politicians who supported these tariffs by voting them out of office for making all their toys more expensive. Everyone likes cheaper stuff and more stuff in the short term.
      - ren_engineer 5y ago
xyzelement 5y ago
> just stepping into adulthood and financial responsibility. I am older than that (40 and my wife is 35) and while we have been independent professionals for a while, we now have a 1 year old so this summer for the first time in our lives we bought a house and a car. It was definitely harder to find a house (mainly less availability driving competitive bidding) and it took a little longer to find a car and we ended up having to pay MSRP. However the thing I can say is - the incremental cost/hassle of having to do these things during the pandemic supply crunch is almost irrelevant compared to having to do this stuff at all. We paid say 3% more for the car and ok maybe 10/20% for the house than we would have otherwise, obviously that's painful but if I was "just stepping into adulthood and financial responsibility" I'd look to avoid this stuff altogether. EG: do you need to own a house? If you're a single person, "throwing away" money on a relatively inexpensive rental might be much wiser than "investing" in a house in a seller's market. Likewise, if you're young and single then you should relatively easily (depending on where you live of course) arrange your life to not need a car. It was very easy for us in NYC, of course may be different for you. The point is that in my mind, "adulthood and financial responsibility" don't have to translate "got my own house and car" but simply "making wise financial decisions given my situation" so if there's room to be flexible, be flexible.
- devoutsalsa 5y ago
  Rents are going through the roof, too.
  - nosianu 5y ago
    And when you try getting that hole in the roof fixed, you might run into even more problems: "Roofing Industry Faces Unprecedented Supply Disruption" (April 27, 2021) https://www.roofingcontractor.com/articles/95590-roofing-industry-faces-unprecedented-supply-disruption https://www.roofingcontractor.com/articles/95590-roofing-ind...
    - wonderwonder 5y ago
      Wonder how much of that is driven by people actually being home to answer the door when roofers knocked during Covid. Completely anecdotal but I got a new roof during the covid lock down and so did 3 of my neighbors and its mainly due to being home to answer the door and the roofer being able to get insurance to cover the cost.
blunte 5y ago
It's been "not a good time" since 1975. Prior to that, at least in first world countries, you could start with less intelligence and have a much better chance at class improvement and even financially secure retirement than now. On the other hand, if you're in politics, finance, or executive business management, it's been a really, really great last 40+ years.
- marcusverus 5y ago
  Incomes are way up for the top ~30% of earners, not just the ultra-wealthy.
oldsklgdfth 5y ago
> stepping into adulthood and financial responsibility The timing of my life events is one of the things I am most grateful of. I graduated in 2014 and within a couple years I bought a house. Strong job market for an employee and low interest rate. I know people that were getting PhDs, because they started undergrad in the aftermath of the housing bubble and couldn't find jobs when finished. I also know people that decided to buy a house before the bubble and are still stuck underwater, preventing them to pursue opportunities not in their area. I also know people that went into medicine as tuition became ridiculous and have no way of servicing their student loans. I guess what I'm getting at is count your blessings. Others may not be as fortunate as you.

ipqk 5y ago

The difference being that lots of people want to keep those inflated housing prices high (nimbyism), whereas nearly everyone wants car prices to go back to normal.

