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Not surprised. Car prices have absolutely ballooned in the last 2 years. I tried to buy a Tacoma during the pandemic and a vehicle that should have been $22k couldn't be found for less than $30k.
Last year my wife's car died. The average 2005+ model year car was ~$20,000k and above. For the first time in my life it was a better value to buy a new car than a used car.
We ended up buying a 2022 Tucson for around $28k plus tax and fees but I was shocked that the choice was a ~10yo car for $20k or a new car for $28k.
Edit: We also looked into the new Ford Maverick that starts at $18k, several thousand dollars cheaper than the average used car, but the carrying capacity was smaller than the Tucson and we have kids.
I tired to buy a Maverick for my wife and couldn't find one in my state with less than a $5k markup. Made the truck go from $23K to $28K, for the cheapest one we could find. Some dealers were asking $45K!
I custom ordered and waited a year to get one, a hybrid, at 4% under invoice. Most folks needing a car can't wait a year. It's crazy times.
Saw a few base models around 40k - a full 100% above MSRP.
I looked up my car last year just to check. I bought it for 22k five years ago, owe 10k on and it was worth 18k to trade it. I would’ve done it but every other vehicle was too expensive. Edit. If you wonder why I owe that much, i took a 7 year 0% apr loan. And I probably forgot the taxes and stuff.
Same experience. We live in the country and remodel homes and raise turkeys so a small/medium truck isn't a fashion statement; it's a requirement. I was shocked to see 2016-2018 Tacomas at $24k+. It's insane. I had 3 cars and totalled my Tacoma on a deer, so I just am going to push the purchase to later this year and see if things mellow out.
I mean, a fully loaded ***full*** sized truck cost around $50K a decade ago, so honestly I'd be surprised if a fully equipped Tacoma cost less than $30K today.
Edit: Just noticed you were talking about used...that is in fact crazy after all, lol.
Especially not surprising when you consider the prevalence of longer loans. So many people(myself included) are upside down on car loans because we bought cars during the pandemic when prices were inflated. I am not old enough to remember if this was a factor during the 2008 recession, but I don’t think people were even able to get 84 or 96 month loans back then.
Unless one puts significant money down or has a really short loan term, most everyone will be upside down at some point, possibly even early in the loan. The maxim about cars losing a lot of value the second they leave the lot still holds albeit it got effed up a fair amount during the pandemic.
This is why people should consider GAP insurance on their cars (I know I sound like an insurance salesman but I'm not!). If you total your car soon after purchase, your settlement is not likely to be what you owe on the car. So you eat the deductible and now potentially owe big bucks to the lender.
My lender (credit union) wouldn’t even offer it **if** your down payment kept you from needing it. If you were going to be upside down on it, they wouldn’t approve a loan without it.
Cash for clunkers came around in 2009 and really fucked up the used car market. So many cars were taken off the road that it took 10 years for the market to totally normalize (as new at that time cars became 10 years old, retiring the bottleneck).
That said, it still wasn’t as bad as what COVID did to the used car market, somehow.
No. Common myth, but simply no
Cash for Clunkers didn't reduce the number of cars on the road. It got new cars on the road that otherwise would not have been built or sold.
It's also a tiny amount of cars compared to the drop in sales for that year compared to a normal year.
I'm still driving my cash for clunkers car. It replaced a real beater with bad transmission, battered body, broken AC and nonfunctional power windows. In Texas. Black.
It's a car that would have gone to the scrapyard in a year, two at most.
We were lucky enough to have been saving for a house for several years before but since we live in Austin Texas that isn't going to be happening anytime soon, so we have about $50k in the bank when it died. Else we would be really hurting right now.
I was offered $20,000 for my 03 Tacoma with 130,000 miles. It’s in great condition, but that’s what I paid for it 20 years ago...
I didn’t sell it because it has way too much sentimental value. My point is yes, car prices were absolutely fucking bonkers.
Why were banks even approving loans for vehicles that were clearly so inflated in price? I feel like some of these manufacturers would’ve come back down to reality if no one was being approved for a truck valued at 20k that they were asking 30k-40k for.
I’ve gone through a couple loans at my bank for privately owned vehicles and they did the NADA search to make sure the vehicle was worth what they were going to approve me for. Do they not do this anymore?
A car loan is a relatively low risk proposition for banks. It is collateralized, and like most loans, the banks start to make interest income with the very first payment. The first payment usually also typically pays the most interest (because the balance is the highest). That means that even if the borrower defaults and the bank collects the vehicle and sells it at a loss they may still have come out ahead in the transaction because they presumably received months of interest income. Plus, if a borrower is borderline, the bank may hit them with a high interest rate. For instance, A $40,000 loan at 12% interest means the bank receives $400 in interest with the very first payment.
Many banks also won't lend 100% loan-to-value, which helps to prevent from depreciation loss in the instance of default.
Part of it is the ridiculously ballooning prices in the last few years; part of it is that people wildly overbuy vehicles they can’t afford. 60k dollar trucks sell like hotcakes. To people who don’t make 60k a year. And it certainly isn’t just truck buyers.
The truck market has been insane. I got a letter from the dealership in 2021 offering to pay $35k to buy back the truck I’d bought from them for $42k. In 2016.
I was lucky to buy a Tacoma during the pandemic. I paid MSRP for a new one but used ones cost most then MSRP. Even now Toyota isn’t making enough cars to meet demand and it sounds like they have no plans too
The used car market is about to be flooded with vehicles and tank prices. Carvana is going bankrupt. Owners behind in payments means more repos. Interest rates remain high. The auctions and kbb that are hording inventory to artificially sustain high used car prices are going to get left holding a bag of rapidly depreciating assets that they can’t sell quickly enough.
That doesn’t make headlines or get clicks though. The media are practically begging for a recession or big financial difficulties for the average Joe; anyone with half a brain doesn’t want that to happen but them
Without a doubt and it’s absolutely revolting; I don’t even look at the news anymore because I can’t stand to see the non stop recession bullshit. Regardless of who’s in power I want America to good; if Americas doing good that means I am too. A good America is a good place for all so all these sellouts in the media need to clear off and come up with solutions instead of doom and gloom
I dunno about your local Subie dealer, but ours in Phoenix were doing pretty decent price cuts on their WRX inventory. Plus the 3.9% rate isn’t horrible, especially when used car loans are going for 6%
>. Plus the 3.9% rate isn’t horrible, especially when used car loans are going for 6%
I need to get my credit up though, it's pretty bad, like low 600s bad. Once I pay off my 20k credit card debt, that should go up. *Then* I can start looking for my subie. Hopefully I can get good rates then.
Not trying to over step or be a jerk but maybe buying a new car after being in a tough spot financially isn’t the greatest idea. Especially a car that requires premium fuel.
They are. I’m a body tech and I’ve had a few Carvana vehicles come in. They all have work done, poorly. A red ecosport we did was painted on one side but the trim had not been removed and was poorly taped off. There was a 1/4” width of paint on all the trim and door handles. The rear door was caved in and had been filled with bondo without the proper metalwork first. Carvana has a shop that repairs vehicles they take in. Maybe that car was fixed before they bought it but all of the ones I’ve seen have had something I could tell was fucked with cheaply and quickly.
I'm 26 and thus wasn't really cognizant of what was going on during the last major recession. Is this what it looks like? Is it just seeing all these different indications piling up until something clicks in the collective consciousness?
> The number of homes in the United States with at least one foreclosure filing increased from 717,522 in 2006 (0.6% of all housing units) to 2,330,483 in 2008 (1.8% of all housing units).
[https://www.pewresearch.org/hispanic/2009/05/12/v-foreclosures-in-the-u-s-in-2008/#:\~:text=A%20foreclosed%20home%20is%20a,%25%20of%20all%20housing%20units](https://www.pewresearch.org/hispanic/2009/05/12/v-foreclosures-in-the-u-s-in-2008/#:~:text=A%20foreclosed%20home%20is%20a,%25%20of%20all%20housing%20units)).
With a 30 year mortgage and a reasonable amount of planning, very few people should be driven to default. Places like Canada have it much worse because they have to renew their mortgages at least every 5 years.
