[whitejeep1989]

And here's a chart of median house prices in the US over the past 18 years. Mortgage and finance rates are a couple percentage points higher too, so people entering the market to buy a new home and car today are paying like 3x more per month on the combined payment. Definitely not sustainable, and the cracks are already appearing.

I'm not an economist but I think home builders and local municipalities are to blame here.
My early 1950s house was built specifically for post-war workers/families. It's a very small house, by modern standards, but it is affordable to finance, heat, and the taxes are laughably low.
Those types of houses and neighborhoods haven't been built, in my area, in decades! In the 80s, luxury townhouses and McMansions started to dominate the new housing market. Townships could charge higher tax bills to these bigger and more expensive properties, and the builders could obviously charge more to sell the things. Now, it seems like every new housing development near me is starting at $500K for a mega townhouse and higher for detatched luxury homes. I'm pretty sure my township is losing money on my neighborhood of little post-war bungalows, and will probably bulldoze the lot of them, to build luxury homes.

 

[whitejeep1989]

THIS. Even new Mitsubishi Mirage is selling for $20K these days, and that's absolutely worst car ever in history of mankind.

BTW, average used car price in March was $21,343. So even $30K doesn't buy much these days.

I'd check those Mirage prices again....
I'm seeing $16K starting prices.
All New 2023 Mitsubishi Mirage Compact Hatchback | Mitsubishi Motors (mitsubishicars.com)

Also, I think all the griping about used car prices being too high is coming from people who have crazy high standards or aren't very imaginative in what they are willing to consider purchasing.
I can easily find a mid-sized used family sedan for $15K or less. The higher end of the average price scale must be for people trying to buy a 2 year old 5-Series BMW.
Used 2015 Ford Fusion Energi Titanium For Sale in West Chester, PA | VIN# 3FA6P0SU0FR156611 (piazzaacuraofwestchester.com)

2019 Chevrolet Malibu LS for sale in Trevose, PA - CARFAX

 

[Samson]

Sounds about right. Around here, it seems like every other car is a temp-tag-wearing white dual motor Model 3 or Model Y with the brights on 24/7. Those aren't cheap.

For my $48k, I'd get an IS350 F-Sport with nav and the LSD/handling package. Odd that's an "average" cost, but fancy EVs (and whatever else) will bring that up a bit.

 

[Egz]

2019 Chevrolet Malibu LS for sale in Trevose, PA - CARFAX

I remember 20 years ago trying to trade in a 2 year old focus with 30k miles, and being offered 25% MSRP. This Malibu had a MSRP of $23,000 when new, and is asking for more than half of that after 105k miles. The used market is still kinda nuts.

 

[CTK]

I'm not an economist but I think home builders and local municipalities are to blame here.
My early 1950s house was built specifically for post-war workers/families. It's a very small house, by modern standards, but it is affordable to finance, heat, and the taxes are laughably low.
Those types of houses and neighborhoods haven't been built, in my area, in decades! In the 80s, luxury townhouses and McMansions started to dominate the new housing market. Townships could charge higher tax bills to these bigger and more expensive properties, and the builders could obviously charge more to sell the things. Now, it seems like every new housing development near me is starting at $500K for a mega townhouse and higher for detatched luxury homes. I'm pretty sure my township is losing money on my neighborhood of little post-war bungalows, and will probably bulldoze the lot of them, to build luxury homes.

Here is something to really put the stupidity of American home development into perspective:

And IMO, the big pivot to open horizontal layouts makes all that extra square footage less usable. My kitchen and 2 living rooms are one big continuous space. It's beautiful, but for example, my wife hosted book club earlier this week and my kids could hear them loud and clear in their rooms while trying to sleep. I much prefer the more vertical layouts of townhouses or the little row houses in the dense NYC suburb I grew up in.

But most people don't need anywhere near the square footage we have anyway. Sure there are fixed costs for each house (land, utility connections, permits etc). But it seems more logical to me to sell 2 expandable 1500 SF houses for $250-300K than 1 3500 SF McMansion for $500-550K. Yea those 2 houses will require twice the municipal services but they will also probably generate more than twice the tax revenue.

Though the other issue is private equity gobbling up all the affordable housing to rent back........... so many issues with the American real estate system but they all point back to the overarching theme of capital wielding way too much power. RE developers build McMansions because that's the most profitable for them... nothing else matters, even the kind of houses people actually want. PE gobble up whole tracts of houses to rent and cut out normal buyers because that's a great cash flow stream. Etc. End stage capitalism are these kinds of monopolies that benefit an increasingly small group of people at everyone else's expense. It's a scam.