yalogin 5y ago
Car prices won't go back to normal again though. They will come up clever financing schemes to make people pay but the prices will never be reduced.
- wyager 5y ago
  This is mostly just a reflection of the fact that the value of the dollar has declined precipitously over the last 18 months. Dollar prices are sticky, so it can take a bit of a shock for inflation to “kick in”, but we’ve had plenty of shocks to go around.
  - jondwillis 5y ago
    I'll add a bit of a pedantic point: the dollar hasn't really lost any value _against other currencies_ (DXY) over the past year. In fact, it is a little higher. It has lost value against lots of commodities and "real" goods.
  - smeyer 5y ago
    I don't think it's fair to attribute "most" of this to inflation. Car prices have been rising much faster than many other components of CPI, so even in real rather than nominal dollars cars are getting more expensive.
    - wyager 5y ago
      The stuff people actually care about has been rising faster than CPI. Cars, housing, meat, metals, lumber, etc. are all going through the roof. Inflation is a vector, and any reduction to a scalar involves taking the dot product of that vector with a weight vector. Under my personal weight vector, and I suspect most people’s weight vector, inflation is a lot higher than CPI.
      - wonderwonder 5y ago
        Food prices are insane right now. I used to leave the grocery store with a spend of ~$90 now I average ~$120. Its anecdotal but it adds up.
- JackPoach 5y ago
  There's huge inflation in many things related to making cars (chips, steel, shipping costs as many cars are still being shipped across the ocean, labor costs, etc.). We are likely to be in the very beginning of significant inflation cycle, with probably double digit inflation which will eventually drop to 4-4.5%. I wouldn't expect to prices to drop any time soon, nor have 2% inflation. My bet is that fewer and fewer new cars will be sold in the next few years (3-5) with prices rising 4-10% each year.
  - ptero 5y ago
    It's not just cars, the prices are rising across the board (not evenly), so we have pretty high inflation if you add in the items official estimates excluded.
- tms2x2 5y ago
  When do we get 30 year loans to buy a car?
beached_whale 5y ago
I would say it is more self perpetuating. With housing prices growing as they are, people are saving less for retirement and putting that money into their house with a plan to cash out, move to the country, and retirement.
dalbasal 5y ago
Nimbyism exists, as do more concrete constraints in urban locations but... The way house prices work, often, is more or less banks determining prices via mortgage eligibility. Banks agree that a house is worth X. They lend X. That becomes the price. Buyers tend to be available. People are so quick to see that credit expansion fuels price inflation in other areas, even the economy at large, but somehow diminish or ignore this with housing. Obviously, supply constraints avoidable or otherwise, affect supply. In any given year though, the supply of housing does not change a ton. Where they do, you don't tend to have wild inflation... though you do often see bigger houses. It's impossible to decouple housing from monetary policy. Housing is one of the few ways that buying power gets from A to B, where B is not a financial institution or direct spending.
sandworm101 5y ago
>> whereas nearly everyone wants car prices to go back to normal. There is a significant voice that would like to price cars out of private ownership. Traffic, pollution, safety, urban sprawl ... pick your evil and someone wants to eliminate private cars for that reason. I regularly read about how the next wave of cars will all be somehow "shared", that we will whistle and they will appear at our doorsteps ready to carry us off to our 9-to-5 jobs in shiny glass office towers. I just don't see that happening anytime soon. Total conversion to electric cars in 10 years, maybe. Conversion to total ride-sharing and/or mass transit, doubtful in 30.
- nsizx 5y ago
  That's like 0.1% of people
  - razius 5y ago
    The 0.1% that matter.
ThePadawan 5y ago
I live in a country with a working public transport system. I'd prefer it if ICE cars were as expensive as possible in order for the planet not to burst into flames.
wonderwonder 5y ago
I don't think it's necessarily NIMBY or at least my understanding of it that makes people want to keep housing prices elevated. If I buy a house at an inflated price, I want the house value to continue to rise as a large degree of my financial security is tied up in that house. My ability to refinance, take cash out and eventually even sell that house are tied to it continuing to escalate in value. In the US this is particularly true as so much of out net worth is essentially our home value. As inflation increases and peoples ability to save is even further reduced this will become even more of an issue.
- BurningFrog 5y ago
  NIMBY-ism doesn't make people want housing prices to rise. The wish to inflate housing prices causes NIMBY-ism!

teorema 5y ago

Not really a great time for anyone really, at least from the vantage point you're referring to.

dahfizz 5y ago
If you're an established adult who owns a house and two cars, your assets have skyrocketted. You're having a great time.
- codesnik 5y ago
  how? can you capitalize on that upside somehow? sell them, live in a tent until prices are down?
  - mlac 5y ago
    Yeah they are not liquid assets… my concern is if one of my cars dies…
    - dahfizz 5y ago
      Trade it in. You'll still pay MSRP on the new car, but you will get way more for your trade in than it is worth.
  - dcolkitt 5y ago
    You can pull out home equity in a cash out refinance. Borrow at 2.5%, then roll that into index funds averaging 8%, and turbo-charge your retirement goals.
    - i_haz_rabies 5y ago
      "put it all on black!"
      - bluGill 5y ago
        yeah. That might work out, but my investments are diversified more. I have real estate in the form of my house. I have stocks and bonds in my 401k. I have government in my social security. They are completely separate, so if any one fails I'm still okay. (well if the government fails I'm probably in trouble no matter what, but social security is limited at best)

gonzo41 5y ago

Spend 5K on a really nice commuter electric bicycle. You'll be doing a solid for the Environment and you'll have an EV that makes you fitter.

carlmr 5y ago
My problem with dropping 5K on a bike is that they get stolen
- deleted 5y ago
  [deleted]
- dont__panic 5y ago
  In the US city that I live in, cars get stolen an awful lot too. And not just puffers (cars left with the keys in the ignition to warm up on a cold day) -- I've heard of plenty of locked recent-year cars stolen from private locked garages with no keys at all. I believe car theft is up at least 500% from pre-covid. And that's to say nothing of the opportunistic catalytic converter thefts if you park your car on the street overnight.
  - carlmr 5y ago
    Where I live I'd guess the rate is 100 bikes stolen for every car. With a bike you don't expect it to be there after locking it in the street for more than 15 minutes. I don't know anybody personally whose car was stolen.
  - paunchy 5y ago
    Most of these thefts utilize "relay attacks" that simulate the key being in close proximity to the car, using directional antennas to interrogate the key that's sitting in the house and then relay it back to the car. The solution is to disable the proximity feature, but that's inconvenient.
- rcMgD2BwE72F 5y ago
  In France, all bikes must now be marked to prevent theft https://www.bike-eu.com/laws-regulations/nieuws/2021/01/france-makes-bike-marking-mandatory-to-protect-against-theft-10139561 https://www.bike-eu.com/laws-regulations/nieuws/2021/01/fran... Is there similar plans in the US or at least some states?