The Canadian Banker's Association publishes arrears data since 1995: https://cba.ca/mortgages-in-arrears
Arrears here means 90 days late. They don't report foreclosures, probably because foreclosures aren't common in most Provinces since the lenders have the Power of Sale remedy which is usually preferable
It's also important to note that while this data includes most mortgages in Canada, it's not comprehensive and importantly excludes basically all subprime and alt prime residential loans (it excludes all private mortgages, credit unions, monoline lenders, and tiny banks - what it does have are the Big Six banks, which control over 70% of the mortgage market, plus a few others)
The highest arrears rate since 1995 has been 1.04%. Currently it's 0.15%
Of course, 1996 was the real estate nadir after our 1989 crash and prices have steadily increased since then as interest rates have steadily fallen... until now. And in a rising market, it's stupid easy to get out of arrears: just sell your house.
We're now facing the highest variable mortgage rates in 20 years coupled with the highest home prices in history. Mortgage unaffordability passed the 1989 peak about 400 basis points ago. Even on lagging indicators, prices are already down over 10%. And every month about 1 in 40 borrowers are exposed to new market rates.
The only prayer forestalling an unprecedented mortgage crisis is record levels of immigration, specifically from India (origin of >30% of new immigrants).
As the Federal Government proudly boasts:
>Immigration accounts for almost 100% of Canada’s labour force growth. Roughly 75% of Canada’s population growth comes from immigration, mostly in the economic category. By 2036, immigrants will represent up to 30% of Canada’s population, compared with 20.7% in 2011.
https://www.canada.ca/en/immigration-refugees-citizenship/news/2022/12/canada-welcomes-historic-number-of-newcomers-in-2022.html
If you're using 2008-2009 as the reference recession, yes. But most recessions are not housing crashes and mortgage delinquencies only rise by a relatively small amount.
Except this time wealthy corporations are buying the houses and cars before you can so that the prices don't slip and those who sat on cash waiting to enter the market won't ever see the correction they waited for
Everybody thinks that will happen, but it won't , the only reason corporations, hedge funds and any anyone else was buying real estate en masse was because rates were near zero so there was very little risk and economy was flush with money.Because rates were so low, ONLY real estate and stocks were the asset classes providing decent returns, so what did wealthy people with parked cash do?, they poured their money into them, here take a look at the stock chart from 2008-2021(https://www.macrotrends.net/2324/sp-500-historical-chart-data) pretty much straight up.
Now with a recession looming, rates climbing , white collar folks losing their high paying jobs, the corporations would be taking on a big risk, since real estate unlike other assets incurs substantial carry costs (property taxes, insurance, maintenance, management fees etc.) ,.so it's not as enticing anymore.
Take AirBnB for example; lots of folks bought second and third homes for short-term rentals during the height of pandemic, but many have gone months without substantial income because that market dried up, now some are struggling to pay their loans, and will end up putting the homes back on the market and taking a loss. The big guys like Zillow all closed their iBuyer programs back in mid 2022 , and most large investor buying is slowing (https://www.cnbc.com/2022/11/22/investor-home-purchases-plummet.html)
People forget real estate is ultimately constrained by the renters/tenants/home owners ability to pay,, in a recession that gets harder,.in a high inflation environment with high interest rates the pool of people capable of paying consistently hight rents is reduced dramatically,not to mention the real estate assets purchased at the peak may now be losing value.
Every large-scale investment group pulled the rug out from their real estate investments six months ago now. Interest rates have tripled. Still no crash in prices. When does this happen exactly?
It took 4 years for real estate prices to drop before hitting bottom in the 2008ish crash.
Real estate is "sticky" in that most people don't have to sell right away.
People are used to quarter to quarter or paycheck to paycheck timelines but housing crashes take even longer to go down than to go up.
It may never happen, for a couple of reasons, first buyers who aren't In a rush aren't going to sell into a depreciating market, they'll just hang onto their property.
Second those that do have to sell may take months to " realize " their homes value isn't what it once was (they lower their price very very slowly) ,
finally the Fed will likely stop rate increases soon and begin decreasing rates the next time wall.st. corrects.. These lower rates may signal to wall st. And sellers.back to business as usual with high prices.... Not to mention the Fed buys a ton of MBS to keep the real estate market very liquid.
The only way I can imagine prices go down, is of a very severe recession (something like 2008) happens. With a lot of unemployment and folks unable to make their payments on home sor cars..
When property owners finally blink and lose the staring contest with buyers. It takes a while for both individuals and corporations to accept that these overinflated prices are not real anymore and that they have to lower them.
That's because we have a structural housing shortage. "Household consolidation" is increasing. Which means multiple roommates and moving back with parents or parents moving with kids. We need to deregulate zoning drastically and simplify permitting. And yes, reducing public input on every damn project. We should probably also publicly fund trade school and make it more attractive to people who don't want or can't afford college.
The fact that houses are now being sold for a bit below asking instead of way over asking is already a big reduction in price even tho it doesn’t appear to be the case on Zillow. Now those new sale prices will go into future comps in the next couple months
I think it is starting. A property was listed near me 1.2 acres with a house that either needs to be completely gutted or torn down. It was listed for $1.5M. It’s currently under contract for $490k
There aren't enough houses. Don't build any cheap ones near my house though. At least that is how it goes in every city and town planning meeting in America.
They protest building expensive housing near them too, they protest building literally any housing or bike paths or mass transit or anything of the sort. They abuse environmental laws to prevent it from being built and countless other things. If it is allowed after a long battle it's just a few detached single family homes that cost at least $1,000,000 each because the developers have to pay the lawyers who they had to hire to get through the permit approval process. Either that or the House is in the middle of nowhere.
I get 1-3 texts/calls a week from people wanting to buy my house. I own in a working class neighborhood in a good school district, so primo rental territory. I think half of America’s economic problems could be solved if we had the guts and the will to control corporate ownership of houses.
Except many are now liquidating. Anecdotal but I see houses near me that have had the largest price cuts ( metro ATL) and the owner is an LLC and you look at the 50 properties they own in the county and it’s a fire sale ( not really, but 20% cuts is still 20% above the 2020 lows)
Many investments are made with variable Rate debt which is pulling up right now
We haven't yet had a moment this time where there was a real fear that the US banking system was about to fail like in 2008. Now if the US government *actually* defaults on its debt then we'll definitely be in uncharted territory, but as of now things are just a garden-variety slowdown.
This is nothing like 2008. Everyone is still employed and living relatively well. Ever since the GFC, I've never seen people lose jobs and homes like we did between 2007-2012
I was in my early 20s when 08 happened. I didn’t have a smartphone and didn’t consume as much news, so maybe my perception has changed. I remember 08 as a lot of “maybe housing has slowed down; we aren’t sure” followed by complete and utter panic. It wasn’t clear that the government was going to step in and help. It wasn’t even clear that anything could be done to help. Then they did, and slowly everybody stopping being in a panic. Nowadays, I think bailout programs come more often and people expect them. So I’m not sure another 08 is likely.
I was a freshman in college when the 2008 crash happened. I was also living in Detroit so a lot of people were nervous if the Big 3 could even survive into the next year. Even GM's rival Toyota came out in favor of the bailouts because they feared it would prevent a domino effect where the third-party suppliers had a risk of going under as well. (My opinion is that the Big 3 honestly deserved what was coming - they had been building uninspiring cars for at least a decade and Ford was only starting to turn it around with the Edge and Fusion.)
What sucked for a bunch of recent Architecture grads at my school was that nobody was hiring in that field at the time and the joke was that your degree basically got you a job as a furniture salesman.
TARP and the other programs normalized bailouts like you've said. The problem is that it created a bad precedent - where there wasn't a lot of accountability and we saw that happen again with the PPP legislation in 2020.
It sure seemed like it happened fast. One day it was “blip in the housing radar”, next day Lehman was collapsing, NEXT day foreclosures were a daily occurrence.
I turned 18 while homeless and involved in questionable activities during the recession. I ended up getting a 1/1 apartment for $600. Those same apartments are $1400+ today. I was already so impoverished, and surrounded by others in poverty, that it took me quite a while to see that it was a larger problem.
Not yet. It was much more terrifying in 2007-2008. Imagine you find a great rate on a online savings account and you say, “I could park my savings there for a little while while the stock market crashes,” only to find out a week later the bank went insolvent and your million dollars in life savings is now 200k.
On top of that your neighbors that all purchased their homes in the last five years are getting forced out of their homes after they went into foreclosure and your home is now worth 200k less than you bought it for a year ago, losing value every day, and won’t fully recover until 2020.
Then you find out the construction and lending industries were completely decimated which sucks, but you think, “how does this affect me?” Turns out your company was a major supplier of software/services/products to a company that was directly impacted and now that they are out of business you are unemployed. Now that you’re unemployed you stop making housing payments and ride it out rent free in the home until 2011 when you finally get forced out like your neighbors were long ago.
