High car prices squeeze buyers

Katherine Mondo has been car hunting for over three months. From her home in Berkeley, she’s overlooked an online car scam, mourned a vehicle in Texas that slipped through her fingers, and is now reviewing an old, almost-too-old Subaru in Sacramento.

With used car prices skyrocketing to over 40% higher than last year and buyers outbidding each other for vehicles, Mondo’s dizzying ride is the norm in one of the craziest times to buy a car. used car in recent history. Think the Bay Area housing market has gone crazy. Last year ranked among the biggest price increases ever, according to the Consumer Price Index, with new cars also up 12%.

“I’ve realized this is the worst time to buy a car ever,” said Mondo, who is hoping for a Toyota RAV4 with less than 150,000 miles. “Instead of scrolling through Instagram, I scroll through 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., Thursday, February 17, 2022. Mondo has been trying to buy a car for more than three months without success due to rising prices and shrinking supply . (Ray Chavez/Bay Area News Group)

Those falling prices are symptomatic of a market still grappling with the after-effects of the pandemic, as manufacturers struggle to ramp up vehicle production and meet rising demand amid chip shortages.

“Everything in the market right now is being driven by this lack of new vehicle inventory,” said Mark Schirmer, a spokesman for Cox Automotive, which owns Kelly Blue Book. “This shortage has pushed more buyers into the used market.”

The average used vehicle list price is now $27,633 with an average of over 71,000 miles on the car, according to a Cox Automotive analysis.

Meanwhile, people who bought cars in recent years are seeing their cars hold value and — in some cases — appreciate in value.

The best advice for potential used car buyers from the mouth of some car dealers? Wait, if you can. The market is still very hot, they say, and unless you have an urgent need for 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 Buggy Bank in Berkeley, a car showroom that serves as a broker between privateers. vendors and customers.

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

In the Bay Area, car prices have been on the decline, following national trends. Prices rose in the summer and fell during the fall on land 26% higher year-over-year. The sticker shock then worsened, as costs jumped 36% higher in December, according to the latest Consumer Price Index data for the region.

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

This has led to list prices falling. A new Toyota RAV4 Prime was listed for nearly $97,000 — a $40,000 premium — earning social media scorn. A Bay Area man sold his car to Carvana, an online car dealer, for $90 more than he paid seven years ago for the vehicle brand new.

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

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

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