ren_engineer 5y ago

but stop and think for a second about all those short term profits Wall Street made by outsourcing all of our crucial manufacturing! Those congressional bribes don't pay themselves either! /s the worst part is our government is rewarding them for bad behavior, the article mentions the billion dollar chip subsidy program. So these companies made money outsourcing and will now make more by bringing it back. Instead they should put a massive tariff on any chip not made in the US. Companies that invested here would be rewarded for loyalty

dcolkitt 5y ago
What short term profits? The car industry has among the lowest margins in the entire economy. Moreover the chips were never outsourced. Toyota never made its own chips, nor is it feasible to. You seem to have some sort of idealized view where a company internally manufactures everything it needs starting from raw materials. That’s not how it works, and that’s never how it worked.
- ren_engineer 5y ago
  "silicon valley" is the name because of all the chips that used to be made here, US used to lead the world in chip manufacturing Toyota is just a symptom, every other car manufacturer and other industries are facing shortages as well. The US economy is now strangled because our supply chain got outsourced for "efficiency" that didn't account for potential disruptions
  - lotsofpulp 5y ago
    > Instead they should put a massive tariff on any chip not made in the US. Companies that invested here would be rewarded for loyalty Voters would have rewarded politicians who supported these tariffs by voting them out of office for making all their toys more expensive. Everyone likes cheaper stuff and more stuff in the short term.
    - ren_engineer 5y ago

xyzelement 5y ago

> just stepping into adulthood and financial responsibility. I am older than that (40 and my wife is 35) and while we have been independent professionals for a while, we now have a 1 year old so this summer for the first time in our lives we bought a house and a car. It was definitely harder to find a house (mainly less availability driving competitive bidding) and it took a little longer to find a car and we ended up having to pay MSRP. However the thing I can say is - the incremental cost/hassle of having to do these things during the pandemic supply crunch is almost irrelevant compared to having to do this stuff at all. We paid say 3% more for the car and ok maybe 10/20% for the house than we would have otherwise, obviously that's painful but if I was "just stepping into adulthood and financial responsibility" I'd look to avoid this stuff altogether. EG: do you need to own a house? If you're a single person, "throwing away" money on a relatively inexpensive rental might be much wiser than "investing" in a house in a seller's market. Likewise, if you're young and single then you should relatively easily (depending on where you live of course) arrange your life to not need a car. It was very easy for us in NYC, of course may be different for you. The point is that in my mind, "adulthood and financial responsibility" don't have to translate "got my own house and car" but simply "making wise financial decisions given my situation" so if there's room to be flexible, be flexible.

devoutsalsa 5y ago
Rents are going through the roof, too.
- nosianu 5y ago
  And when you try getting that hole in the roof fixed, you might run into even more problems: "Roofing Industry Faces Unprecedented Supply Disruption" (April 27, 2021) https://www.roofingcontractor.com/articles/95590-roofing-industry-faces-unprecedented-supply-disruption https://www.roofingcontractor.com/articles/95590-roofing-ind...
  - wonderwonder 5y ago
    Wonder how much of that is driven by people actually being home to answer the door when roofers knocked during Covid. Completely anecdotal but I got a new roof during the covid lock down and so did 3 of my neighbors and its mainly due to being home to answer the door and the roofer being able to get insurance to cover the cost.

blunte 5y ago

It's been "not a good time" since 1975. Prior to that, at least in first world countries, you could start with less intelligence and have a much better chance at class improvement and even financially secure retirement than now. On the other hand, if you're in politics, finance, or executive business management, it's been a really, really great last 40+ years.

marcusverus 5y ago
Incomes are way up for the top ~30% of earners, not just the ultra-wealthy.

oldsklgdfth 5y ago

> stepping into adulthood and financial responsibility The timing of my life events is one of the things I am most grateful of. I graduated in 2014 and within a couple years I bought a house. Strong job market for an employee and low interest rate. I know people that were getting PhDs, because they started undergrad in the aftermath of the housing bubble and couldn't find jobs when finished. I also know people that decided to buy a house before the bubble and are still stuck underwater, preventing them to pursue opportunities not in their area. I also know people that went into medicine as tuition became ridiculous and have no way of servicing their student loans. I guess what I'm getting at is count your blessings. Others may not be as fortunate as you.