 

[Zillon]

Income is a controllable

Oh **** off.

I lost my job in 2020 and worked manual labor jobs to make ends meet for 2 years before landing a new job at the beginning of 2022. Since then it's been nothing but a struggle to return to what I made prior. It's been a very slow and frustrating grind.

'Income is a controllable.'

Don't even ****ing start with that bull****; just because you've succeeded in the last 3 years doesn't mean everyone has. The cost of goods and housing has jumped significantly in the last three years and vastly outpaced any kind of wage growth for anyone that isn't in upper management in any industry.

 

[Karl_1340]

My income is substantially higher than that, but I wouldn't buy a car for even the average price.
My Charger was the most expensive car I have ever bought at $46K, and even then I was a bit uncomfortable with it.
I like the $30-35K range, and I guess that means I will only be buying used from now on. I have no problem with that.

 

[Senior Member]

In the past couple of years, a good amount of people used "free" corona money to upgrade to a car otherwise they couldn't afford, and paid for most of the add-ons on the top of ADM. A $18,000 KIA suddenly became a $35,000 car.

 

[DrivinAW8]

We're heading to 15-years car loans.

to be honest, if a product and its warranty coverage for massive repairs lasts near that long (and most cars built since the 00s do), whats the problem?

a car is a durable good. tract houses are spec built to last about 25-30 years. the financiers will own us all in the end

 

[DrivinAW8]

We own and rent out "luxury" properties (either home is worth $1m+ or property is extremely upper tier in a low col city) on the side, so I get pretty good insight into people's incomes and overall financial position when they apply. My observations:

• A lot of people carry tens of thousands of debt on credit cards like it's no big deal.
• A lot of people think they're "out smarting" the system via high debt loads because they stock market was, for a brief period of time, giving great returns.
• People who have $100-200k hhi genuinely think they're "rich" and it's usually people in this income bracket that seem to be buyers of luxury goods (German cars, Rolex watches, fancy handbags). I can spot them out easily when we do the open house for applications.
• There is a very healthy market for people who can pay $3000-$5000/month in rent but are unable to ever save up a down payment to buy a home.

I don't totally blame people for their decisions, as a society we push the concept of debt, and my favorite bs term "good debt", on people. Our banker was trying hard to get us to pay our taxes out of our line of credit so we would have more money to invest. LOL, if I had done that, the line of credit that was ~2.75% is now 6% and the stock market has taken a huge dive; I'd have lost a bunch of money and would have a very expensive debt obligation. However, I could totally see people listen to a financial advisor and convince themselves that it'd have been a smart idea at the time to follow that strategy.

fire that banker homie


also, where are these luxury properties? asking for a friend w a rolex

 

[Chris_V]

to be honest, if a product and its warranty coverage for massive repairs lasts near that long (and most cars built since the 00s do), whats the problem?

a car is a durable good. tract houses are spec built to last about 25-30 years. the financiers will own us all in the end

Yeah, I mentioned this before: in the '70s, when cars were only lasting about 5 years before they were basically worthless, a 3 year note was kind of risky. By the '90s, with cars lasting at least 10 years, a 5 year note was normal. Now, with the average age about 12 years, and 20 year old cars being normal, a 7 year note isn't risky at all, as a car that is 7-10 years old will still have a lot of life and value left. And even though interest rates are rising, they are still at really low levels compared to the '70s-90s.

 

[Senior Member]

to be honest, if a product and its warranty coverage for massive repairs lasts near that long (and most cars built since the 00s do), whats the problem?

a car is a durable good. tract houses are spec built to last about 25-30 years. the financiers will own us all in the end

Great, so people who can only afford a $30k car now will be able to buy a $90k car.

 

[CTK]

Yeah, I mentioned this before: in the '70s, when cars were only lasting about 5 years before they were basically worthless, a 3 year note was kind of risky. By the '90s, with cars lasting at least 10 years, a 5 year note was normal. Now, with the average age about 12 years, and 20 year old cars being normal, a 7 year note isn't risky at all, as a car that is 7-10 years old will still have a lot of life and value left. And even though interest rates are rising, they are still at really low levels compared to the '70s-90s.

People are holding on to cars for longer too. A 7-8 year loan is a lot of interest, but ultimately if people are holding onto cars for damn near 9 years, what's the big deal?

There's also all the concern trolling around people being upside down or whatever. It's just schadenfreude/moral superiority complexes. People DGAF about other people's finances; they just use them as a stepping stone to levy judgement. It's the same thing in every single thread about auto loans.