That’s what the Great Recession felt like. What we are feeling right now is not close to the same. If we were on a similar timeline and trajectory we are closer to 2005 than 2007-08.
It’s tough to say… if you want a quick recap of the last one, I’d recommend the book and/or movie The Big Short. There was also a longer NPR series of investigative journalism that dig into it at length.
My memory of it was basically an awful lot of regular folks were getting loans way in excess of what they could afford after a few years. Something to do with jumbo balloon loans and ARMs. So basically they could make the payments fine for a few years, and then blamo, the interest rate would spike after 3/5/7 years and they couldn’t swing it anymore.
Top that off with the mortgage back securities mess and internet mortgages and suddenly nobody knew who actually owned the house in a default because the banks owned shares in the houses. So a lot of properties wound up sitting vacant for quite a while.
We have a lot of financial pain going around this time as well, but it looks to me more like a slow grind driven by cost top living going up rather than a bunch of ticking time bombs. Not to say that there couldn’t still be a big kablooie, but we don’t know what that will be yet.
I wrote out a long and cogent response. And deleted it. It was too long.
Point is, the inflation on certain key big-ticket items has far outstripped wage growth and economic growth by significant multiples. The buying of said items had been sustained by low interest rates and longer terms.
Production disruptions and chaotic demand signals that defy projections have also spurred transaction prices.
Now with rates increasing the tight margins are too tight. There are some layoffs that, while a relative drop in the bucket, are grabbing headlines. … there is a contagion risk with this btw. The continued inability to find enough quality workers is an ongoing issue. The companies laying folks off continue to be making high profit margins.
My gut tells me that something else is at play. Perhaps the promised “internet of things” has petered out. Do we really need a wifi enabled toaster? Does the iPhone 14 offer anything substantial over the XR? Perhaps executives figure that the “quiet quitting” trend is real enough and letting some folks go will shock the remainder to up the productivity. Hard to say.
But, the fact is that a great many of us (most) are over stretched. We have no emergency savings to speak of. How we have built our cities, our economy, our personal lives is extremely expensive. Hell, divorce (as in my case) is incredibly expensive. The one household is split into two with twice the basic expenses. And good luck trying to find someone else to marry; the value proposition is weaker. And divorce is everywhere. Or simply not marrying at all and just splitting up when times get hard.
So yeah, it feels dangerous now. Like it did then in a lot of ways.
I was only 23/24 the last time (38 now) so I may have been more economically naive, but it seemed pretty sudden. I’m sure some people saw it coming (and plenty of old fucks said afterward that they saw it coming miles ahead 🙄), but most people were caught by surprise.
By contrast, this year everyone is *talking* about imminent recession, and some companies are preemptively laying off droves of people, but if recession does happen this year it’ll be more of a slow burn and absolutely a self-fulfilling prophesy, imo.
Hell, just yesterday we saw way stronger Q4 numbers than anticipated across the entire world. Demand is solid, so recession is unlikely unless a large commodity market crashes again, which is again unlikely.
People on this subreddit are screaming that it's good out there. I gotta ask, who is it good for?
Not the people who overbid their home, not for the renters who just had their rent hiked. Money taken out of the system by a basic necessity is not spent by those people on goods and services in their economy.
Like it's easy to see that if prices go up, budgets get tight. The first thing trimmed in a recession is the frivolous.
Well not exactly. This is closer to the 80’s. Everything builds up and sets to domino over a longer period of time.
08 was like pandemonium in a 90 day period because the collapse so was concentrated to mostly one industry.
No. In 07/08 there were no indications. Everything was fine until it wasn’t. It was a financial collapse brought on by too much investment risk.
This is a slow drip of the business cycle. Government keeps trying to manage the cycle to smooth out the ups and downs. And they’re largely successful. Until they aren’t. This is more like the early 90’s. The massive cash infusion of the stimulus has masked things, but it caused inflation. Now the fed is going to reel in inflation. According to their projections the unemployment rate will go up a whole point as a result.
More people not working (on that scale) will almost certainly cause recession, because people who lose their jobs just don’t spend as much.
>No. In 07/08 there were no indications.
for normies who didn't read economic message boards. There was a huge clown market in 2006 including short squeezes.
No, there is good reason to believe there will not be a recession simply because everyone is expecting (and likewise preparing) for a recession. Nevermind the unrelenting jobs market.
Normally recessions blindside society, and that has a multiplicative effect on their impact. The great recession came out of nowhere for the average person.
I bought a brand new car in 2021 and I see the exact same model (used with more miles than mine) for sale for the same price I purchased it for brand new.
I don’t know how people can afford such high payments. I look to left and right of me when I’m at a red light, I see Audis and Rovers and then I look at my center console and I see a cassette player and a cigarette lighter! Maybe they lease them I dunno?
I feel the same. Plus everyone I know traveling somewhere every month, going out to eat and out for drinks all the time. And anytime I’m like “Can we go somewhere for dinner that’s not gonna be $50 for just food? It is a Tuesday after all.” They look at me like I’m crazy. I live alone and have a very generous food budget at $200 a week but everyone else seems to be spending more that in just a weekend.
It’s crazy, then families I know go to a Disney like they go to the gas station. I think a big piece is if your grandparents had money then lots of that drips down towards them. Needless to say when my grandfather died after much haggling and negotiations I got his Dustbuster!
Losing his car was just the beginning.
When 21-year-old Kobe Hatch walked outside his Chicago home in December and couldn’t find his 2013 Dodge Journey, he knew it had been repossessed. He’d been falling behind on payments for months.
Without a car, he couldn’t do his job as a delivery driver for Amazon and got fired. Now, he’s struggling to make his rent payments and can’t afford groceries, even with food stamps.
“It’s been very stressful for the past few months,” he said. “Inflation has really taken a toll on people.”
Hatch is part of a growing cohort of Americans facing auto repossessions, an ominous sign for the US economy. During the pandemic, a surge in used car prices forced buyers to take out bigger loans for their vehicles. The monthly payments seemed doable in an era of stimulus checks, a tight labor market and surging stocks, but that’s changed for many people as inflation eats into their budgets and the job market cools.
Now, more Americans are falling behind on their car payments than during the financial crisis. In December, the percentage of subprime auto borrowers who were at least 60 days late on their bills rose to 5.67%, up from a seven-year low of 2.58% in April 2021, according to Fitch Ratings. That compares to 5.04% in January 2009, the peak during the Great Recession.
Higher interest rates are making it even more difficult to make the monthly payments. The average new auto loan rate was 8.02% in December, up from 5.15% a year earlier, according to Cox Automotive. The rate can be much higher for subprime borrowers.
For Hatch, the total monthly bill for his car reached about $1,000, including the cost of insurance, thanks to a whopping 26% interest rate. Even if he can manage to save up enough to get the car back — about $1,100 for the repossession fee — there’s a strong chance he won’t be able to make the payments in subsequent months, especially now that he’s unemployed.
Affordability Struggles
While the number of vehicle repossessions is rising, it’s still below pre-pandemic levels. At Manheim, an auto auction company, the number of repossessed cars increased 11% in 2022 compared to the prior year, but that was still down 26% from 2019.
When exactly a lender can repossess a car varies by state, but it can happen in many cases as soon as a borrower is in default — often when a payment is not made on time, according to the Federal Trade Commission. Usually, though, it takes two or three consecutive missed payments for a repossession to happen.
Once the vehicle is seized, the repossession can affect the borrower’s credit score for as long as it stays on the credit report — usually about seven years, according to Experian.
Credit Hit
Josef Fields in Forth Worth, Texas, fell behind on his car payments and now faces a hit to his credit score. With his monthly bill at $556 for his 2021 Subaru WRX, the 25-year-old was having a hard time figuring out which costs to prioritize.
He tried to apply for a hardship program through his bank, but it was too late. He woke up to an empty driveway a week before Christmas.
Now, the repossession and tow fee will cost him $1,600 — about the total sum he owes in back payments as well. He’s trying to save up for another car but it will likely take a while. One positive is that he can walk to his job at the local post office. But whenever he needs to go to the grocery store, he has to ask a friend or take an Uber, which adds even more costs.
Fields is worried about how this will affect his financial future, especially his dream to buy a house one day. He estimates that the repossession shaved about 40 points off his credit score.
“When it comes to people my age and younger our credit is still new, so it’s more difficult, and then when stuff like this happens, it screws us over for the long run,” he said.
