Sky-high car prices squeeze buyers

Sky-high car prices squeeze buyers

Katherine Mondo has been on the hunt for cars for over three months. From her home in Berkeley, she dodged an online car scam, mourned a vehicle in Texas that slipped through her fingers, and is now considering an almost-too-old Subaru in Sacramento.

As used car prices skyrocket by more than 40% from a year ago and buyers outbid vehicles, Mondo’s dizzying journey is the norm in one of the toughest times. infuriating to buy a used car in recent history. Think of the exasperation of the Bay Area housing market. The past year ranks among the highest awards increases ever, according to the consumer price index, with new cars also up 12%.

“I realized now is the worst time to buy a car,” said Mondo, who is pinning her hopes on a Toyota RAV4 with less than 150,000 miles. “Instead of scrolling Instagram, I scroll Craigslist.”

Across the country, used car buyers are being forced to lower their expectations and increase their budgets by hundreds or thousands of dollars.

BERKELEY, CA – FEBRUARY 17: Katherine Mondo crosses Telegraph Avenue in Berkeley, Calif. on Thursday, February 17, 2022. Mondo has been trying to buy a car for over three months without success due to skyrocketing prices and dwindling l ‘offer. (Ray Chavez/Bay Area News Group)

The jaw-dropping prices are symptoms of a market still dealing with the aftermath of the pandemic, as automakers struggle to ramp up vehicle production and meet booming demand amid shortages. of chips.

“Everything in the market right now is driven by this shortage of new vehicle inventory,” said Mark Schirmer, spokesman for Cox Automotive, owner of Kelly Blue Book. “This shortage has pushed more buyers into the second-hand market.”

The average list price for used vehicles is now $27,633 with an average of more than 71,000 miles on the car, according to analysis by Cox Automotive.

Meanwhile, people who have purchased cars in recent years are seeing their cars retain value and, in some cases, appreciate in value.

The best advice for potential used car buyers from multiple car dealerships? Wait, if you can. The market is still too hot, they say, and if you don’t urgently need a car, delaying the purchase for a few months or even longer is a smart move.

“I don’t think I want to go on The Mercury News telling people not to buy cars, but it’s the truth,” said Jerry Griggs, who runs the stroller bank in Berkeley, a car showroom that mediates between private sellers and customers.

Currently, Griggs has a 2018 Subaru Forester that’s advertised at $29,600 – $3,000 more than the original sticker price four years ago. “If you’re buying, don’t go for that two-year-old car because the newer it is, the more you’re going to lose,” he added.

In the Bay Area, car prices fell, following national trends. Prices rose in the summer and fell in the fall to land 26% higher year-over-year. Then the sticker shock escalated further, with costs jumping 36% in December, according to the most recent consumer price index data for the region.

OAKLAND, CALIFORNIA – FEBRUARY 17: A Toyota Oakland sales manager, Nathan Myler, is pictured in front of a row of used vehicles for sale in Oakland, Calif., Thursday, February 17, 2022. According to data released last week by U.S. Bureau of Labor Statistics used car prices are 40% higher in January than they were at the same time last year and have been on a tear for the past three months . (Jose Carlos Fajardo/Bay Area News Group)

This led to jaw-dropping list prices. A new Toyota RAV4 Prime has been listing for nearly $97,000 — a markup of $40,000 — earning social media scorn. A Bay Area Man sold his car to Carvana, an online car dealership, for $90 more than he paid seven years ago for the brand new vehicle.

Schirmer said there could be a slight increase in used car prices over the next few months, in line with the traditional spring price hike that coincides with tax refunds, but Cox economists expect the market to stop soaring and stabilize this year around current levels. . But there are no signs of a return to near pre-pandemic levels.

“Do you know of anything that gets cheaper over time? Schirmer joked.