 

[nasty_VW_habit]

$49k Avg is NUTS I agree but it's obviously skewed by all the bigger dollar vehicles in todays offerings.
These people in the upper half of the range ($49k+++) are spending ALLOT of money on their rides.
I live in a town where I routinely see multiple G Wagens in same parking lot, multiple Cayennes at an intersection etc.
Yesterday I was driving my wife's '22 Bronco and when I parked at the grocery store there were two others with sight....

There's a used Cayenne nearby and its got $55k in OPTIONS.... WTF

There's tons or cars above that $49k and tons below... $32k still gets you some amazing cars... I drove a GR86 recently and if I was to buy something new for myself that's a front runner. Almost half the price of the Mustang 5.0 that I had also toyed with test driving...

We pulled off a great purchase with the 2022 Bronco - very happy with how the deal played out and the whip.
1. Did the July 2020 New Ford Bronco $99 Reservation. Figured WTF as it was refundable....
2. When time came to spec ours in early Dec '21 we went with top 4 door Wildtrack model and loaded it with options as this will be wife's ride for 10ish years, just like her last 2 SUVs. It will be paid for in 5 years, driven 5 more and still have a great value in ten years.
3. Covid car pricing helped out big on this deal. Bronco arrives right before Easter last year.
We traded in a paid off high mile 2012 Tourag for $10k as well as a Wrangler Rubicon 4 door I had bought privately in early Covid for $45k (and drove 1.5 years) got dealer to give us $47k for that....
I owed $30k on Rubi....
4. Tax - Only had to pay luxury tax on $3,000 difference between the $57k I trades and sale price.
5. So long story short got a sweet new Bronco, no Dealer markup, borrowed roughly 1/2 cost of vehicle at 2.x% interest rate.

I drive a 2002 24V but with wife now full time working remote I dabble in Bronco driving when I'm too lazy to shuffle cars around, or weather is crap.....

Go drive a GR86 if you have some free time..... it's still on my radar just not paying markup.

 

[CTK]

I would wager the median new car price is substantially lower but why would the media provide info when they can just fester outrage. "I was not in the market for a new car but now I am angry about how much other people are paying for them!" screeched the commentariat.

 

[Samson]

I would wager the median new car price is substantially lower but why would the media provide info when they can just fester outrage. "I was not in the market for a new car but now I am angry about how much other people are paying for them!" screeched the commentariat.

Not sure how accurate these are, but an in quotes "median" search (otherwise you just get the average...) gives a $45-$46k result on various search engines. Seems high.

Also found this:

"The segment median for cars ($25,745) is $8,450 less than small SUVs, $17,325 less than small pickups and $33,925 less than EVs."

https://www.cars.com/articles/2023-cars-com-affordability-report-best-value-cars-461158/

Oh well. Some people are willing to pay (what others may see as) a lot for things that they want. Meh.

 

[nasty_VW_habit]

Why isn’t CPO listed as an option?

Slats that would be another good thread... best CPO deal stories.

In 2014 traded I a CPO '12 Golf R on CPO '12 Touareg Lux and had it till last Spring.
Just guided my 26yo daughter last fall in buying a CPO '22 Tiguan with nice specs. She got it with only 6.000 miles and the extra 2yr/24 bumper to bumper. worked out well

 

[masa8888]

I know it's mostly flat in real terms, but I was sorta surprised to find out that the median household income is now at $80k in nominal terms. I had the $50-60k figure in mind for so many years.

 

[damirbasicsa]

I think the issue is that most people don't buy a car by the total price, but by monthly payments.

They will go to a dealer and get asked, how much is your current car payment and how much can you go up to?

That is why we are seeing longer term and having unbelievably low interest rates over the last few years have made this even easier.

Its the same thing with phone, you use to pay a monthly fee for a phone for 12 months, then it went to 24 and now verizon is doing 30 just to keep the payment artificially low

 

[AZGolf]

They will go to a dealer and get asked, how much is your current car payment and how much can you go up to?

If the dealer is really doing their job, they don't even ask you, they just say "Let's run your credit and see what we can get you in to?" Since the credit report shows their income, credit rating, and a few other things the dealer knows what loan they can probably get you qualified for. At that point their job is to sell you a car as close to the maximum you qualified for as they can get you to agree to by instilling a feeling of FOMO if you don't take advantage of as much as you've already been pre-qualified for. Not all of them are like that, but the maximum profit places don't care what you want, they start with what you're qualified for.