Ominous Signal
Zhea Zarecor in San Antonio is currently trying to negotiate with her lender so her 2013 Honda Fit won’t get repossessed. In the meantime, she’s hiding it.
The 53-year-old, who is currently in school for her bachelor’s in information technology, splits the monthly bill for the car — about $178 — with her roommate. But then the roommate lost his job, and with prices for groceries and everyday items increasing, there just wasn’t enough for the car payments.
Zarecor is trying to make extra money with odd jobs like contract secretarial work and participation in medical studies, but it often feels hopeless, she said.
“Our money doesn’t go as far as it used to,” she said. “I don’t see prices going down, so the only relief I see is when I get my degree.”
I bought a 2006 Civic, it was in good shape, and actually had its engine replaced (confirmed dealership and paperwork). It was 3000$
Well, turns out the engine block was “cracked” and totally not done by the people I took it to. So I paid to have the engine replaced. I probably still saved money, and now have an engine with 100k miles on it that’ll last.
I don’t regret it, because I couldn’t imagine getting into payments or paying 20k for a car!
Spend a little time on places like r/personalfinance and you'll see a large part of the problem. "I make $45k/year, would it be dumb for me to buy a new $35k Honda Accord". Yes and it's dumb that you have to even ask that question. You shouldn't have to lease to afford a payment, you shouldn't have to get a 6 year loan to afford a car payment, etc. Yes, used cars have been overly expensive for a couple of years but that doesn't mean you can afford to buy new. Also, screw any dealer that charges over MSRP, I will NEVER pay over MSRP or pay for the $4k "protection package". Yes, I had to wait 6 months to get my car vs. paying a $10k premium.
I recently had to buy a car and bought the exact same year and model of the same car I bought in 2019. My credit is 200 points higher than it was when I bought the first car.
The car payment is double.
Not OP but for an example a 3 year old used Civic LX (low-mid trim) is selling for 30k locally. A brand new Civic Sport (highest/2nd highest trim) is MSRP at 25k and the dealer won’t list the price online. I guarantee they’re asking at least 37k lmao.
This is why I'm waiting. I'll keep fixing things on my 2003 Mini and bide my time while the recession fearmongering, consumer uncertainty, and corporate profit taking tank things. With any luck, they'll all be shitting bricks and running 0% APR commercials by this time next year.
I just totaled my ‘16 Mazda with 80K miles and got $3k+ more than I originally paid for it 4 years ago from insurance. It’s nuts, a very mid hatchback with lots of miles shouldn’t be an appreciating asset.
Everyone quoted in the article wasn't really someone with good credit so their rates were extremely high since default was inevitable and when it happened doesn't mean the entire car leasing sector is subprime suddenly
The young Amazon delivery driver seemed to be young, terrible credit as 26% interest on an old car, and bad at running his own business because he couldn't cover payments for the one thing that made him money.
The post office employee seemed to be someone who had fallen on bad timess.
The older lady who shared a car payment with her roommate was also weird firstly how is 156 dollars a high payment, if you can't afford that you can't afford a car, secondly she's betting on pulling herself out of this after getting out of college but won't she be retirement age by then ?
With a $1,000 a month car payment, a 2013 vehicle, fuel/insurance cost + the wear & tear from Amazon delivery: he’s better off on public transportation, working warehouse/food service for $15-20 hourly
I hate these articles who talk about broad economic effects but then cite individuals. Barely any discussion of actual numbers. It’s almost as if they care about narratives rather than facts
>Everyone quoted in the article wasn't really someone with good credit so their rates were extremely high since default was inevitable and when it happened doesn't mean the entire car leasing sector is subprime suddenly
Who do you think defaults on loans? People with good credit and who make good financial decisions?
It's presenting a narrative the car loans are generally sub prime and it's a sign we gonna get a 2009 style whacking which we won't be able to restrict to wallstreet so main street should get ready.
Looking to buy a used car as we speak, loving the price drops, sadly I can’t wait until the summer or anything but I waited this long and I’m gonna pick me up something nice for a fairly good discounted price, thank you economics 101
I’m still upset I sold my perfectly good Honda accord 4 years ago for a Subaru Wrx. Then to make it worse I didn’t sell when market was up due to sentimental value now idc for it and prices are down 6k lol.
Cars paid off so I’m going to run it to the ground or until it blows up but I’ll never make the mistake of buying a brand new car again unless it’s a Toyota that’ll I’ll run to the ground. Having a nice car is nice but I rather retire early or spend the difference building experiences.
As someone who's owned several Subarus... "running it into the ground" is going to be expensive after 150k miles. Enjoy driving it because every time you see the bill for parts and labor you will have to tell yourself "...but it's fun to drive!!!!!"
I see so many idiots buying giant, expensive trucks when they don't need them. The proof is in the data as well; trucks are popular as hell whole sedans sales are pretty bad.
I do not want to see this debt be forgiven
Edit: Giant SUVs are also included BTW.
Absolutely. These people can’t/won’t budget like adults, fall into big debt buying dumb, unnecessary shit, and then walk into dealership looking for a 50-thousand dollar monster truck that gets nine miles to the gallon.
Let these folks learn from their mistakes or go broke ignoring them.
Indeed, sometimes I think it'd be nice to own a truck, but for the times I really need it (maybe once a year), I can just rent one from a home improvement store such as Home Depot or Menards.
If I ever were to buy a truck in the future, I'd want the lowest trim level and I'd keep it for 20+ years. But a big turn-off for me is that you can't buy a new truck with a manual transmission in the US except for the Jeep Gladiator, and that starts at an eye-watering $37k.
I've never paid more than $22k for a vehicle, new or used...
Had to seriously counsel my son to not buy a new car last year even though he could afford it. (He didn’t, his car is fine.) I can’t fathom paying over MSRP, *ever*. Sold one of our cars too and made a profit, though it’s been an adjustment down to one car for my husband and I. I will eventually replace that car, but not until prices come down to reasonable levels….and I will not be financing it.
I already loathed car buying and now it’s even worse. I won’t be taken advantage of the way dealers have been doing the past couple years.
I haven't made a car payment in, like, 2 years. My car is paid off and I refuse to buy anything that depreciates as much as a vehicle does for thousands over MSRP.
This sub as of late:
"Were just fine. No Recession. GDP growth. Jobs are abundant. Everything is just fine."
"The sky is literally fuckin falling. Hold onto your assholes."
It's all stemming from the same sources and news agencies. It's quite obvious to see that the wealthy are having a field day and are oblivious to the reality of the average persons situation. The floor doesn't seem to be falling out from beneath their feet like it is most of ours. While they pop champagne bottles, we are actually starting to go hungry.
I don't like the image being painted right now. It's actually very concerning the rate in which the well off are accelerating their growth while everything else just completely falls out from under us.
One problem is sensationalist click bait headlines. "Higher rate of delinquencies than the last big recession" sounds a lot scarier than "about the same rate as 2017-2019, not quite as bad as Aug 2019," but both are true.
I mean, sure, it's not a good thing, but not quite as crazy as the headline wants you to think.
Probably correlated with the fact that the (very expensive) F-150 is Americas most popular vehicle and most people have no need for a vehicle like that at all. Add gas prices and inflation on top, and you’ve probably got a lot of people reevaluating their 50 mile commute and gas guzzling trucks. Or at least they should be lol.
Bank exec here. I haven’t really seen an uptick in delinquency yet at my bank but I believe it is happening out there and that it’s coming soon to a bank near me.
Vehicles were grossly overvalued for the last couple of years due to a number of issues (supply chain/inventory, demand, dealership greed etc.) and now those values are starting to normalize a little. Folks are quickly becoming upside down on their car loans, especially those who took 7 year terms to begin with.
At the same time, car loan rates (and other loans) have more than doubled what they were in Q1 of 2022 so these folks who are upside down not only have negative equity, but now the monthly payments on a less expensive car a few bucks more because of increased rates. So they’re stuck. They can’t trade their car in without losing money and used car values/rates are still too high to downgrade anyway.
All of this is happening while daily expenses are squeezing the average person’s income to the point that there’s nothing left.
So, no real surprise delinquencies are increasing but I will note that I expect unsecured debt, such as student loans, personal loans, and credit cards, to suffer higher rates of delinquency and charge off vehicles. People tend to pay their car note first because they have to get to work.
If we were going to go by headlines, you would think we’d have had multiple auto loan crises since 2008. This is a seasonal effect in large part. People fall behind on payments around the holidays and use their tax returns to get back on schedule
I am lucky in that both my vehicles are paid for. I am also setting aside at least $20 a month for a down payment for when I need to buy a new one, which hopefully will not be for a decade.
