The first column of Sports Car Market by Keith Martin was thought provoking, the high end car collector are blowing sales statistics from the 90′s.
“You can never pay too much, you can only buy too soon!” What does that remind you of? Real estate. It reminds me just of that. People who jumped into the fray without fully realizing the ephemeral nature of any markets, or those who just took a chance.
Keith notices that in 20 years of observing the market, high end cars have never appreciate that quickly. Why is that? Aren’t we talking about recession brought by a falling real estate market that finally revealed the ugly hidden nature of lax lending standards? In the collector car world, markets come up and down, we all know that. However, higher end car just don’t seem to stop climbing.
So who’s buying? Apparently there is a new crop of investors. Asians with new money are pouring into the market buying at any cost. Will we see a redo of the late 80s – early 90s when the car market boiled and fizzled leaving a shaky economy behind? Hard to say yet. With the dollar being so weak, our market makes for an interesting bargain for Europeans and Asians. We are shipping more collectors cars out than in.
Up until early last year, every cars were moving up, even lowly entry level ones. It looks like the $5000 to $90,000 has stabilized and anything above is still picking up.
In one sense I see the similarities with the real estate market. After the hectic pace of 2005 which slowed down in 2006 and crawled in 2007, the higher end homes didn’t get hit as hard as lower end of middle market. The answer seems obvious, when you buy into $2,000,000 homes and already own above $1,500,000, equity abounds and getting a $500,000 loan is easy. Getting the same loan when you start out is risky for both lender and buyer. The car market is probably seeing a lot of nouveaux riches who don’t blink at the sight of a $10,000,000 car. It also seems that category of investors are a little more savvy, they are in it for the longer run.
And that, ultimately is the key to smart investing. Sure Poker might be a craze and attracts the adrenaline junkies but long term strategies is what pays ultimately. I expect these people who buy rare race Ferraris for $10,000,000 know they might come down a bit but in 10, 15, or 20 years will be a great investment. I only wish people would see homes the same way. Homes have an extra advantage over cars, you can actually live in them.
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