Why are used cars so expensive right now?
thehustle.co
thehustle.co
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 :)
Huh? Wood prices have corrected some, but they’re still >2x what the were pre-pandemic.
I wouldn't store the brown rice meant for GABA longer than six months or replace more than half my vegetable intake with it (i.e. one probably shouldn't replace dark leafy greens and/or the broccoli family,) but that is still something like a compensation for 45% inflation in fresh vegetables.
The asparagus season might be a few weeks shorter, you may pay 3-5% more but ultimately no one is going to starve.
The best thing to do is prepare for slightly higher outgoings.
If you are in Sub-Saharan Africa continue doing what you're already doing, get on a dinghy and point it at Europe.
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!).
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.
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.
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.
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.
Of note drive an Optima so not a super Kia hater just what they have done with the release of this model
(we’re keeping it of course)
I'll sell it once my Cybertruck preorder is ready! haha`
I noticed it because I like their trucks, especially the 22r/re ones.
It did have less than 30,000 miles though.
The price of that truck is no more than 5 grand, even with the low miles.
(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.)
Small, lightweight pickups are no longer being manufactured. And Toyota’s are ridiculously reliable. My old truck still ran like new with nothing but regular oil changes and a one-time replacement of the spark plugs.
Around the mid 2000's, something seems to have changed with Toyota-- maybe more emphasis on design & listening to what fat Americans want (wider seats, heavier duty suspensions, more ground clearance to go to Starbucks) vs building high quality functional vehicles. They're still better than others, but it seems that they've had more issues with quality, at least in the models that I've researched.
If you're in California or southern US they probably last a lot longer. The 22RE engine is very good.
The S&P500 has generated approximately a 266% return in the past 20 years (ex any dividends). The average home sale price has climbed by just under 100% in that time.
Real-estate will nail you annually on property taxes (although not in every state) and you have to maintain it (let's assume a best case and you own it without a mortgage).
You can sit on a stock you bought for a decade, not sell it, let it appreciate by a lot, and incur zero taxes on the holding the entire time.
The average US house incurs ~$2,500 in property taxes each year (a painful expense across a decade). And you have to out that cash every year. If for any reason you can't come up with the taxes, they seize your property; that doesn't happen with a stock holding. The government doesn't care if the real-estate is going up in value or not, they want their property taxes. At least if your equities don't go up, you owe nothing when you sell. Equity trades also have zero commission now in most cases - you can sell a million dollars worth of stock at zero commission; you can't do anything remotely like that in most cases with real-estate.
Most real-estate struggles just to keep up with inflation. Average home sale prices haven't managed to outrun the cost inflation in average new car sales in the past 20 years. You're probably as well off sitting on gold ETFs like GLD or IAU as you are typical real-estate as an inflation hedge (IAU only has a 0.25% management fee, far lower than the typical real-estate property tax).
In most states your real-estate will also suffer a persistently climbing tax basis if you're lucky enough to see value gains; and local governments love to increase property taxes whenever they can.
And last but not least, in most cases you can click a button and liquidate your stock holdings in a matter of seconds or minutes with near zero hassle.
Obviously that equation changes if you're an experienced, competent property manager and you can get a healthy yield from your real-estate; however that's a serious job, with an enormous time/effort/labor/legal/mental burden, not a low-effort side task (much less a near zero effort task like sitting on the S&P index).
1) There are places where the appreciation on the primary residence is not-taxed or taxed at a low rate. I.e. In HCOL areas, people who just bought a house and did nothing much in life (say, drove an Uber just to make ends meet), are worth 1-2 million dollars after tax.
2) When you buy real-estate through a mortgage, you are getting massive leverage on your investment. Would I borrow 5x my principal to buy shares? No! Why is that? If prices go down on shares and I bought on margin, I can get a margin call. If I have a 25-30 year mortgage, I can ride the ups and downs.
These are all my personal experiences .. I followed blogs like greaterfool and totally missed out on some key aspects in life. Owning a home was a much more pleasant life experience than renting for me personally. It is certainly more risky (with respect to restricting job mobility), and more expensive in some respects (utilities). I just want to provide a counterpoint to your argument. Not a financial advisor so pls don't take stock in anything I say :)
Now, buying a home for your own personal use and as an investment is a better proposition. But you can only have one of those and you can't get such low interest rates and low money down for investment properties as you can for a personal home mortgage.
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 doing put backs for deficient notes)
The core issue is that debt is always risky.
Just look at default rates of underwater properties to see how the masses react.
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/2012/7/14/426795-134... Most recently, Zimbabwe had hyperinflation and here look at the money supply: 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/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.
https://en.wikipedia.org/wiki/Stagflation
Unlike the 70's it's not a single thing that had had upsets but multiple things in countless pipelines, increasing the cost and difficulty of getting workers, materials, and transportation.
I'm guessing logistics are all screwy in dozens of areas and prices are rising as fast as they can while capitalistic opportunists are trying to "get theirs" in the melee.
Are distributors holding zillions of unsellable obscure level shifters or CPLDs or something?
We've probably run out of new old stock and nobody wants to go back to making these cheap chips.
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).
how about something like this arstechnica/Financial Times post about the inflation impact from June
The issue is cheap credit and the lack of an LVT that would avoid all the economical and ethical issues with land ownership.
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).
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.
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
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.
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.
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.