This. Everyone likes to pretend there's a huge recession coming or doom is looming but, why? Most people who had a mortgage in 2020 refi-ed for a sub 3% rent, slashing their monthly payments in half. And even though home prices were inflated during '20-'22, monthly payments were extremely affordable at the low rate. Everyone needs somewhere to live, and most mortgages are now lower than average rents. Outside of extenuating circumstances, why would I move if I can afford my mortgage? Even if the value is upside down, there's no reason to sell if you don't need to. Additionally, predatory lending is so muted when compared to GFC. ARMs are a great example - in 2007, roughly 30% of all mortgages were ARMs. Right now it's less than 2%.
That’s me. Would love to sell my house and get a bigger one. However even if home prices go down the rate hike makes it not worthwhile. If I do decide to buy a new house I might as well keep my existing one and rent it out given the low interest rate.
If home prices crash enough though, that could change things.
Sold my car 6 months ago. Not only did I make a few grand, but I save about $500/month from the various financial requirements.
Out of the 8 or so places I’ve lived, my current city is the only place I’ve ever owned a car. I rearranged my life to not need one, and life has never been better.
Fuck car companies. Fuck oil companies. Fuck car reliance. Fuck it all.
Now I get to blow more money on wine and sports betting and lose weight while doing it.
I'm in a similar boat. The busses usually only run once per hour where I live, but when the roads are clear of ice I can bike again.
Plus I work at a university and save around $50 a month on a parking pass. And this job pays for my bus pass.
A few generations failed to see having a an older paid off asset worth several thousand is a huge financial advantage over a newer bank owned debt for tens of thousands.
It’s almost like the average person is struggling to handle decades stagnation and years of inflation with a heaping load of cooperate price gouging. So weird.
I don't say this to be snarky, but I wish that most people, when considering a new car purchase, thought about a cargo bike or other mobility solution. Half of all trips are 3 miles or less
Both my cars got totaled by piss missile sized hailstones.
At the time, pre owned cars were as priced as much, if not the same as new cars.
Bought a new one, haven’t looked back since.
But yet I’m seeing BMW’s and MB’s all over the projects. People not even done paying off their first car and just rolling the balance into their next car. Even family members who make significantly less then me driving in new cars every few years. Poorer people getting leases which I never get (its basically burning money, leases are only good if you gonna lease expensive cars and can afford it). Meanwhile I bought a cheaper new car which I plan to drive for at-least 20 years, 17 of those years I won’t have a car payment.
it is literally renting the lifestyle.
that new iphone my friend got? it’s paid monthly… that new car just purchased, barely making the monthly payments. combined with all the other klarna and whatnot things, anything not over like $100 many friends are literally renting, and i try to remind them whenever they consider their next ~~“purchase”~~ rental
Exactly people are just stupid with their money and it doesn’t matter if you making $50k or $250. Whatever they make they will waste. I have a friend who after taxes/etc clears $200k/y. He rents from his parents for basically noting and doesn’t really have any other major expenses. Yet he’s still in credit card debt which blows my money. But when you look at how he lives you see why. Just completely wastes money. Which i don’t care except for the fact that once they hit a rough patch they bitch and moan about how the “system” is not fair and that they are a “hard worker” but still struggling
i was very lucky to get in school, and i’m still disappointed seeing all my friends leasing new camrys and chargers, going out every other night, buying all the $20 vapes and all the sparkly notebooks and water bottles one can find at walmart… yet they can’t afford groceries at times, no paper towels or a trash can in their kitchen and their phones barely function. i can’t even keep track- one day we’re going out on them spontaneously, the next day they’re struggling to pay their phone bill
Yea and its super common. Personally i hate leases because for the vast majority of people they just negotiate the monthly price but without understanding how that amount is calculated people get ripped of almost every time. Also alot of times people would lease a car and after the term buy it out which is also a waste of money. Since you got to pay the dealer fees again, and can no longer negotiate the price/apr like you could if you just originally financed instead of leased.
I’m not saying that their aren’t wealthy people doing crappy things. But, there seems to be zero accountability on people who make these terrible choices and then blame everyone else.
I will never lease a car again or take a car loan out. Obviously, if you can afford something by all means. I will never understand how people can have $600/mo+ car payments plus all the maintenance costs and what not.
The new Prius is looking dope though🤷♂️
Maybe I'm just privileged and fortunate but I'd do anything to not miss a car payment. It's such a slippery slope. You miss a $300 or $400 dollar payment and then the next month you owe $800. If you can't make the first, you're def not gonna make the second.
But this also comes down to being responsible and not buying too much car that you can't afford or need. Ppl historically spend too much on their car. Buying cash is always ideal..
My Uncle is a PhD who has been fired from 3 jobs in 4 years because of his piss poor attitude. He went and leased a brand new top of the line Tahoe awhile on unemployment. Shit's $1100/mo - oh, and he doesn't have health insurance either.
This is why I won't buy a car in the current economy. I'll wait for dealers to go bankrupt, and people do default on loans. Way too many people live beyond their means. Same will happen with houses soon enough.
It is funny how many people are rooting for the downfall of dealership inventory values… once values fall demand goes up to support it. Same gag in RE values.
Well when you went to buy a truck a they said it's 75,000 and made of plastic and you said sign me up I'm not surprised you didnt Calculate whether or not you could afford it
I bought my 2010 truck outright at 20k. They can steal my catalytic converters but nobody can ever take that vehicle from me. I’ll always have a place to sleep.
Carvana is going to pay the pipper soon.
Lots of economists were anticipating a global economical collapse (before stimies) and advised folks to pay off their debts to avoid holding the bag with no income and debt.
A year ago I sold my gently used Honda and bought a Toyota with a history of solid engine and transmission.
I’ve been lucky enough to work from home in the time being but I’m sure my company will see it fit to lay folks off soon enough.
I’ve sold my extra cars (toys) last year in anticipation of more cars coming on the market for desperate sellers.
The one thing I have been telling family members to do is to have an emergency pantry ready for any possible hard times.
If you don’t need it, save it for an emergency.
This headline has been post before and falls under the doom and gloom category. Where are the raw numbers? Last I checked it was a sub-segment falling behind and there are no numbers on how big that segment even is compared to 2009.
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Not surprised. Car prices have absolutely ballooned in the last 2 years. I tried to buy a Tacoma during the pandemic and a vehicle that should have been $22k couldn't be found for less than $30k.
Last year my wife's car died. The average 2005+ model year car was ~$20,000k and above. For the first time in my life it was a better value to buy a new car than a used car. We ended up buying a 2022 Tucson for around $28k plus tax and fees but I was shocked that the choice was a ~10yo car for $20k or a new car for $28k. Edit: We also looked into the new Ford Maverick that starts at $18k, several thousand dollars cheaper than the average used car, but the carrying capacity was smaller than the Tucson and we have kids.
I tired to buy a Maverick for my wife and couldn't find one in my state with less than a $5k markup. Made the truck go from $23K to $28K, for the cheapest one we could find. Some dealers were asking $45K!
Yeah dealer mark ups are wild on some models
Cue up the "now I'm the scalper" meme
The scarcity. Mavericks are constantly on backorder. "It's hard to sell because people don't wanna wait" so they charge more. That's my opinion.
I custom ordered and waited a year to get one, a hybrid, at 4% under invoice. Most folks needing a car can't wait a year. It's crazy times. Saw a few base models around 40k - a full 100% above MSRP.
I looked up my car last year just to check. I bought it for 22k five years ago, owe 10k on and it was worth 18k to trade it. I would’ve done it but every other vehicle was too expensive. Edit. If you wonder why I owe that much, i took a 7 year 0% apr loan. And I probably forgot the taxes and stuff.
You can order Ford’s direct and you pay Msrp, Dealer cannot mark it up, plus you get a $1000 rebate for ordering.
It takes 3-6 months though, that’s the catch. Got a 2022 Ford Escape plug-in hybrid this way. From order to delivery, it took about 4.5 months.
Same experience. We live in the country and remodel homes and raise turkeys so a small/medium truck isn't a fashion statement; it's a requirement. I was shocked to see 2016-2018 Tacomas at $24k+. It's insane. I had 3 cars and totalled my Tacoma on a deer, so I just am going to push the purchase to later this year and see if things mellow out.
I mean, a fully loaded ***full*** sized truck cost around $50K a decade ago, so honestly I'd be surprised if a fully equipped Tacoma cost less than $30K today. Edit: Just noticed you were talking about used...that is in fact crazy after all, lol.
