I'm not sure I really believe these numbers. Those are listing prices, right? People can list for whatever they want, but a sale is what matters. I've seen R8's in my age list at 95k and I listed mine at 85k. If prices were really at 95k, then I would have expected to sell mine within a few days at the most.
While it's true that you can list for whatever you'd like, keep in mind that the majority of listings are dealerships and not individual sellers. Dealers will attempt to maximize their profit, but they're also carrying the cost of their inventory (I expect on credit), so they need to move it, as well. If they're still raising prices, it's a good bet it's due to the fact that they're getting higher prices.
The other metric that's important here is the inventory, itself. I posted a while back that inventory looks very low - if I recall, it was down to about a third or less (99 gen-1 units on Cars.com) compared with a few years back - that was down to about 90 a few days ago... the lowest I've seen. Lower supply is definitely going to contribute to higher prices.
Everything luxury is up 20-30%
But it will come down especially the gen2 models and all other items in the next 12-18 months
R8s aside for the moment, I think the broad price increases we're seeing across so many markets are down to two major things:
- In some markets, prices of certain goods are spiking due to artificially low supply. For example, the fact that lumber is up over 300% - this is largely due to supply bottlenecks. I'd expect these situations to resolve themselves eventually. But I'm not sure we're seeing prices come back to prior levels, either... and that's for the second reason...
- Inflation. We've pumped trillions of dollars into the market here in the US, and other countries' central banks have done similar. It's classic inflation. Once those prices go up, they don't come back down. For the past decade we've had inflation below 2%, so most people have long forgotten what REAL inflation looks like.
And on that last note, I give you the following inflation chart (below) for the 1970's. Compare the latest decade of below-2% inflation to this table. In the best year (1972) we were running around 3% - 3.5% inflation. In the worst years (1974, 1979) we were seeing double digit rates of 10% - 13%. Scary indeed.
Now, consider the fact that prior to COVID, the "Great Recession" of 2008 saw the federal government spend more than ever (at that time) on stimulus. The "Troubled Asset Relief Program" (TARP) was authorized initially for around $700B - an unheard-of figure. Less than $500B was actually deployed throughout the crisis, and when the federal government wrapped it up several years later, they actually MADE some money on returned funds. Comparatively, we've now authorized over $5 TRILLION dollars for COVID relief, none of which, to my knowledge, is a loan that's expected to come back to the government. And above-and-beyond that, our government is now contemplating another nearly $2 trillion to spend on infrastructure programs.
In short, the printing press is working overtime. There's no precedent for the amount of money being spent and pumped into the economy. We may be visiting the 1970's again shortly.
This is why investors are clinging to every word coming from Jerome Powell at the federal reserve. Everyone knows a tidal wave of inflation is coming, and they're waiting to see when the fed is going to start raising interest rates to stem it. So far, they've got a good poker face. But even Yellen slipped up the other day and suggested Powell would need to raise rates sooner than anticipated. You can't spend $5 trillion and have fed funds at 0%. Crazy times are coming.