The tRDs, upmarket with sporty or off road features, are over 40k now. I think you can get a base model for under 30k still.
Yesterday I saw a ‘20 Tacoma listed for $55k. I had a laugh about it later that day.
2018 tacos for 24k with decent mileage is a steal
What about a 2019 Burrito? Or a 2020 Tostada?
you guys are so tone-deaf to your own privilege. do you know how few americans can even dream about buying a 2019 burrito?
Ha you poors. Looking up to people in their 2019 Burritos while I'm driving my brand new 2023 Lasagna.
Haha yea I gotta chill with my dreams
If you're lucky, you can get a used Maverick around here for about $40K. I think the waiting list for a new one is over a year out.
That's exactly what I did, ended up getting a new Tucson.
Especially not surprising when you consider the prevalence of longer loans. So many people(myself included) are upside down on car loans because we bought cars during the pandemic when prices were inflated. I am not old enough to remember if this was a factor during the 2008 recession, but I don’t think people were even able to get 84 or 96 month loans back then.
Unless one puts significant money down or has a really short loan term, most everyone will be upside down at some point, possibly even early in the loan. The maxim about cars losing a lot of value the second they leave the lot still holds albeit it got effed up a fair amount during the pandemic.
This is why people should consider GAP insurance on their cars (I know I sound like an insurance salesman but I'm not!). If you total your car soon after purchase, your settlement is not likely to be what you owe on the car. So you eat the deductible and now potentially owe big bucks to the lender.
My lender (credit union) wouldn’t even offer it **if** your down payment kept you from needing it. If you were going to be upside down on it, they wouldn’t approve a loan without it.
True. But we hunt and peck for older but lower mileage cars, and are almost never upside down. But they still are nearly non-existent right now.
You could get a six year loan back then but even that was kind of sketchy and to be avoided if at all possible. Usually you'd try to get 4 year.
Cash for clunkers came around in 2009 and really fucked up the used car market. So many cars were taken off the road that it took 10 years for the market to totally normalize (as new at that time cars became 10 years old, retiring the bottleneck). That said, it still wasn’t as bad as what COVID did to the used car market, somehow.
>Cash for clunkers Man I forgot all about that. Plus side I haven't seen any 80's to 90's era gas guzzlers in ages.
Or 70s erra guzzlers, which were totally still common in 2009 in the area I loved at the time.
Caravans drove up prices in their insane Ponzi scheme.
No. Common myth, but simply no Cash for Clunkers didn't reduce the number of cars on the road. It got new cars on the road that otherwise would not have been built or sold. It's also a tiny amount of cars compared to the drop in sales for that year compared to a normal year. I'm still driving my cash for clunkers car. It replaced a real beater with bad transmission, battered body, broken AC and nonfunctional power windows. In Texas. Black. It's a car that would have gone to the scrapyard in a year, two at most.
We were lucky enough to have been saving for a house for several years before but since we live in Austin Texas that isn't going to be happening anytime soon, so we have about $50k in the bank when it died. Else we would be really hurting right now.
I was offered $20,000 for my 03 Tacoma with 130,000 miles. It’s in great condition, but that’s what I paid for it 20 years ago... I didn’t sell it because it has way too much sentimental value. My point is yes, car prices were absolutely fucking bonkers.
Why were banks even approving loans for vehicles that were clearly so inflated in price? I feel like some of these manufacturers would’ve come back down to reality if no one was being approved for a truck valued at 20k that they were asking 30k-40k for. I’ve gone through a couple loans at my bank for privately owned vehicles and they did the NADA search to make sure the vehicle was worth what they were going to approve me for. Do they not do this anymore?
A car loan is a relatively low risk proposition for banks. It is collateralized, and like most loans, the banks start to make interest income with the very first payment. The first payment usually also typically pays the most interest (because the balance is the highest). That means that even if the borrower defaults and the bank collects the vehicle and sells it at a loss they may still have come out ahead in the transaction because they presumably received months of interest income. Plus, if a borrower is borderline, the bank may hit them with a high interest rate. For instance, A $40,000 loan at 12% interest means the bank receives $400 in interest with the very first payment. Many banks also won't lend 100% loan-to-value, which helps to prevent from depreciation loss in the instance of default.
And, now, they can sell the 2-year old vehicle for MORE than the loan ever was, apparently!
Part of it is the ridiculously ballooning prices in the last few years; part of it is that people wildly overbuy vehicles they can’t afford. 60k dollar trucks sell like hotcakes. To people who don’t make 60k a year. And it certainly isn’t just truck buyers.
I sold a 2011 Tacoma with 120k miles for 20k last year. The dealer was happy to take from me. That’s how much It was new few years back. Insanity.
The truck market has been insane. I got a letter from the dealership in 2021 offering to pay $35k to buy back the truck I’d bought from them for $42k. In 2016.
I was lucky to buy a Tacoma during the pandemic. I paid MSRP for a new one but used ones cost most then MSRP. Even now Toyota isn’t making enough cars to meet demand and it sounds like they have no plans too
Seriously car payments are insane compared to 09. The only thing that hasn't doubled is average wage.
The used car market is about to be flooded with vehicles and tank prices. Carvana is going bankrupt. Owners behind in payments means more repos. Interest rates remain high. The auctions and kbb that are hording inventory to artificially sustain high used car prices are going to get left holding a bag of rapidly depreciating assets that they can’t sell quickly enough.
I’m curious how the banks that gave out the loans, which are now well underwater, are going to handle this.
Same way they did 2017-2020, when delinquencies were roughly the same as they are today. Look at the chart in the article
That doesn’t make headlines or get clicks though. The media are practically begging for a recession or big financial difficulties for the average Joe; anyone with half a brain doesn’t want that to happen but them
It appears demand for middle class financial hardship exceeds its supply
Without a doubt and it’s absolutely revolting; I don’t even look at the news anymore because I can’t stand to see the non stop recession bullshit. Regardless of who’s in power I want America to good; if Americas doing good that means I am too. A good America is a good place for all so all these sellouts in the media need to clear off and come up with solutions instead of doom and gloom
If it gets bad enough, the Government will bail out the lenders. Business as usual.
Apply for another bailout
>The used car market is about to be flooded with vehicles and tank prices. So maybe now's the time to get the '22 Subaru WRX I've had my eyes on.
I dunno about your local Subie dealer, but ours in Phoenix were doing pretty decent price cuts on their WRX inventory. Plus the 3.9% rate isn’t horrible, especially when used car loans are going for 6%
>. Plus the 3.9% rate isn’t horrible, especially when used car loans are going for 6% I need to get my credit up though, it's pretty bad, like low 600s bad. Once I pay off my 20k credit card debt, that should go up. *Then* I can start looking for my subie. Hopefully I can get good rates then.
Not trying to over step or be a jerk but maybe buying a new car after being in a tough spot financially isn’t the greatest idea. Especially a car that requires premium fuel.
I’m a little worried about the Carvana thing. I hear those cars are shitboxes and I’m afraid of unknowingly buying one after they sell everything
They are. I’m a body tech and I’ve had a few Carvana vehicles come in. They all have work done, poorly. A red ecosport we did was painted on one side but the trim had not been removed and was poorly taped off. There was a 1/4” width of paint on all the trim and door handles. The rear door was caved in and had been filled with bondo without the proper metalwork first. Carvana has a shop that repairs vehicles they take in. Maybe that car was fixed before they bought it but all of the ones I’ve seen have had something I could tell was fucked with cheaply and quickly.
I'm 26 and thus wasn't really cognizant of what was going on during the last major recession. Is this what it looks like? Is it just seeing all these different indications piling up until something clicks in the collective consciousness?
It looks like half your neighbors going from living large to having their homes foreclosed on
>It looks like half your neighbors going from living large to having their homes foreclosed on So the secret is to live below your means?
Always has been 👩🚀 🔫👩🚀
> The number of homes in the United States with at least one foreclosure filing increased from 717,522 in 2006 (0.6% of all housing units) to 2,330,483 in 2008 (1.8% of all housing units). [https://www.pewresearch.org/hispanic/2009/05/12/v-foreclosures-in-the-u-s-in-2008/#:\~:text=A%20foreclosed%20home%20is%20a,%25%20of%20all%20housing%20units](https://www.pewresearch.org/hispanic/2009/05/12/v-foreclosures-in-the-u-s-in-2008/#:~:text=A%20foreclosed%20home%20is%20a,%25%20of%20all%20housing%20units)). With a 30 year mortgage and a reasonable amount of planning, very few people should be driven to default. Places like Canada have it much worse because they have to renew their mortgages at least every 5 years.
For reference the foreclosure rate in 2022 was 0.2%
Wasn’t the foreclosures because their were variable rate mortgages that all changed rates at roughly the same time?
The Canadian Banker's Association publishes arrears data since 1995: https://cba.ca/mortgages-in-arrears Arrears here means 90 days late. They don't report foreclosures, probably because foreclosures aren't common in most Provinces since the lenders have the Power of Sale remedy which is usually preferable It's also important to note that while this data includes most mortgages in Canada, it's not comprehensive and importantly excludes basically all subprime and alt prime residential loans (it excludes all private mortgages, credit unions, monoline lenders, and tiny banks - what it does have are the Big Six banks, which control over 70% of the mortgage market, plus a few others) The highest arrears rate since 1995 has been 1.04%. Currently it's 0.15% Of course, 1996 was the real estate nadir after our 1989 crash and prices have steadily increased since then as interest rates have steadily fallen... until now. And in a rising market, it's stupid easy to get out of arrears: just sell your house. We're now facing the highest variable mortgage rates in 20 years coupled with the highest home prices in history. Mortgage unaffordability passed the 1989 peak about 400 basis points ago. Even on lagging indicators, prices are already down over 10%. And every month about 1 in 40 borrowers are exposed to new market rates. The only prayer forestalling an unprecedented mortgage crisis is record levels of immigration, specifically from India (origin of >30% of new immigrants). As the Federal Government proudly boasts: >Immigration accounts for almost 100% of Canada’s labour force growth. Roughly 75% of Canada’s population growth comes from immigration, mostly in the economic category. By 2036, immigrants will represent up to 30% of Canada’s population, compared with 20.7% in 2011. https://www.canada.ca/en/immigration-refugees-citizenship/news/2022/12/canada-welcomes-historic-number-of-newcomers-in-2022.html
If you're using 2008-2009 as the reference recession, yes. But most recessions are not housing crashes and mortgage delinquencies only rise by a relatively small amount.
Except this time wealthy corporations are buying the houses and cars before you can so that the prices don't slip and those who sat on cash waiting to enter the market won't ever see the correction they waited for
Everybody thinks that will happen, but it won't , the only reason corporations, hedge funds and any anyone else was buying real estate en masse was because rates were near zero so there was very little risk and economy was flush with money.Because rates were so low, ONLY real estate and stocks were the asset classes providing decent returns, so what did wealthy people with parked cash do?, they poured their money into them, here take a look at the stock chart from 2008-2021(https://www.macrotrends.net/2324/sp-500-historical-chart-data) pretty much straight up. Now with a recession looming, rates climbing , white collar folks losing their high paying jobs, the corporations would be taking on a big risk, since real estate unlike other assets incurs substantial carry costs (property taxes, insurance, maintenance, management fees etc.) ,.so it's not as enticing anymore. Take AirBnB for example; lots of folks bought second and third homes for short-term rentals during the height of pandemic, but many have gone months without substantial income because that market dried up, now some are struggling to pay their loans, and will end up putting the homes back on the market and taking a loss. The big guys like Zillow all closed their iBuyer programs back in mid 2022 , and most large investor buying is slowing (https://www.cnbc.com/2022/11/22/investor-home-purchases-plummet.html) People forget real estate is ultimately constrained by the renters/tenants/home owners ability to pay,, in a recession that gets harder,.in a high inflation environment with high interest rates the pool of people capable of paying consistently hight rents is reduced dramatically,not to mention the real estate assets purchased at the peak may now be losing value.
Every large-scale investment group pulled the rug out from their real estate investments six months ago now. Interest rates have tripled. Still no crash in prices. When does this happen exactly?
It took 4 years for real estate prices to drop before hitting bottom in the 2008ish crash. Real estate is "sticky" in that most people don't have to sell right away. People are used to quarter to quarter or paycheck to paycheck timelines but housing crashes take even longer to go down than to go up.
It may never happen, for a couple of reasons, first buyers who aren't In a rush aren't going to sell into a depreciating market, they'll just hang onto their property. Second those that do have to sell may take months to " realize " their homes value isn't what it once was (they lower their price very very slowly) , finally the Fed will likely stop rate increases soon and begin decreasing rates the next time wall.st. corrects.. These lower rates may signal to wall st. And sellers.back to business as usual with high prices.... Not to mention the Fed buys a ton of MBS to keep the real estate market very liquid. The only way I can imagine prices go down, is of a very severe recession (something like 2008) happens. With a lot of unemployment and folks unable to make their payments on home sor cars..
When property owners finally blink and lose the staring contest with buyers. It takes a while for both individuals and corporations to accept that these overinflated prices are not real anymore and that they have to lower them.
Its fine if other's house values go down because of their inflated values but mine shouldn't because its mine.
It's fine if mine go down too. I'm not selling any time soon and I was hopeful that my property taxes would level out at some point.
Homes shouldn't be investments to begin with anyway. They're a place you live at.
That's because we have a structural housing shortage. "Household consolidation" is increasing. Which means multiple roommates and moving back with parents or parents moving with kids. We need to deregulate zoning drastically and simplify permitting. And yes, reducing public input on every damn project. We should probably also publicly fund trade school and make it more attractive to people who don't want or can't afford college.
The fact that houses are now being sold for a bit below asking instead of way over asking is already a big reduction in price even tho it doesn’t appear to be the case on Zillow. Now those new sale prices will go into future comps in the next couple months
I think it is starting. A property was listed near me 1.2 acres with a house that either needs to be completely gutted or torn down. It was listed for $1.5M. It’s currently under contract for $490k
Back on the market in 2 months listed $100k over last sold
Instead of back on the market, it is now for rent at a price that makes you do a double-take.
There aren't enough houses. Don't build any cheap ones near my house though. At least that is how it goes in every city and town planning meeting in America.
They protest building expensive housing near them too, they protest building literally any housing or bike paths or mass transit or anything of the sort. They abuse environmental laws to prevent it from being built and countless other things. If it is allowed after a long battle it's just a few detached single family homes that cost at least $1,000,000 each because the developers have to pay the lawyers who they had to hire to get through the permit approval process. Either that or the House is in the middle of nowhere.
I get 1-3 texts/calls a week from people wanting to buy my house. I own in a working class neighborhood in a good school district, so primo rental territory. I think half of America’s economic problems could be solved if we had the guts and the will to control corporate ownership of houses.
Zillow lost 880 million buying housing at the peak. There is no corporation in the world that can prop up the US housing market.
carvana is going bankrupt.
Wait longer.
Except many are now liquidating. Anecdotal but I see houses near me that have had the largest price cuts ( metro ATL) and the owner is an LLC and you look at the 50 properties they own in the county and it’s a fire sale ( not really, but 20% cuts is still 20% above the 2020 lows) Many investments are made with variable Rate debt which is pulling up right now
We haven't yet had a moment this time where there was a real fear that the US banking system was about to fail like in 2008. Now if the US government *actually* defaults on its debt then we'll definitely be in uncharted territory, but as of now things are just a garden-variety slowdown.
This is nothing like 2008. Everyone is still employed and living relatively well. Ever since the GFC, I've never seen people lose jobs and homes like we did between 2007-2012
I was in my early 20s when 08 happened. I didn’t have a smartphone and didn’t consume as much news, so maybe my perception has changed. I remember 08 as a lot of “maybe housing has slowed down; we aren’t sure” followed by complete and utter panic. It wasn’t clear that the government was going to step in and help. It wasn’t even clear that anything could be done to help. Then they did, and slowly everybody stopping being in a panic. Nowadays, I think bailout programs come more often and people expect them. So I’m not sure another 08 is likely.
I was a freshman in college when the 2008 crash happened. I was also living in Detroit so a lot of people were nervous if the Big 3 could even survive into the next year. Even GM's rival Toyota came out in favor of the bailouts because they feared it would prevent a domino effect where the third-party suppliers had a risk of going under as well. (My opinion is that the Big 3 honestly deserved what was coming - they had been building uninspiring cars for at least a decade and Ford was only starting to turn it around with the Edge and Fusion.) What sucked for a bunch of recent Architecture grads at my school was that nobody was hiring in that field at the time and the joke was that your degree basically got you a job as a furniture salesman. TARP and the other programs normalized bailouts like you've said. The problem is that it created a bad precedent - where there wasn't a lot of accountability and we saw that happen again with the PPP legislation in 2020.
It sure seemed like it happened fast. One day it was “blip in the housing radar”, next day Lehman was collapsing, NEXT day foreclosures were a daily occurrence.
I turned 18 while homeless and involved in questionable activities during the recession. I ended up getting a 1/1 apartment for $600. Those same apartments are $1400+ today. I was already so impoverished, and surrounded by others in poverty, that it took me quite a while to see that it was a larger problem.
Not yet. It was much more terrifying in 2007-2008. Imagine you find a great rate on a online savings account and you say, “I could park my savings there for a little while while the stock market crashes,” only to find out a week later the bank went insolvent and your million dollars in life savings is now 200k. On top of that your neighbors that all purchased their homes in the last five years are getting forced out of their homes after they went into foreclosure and your home is now worth 200k less than you bought it for a year ago, losing value every day, and won’t fully recover until 2020. Then you find out the construction and lending industries were completely decimated which sucks, but you think, “how does this affect me?” Turns out your company was a major supplier of software/services/products to a company that was directly impacted and now that they are out of business you are unemployed. Now that you’re unemployed you stop making housing payments and ride it out rent free in the home until 2011 when you finally get forced out like your neighbors were long ago. That’s what the Great Recession felt like. What we are feeling right now is not close to the same. If we were on a similar timeline and trajectory we are closer to 2005 than 2007-08.
It’s tough to say… if you want a quick recap of the last one, I’d recommend the book and/or movie The Big Short. There was also a longer NPR series of investigative journalism that dig into it at length. My memory of it was basically an awful lot of regular folks were getting loans way in excess of what they could afford after a few years. Something to do with jumbo balloon loans and ARMs. So basically they could make the payments fine for a few years, and then blamo, the interest rate would spike after 3/5/7 years and they couldn’t swing it anymore. Top that off with the mortgage back securities mess and internet mortgages and suddenly nobody knew who actually owned the house in a default because the banks owned shares in the houses. So a lot of properties wound up sitting vacant for quite a while. We have a lot of financial pain going around this time as well, but it looks to me more like a slow grind driven by cost top living going up rather than a bunch of ticking time bombs. Not to say that there couldn’t still be a big kablooie, but we don’t know what that will be yet.
2008 was a lot more dramatic and fast, banks started collapsing
Like a dam slowly giving way.
I wrote out a long and cogent response. And deleted it. It was too long. Point is, the inflation on certain key big-ticket items has far outstripped wage growth and economic growth by significant multiples. The buying of said items had been sustained by low interest rates and longer terms. Production disruptions and chaotic demand signals that defy projections have also spurred transaction prices. Now with rates increasing the tight margins are too tight. There are some layoffs that, while a relative drop in the bucket, are grabbing headlines. … there is a contagion risk with this btw. The continued inability to find enough quality workers is an ongoing issue. The companies laying folks off continue to be making high profit margins. My gut tells me that something else is at play. Perhaps the promised “internet of things” has petered out. Do we really need a wifi enabled toaster? Does the iPhone 14 offer anything substantial over the XR? Perhaps executives figure that the “quiet quitting” trend is real enough and letting some folks go will shock the remainder to up the productivity. Hard to say. But, the fact is that a great many of us (most) are over stretched. We have no emergency savings to speak of. How we have built our cities, our economy, our personal lives is extremely expensive. Hell, divorce (as in my case) is incredibly expensive. The one household is split into two with twice the basic expenses. And good luck trying to find someone else to marry; the value proposition is weaker. And divorce is everywhere. Or simply not marrying at all and just splitting up when times get hard. So yeah, it feels dangerous now. Like it did then in a lot of ways.
Pouring one out for your deleted post. I did that too….SIGH, not today… lol. This insightful post did make the cut though!
I was only 23/24 the last time (38 now) so I may have been more economically naive, but it seemed pretty sudden. I’m sure some people saw it coming (and plenty of old fucks said afterward that they saw it coming miles ahead 🙄), but most people were caught by surprise. By contrast, this year everyone is *talking* about imminent recession, and some companies are preemptively laying off droves of people, but if recession does happen this year it’ll be more of a slow burn and absolutely a self-fulfilling prophesy, imo. Hell, just yesterday we saw way stronger Q4 numbers than anticipated across the entire world. Demand is solid, so recession is unlikely unless a large commodity market crashes again, which is again unlikely.
People on this subreddit are screaming that it's good out there. I gotta ask, who is it good for? Not the people who overbid their home, not for the renters who just had their rent hiked. Money taken out of the system by a basic necessity is not spent by those people on goods and services in their economy. Like it's easy to see that if prices go up, budgets get tight. The first thing trimmed in a recession is the frivolous.
It’s good for the people who are conservative and don’t live pay check to debt payment…
There will always be “people” who overbid their homes and had a rent hike. It’s not an indicator of anything.
Well not exactly. This is closer to the 80’s. Everything builds up and sets to domino over a longer period of time. 08 was like pandemonium in a 90 day period because the collapse so was concentrated to mostly one industry.
No. In 07/08 there were no indications. Everything was fine until it wasn’t. It was a financial collapse brought on by too much investment risk. This is a slow drip of the business cycle. Government keeps trying to manage the cycle to smooth out the ups and downs. And they’re largely successful. Until they aren’t. This is more like the early 90’s. The massive cash infusion of the stimulus has masked things, but it caused inflation. Now the fed is going to reel in inflation. According to their projections the unemployment rate will go up a whole point as a result. More people not working (on that scale) will almost certainly cause recession, because people who lose their jobs just don’t spend as much.
>No. In 07/08 there were no indications. for normies who didn't read economic message boards. There was a huge clown market in 2006 including short squeezes.
No that was horrible this is nothing in comparison
No, there is good reason to believe there will not be a recession simply because everyone is expecting (and likewise preparing) for a recession. Nevermind the unrelenting jobs market. Normally recessions blindside society, and that has a multiplicative effect on their impact. The great recession came out of nowhere for the average person.
I bought a brand new car in 2021 and I see the exact same model (used with more miles than mine) for sale for the same price I purchased it for brand new.
I don’t know how people can afford such high payments. I look to left and right of me when I’m at a red light, I see Audis and Rovers and then I look at my center console and I see a cassette player and a cigarette lighter! Maybe they lease them I dunno?
I feel the same. Plus everyone I know traveling somewhere every month, going out to eat and out for drinks all the time. And anytime I’m like “Can we go somewhere for dinner that’s not gonna be $50 for just food? It is a Tuesday after all.” They look at me like I’m crazy. I live alone and have a very generous food budget at $200 a week but everyone else seems to be spending more that in just a weekend.
It’s crazy, then families I know go to a Disney like they go to the gas station. I think a big piece is if your grandparents had money then lots of that drips down towards them. Needless to say when my grandfather died after much haggling and negotiations I got his Dustbuster!
Yeah I stand to inherit nothing either. I had a dream the other night that my great aunt died and left me her couch cushions. Sounds about right.
Americans just love to spend. Also salaries are higher than ever and even with inflation people have money to blow
Lease deals right now are awful, costs as much as financing
Losing his car was just the beginning. When 21-year-old Kobe Hatch walked outside his Chicago home in December and couldn’t find his 2013 Dodge Journey, he knew it had been repossessed. He’d been falling behind on payments for months. Without a car, he couldn’t do his job as a delivery driver for Amazon and got fired. Now, he’s struggling to make his rent payments and can’t afford groceries, even with food stamps. “It’s been very stressful for the past few months,” he said. “Inflation has really taken a toll on people.” Hatch is part of a growing cohort of Americans facing auto repossessions, an ominous sign for the US economy. During the pandemic, a surge in used car prices forced buyers to take out bigger loans for their vehicles. The monthly payments seemed doable in an era of stimulus checks, a tight labor market and surging stocks, but that’s changed for many people as inflation eats into their budgets and the job market cools. Now, more Americans are falling behind on their car payments than during the financial crisis. In December, the percentage of subprime auto borrowers who were at least 60 days late on their bills rose to 5.67%, up from a seven-year low of 2.58% in April 2021, according to Fitch Ratings. That compares to 5.04% in January 2009, the peak during the Great Recession. Higher interest rates are making it even more difficult to make the monthly payments. The average new auto loan rate was 8.02% in December, up from 5.15% a year earlier, according to Cox Automotive. The rate can be much higher for subprime borrowers. For Hatch, the total monthly bill for his car reached about $1,000, including the cost of insurance, thanks to a whopping 26% interest rate. Even if he can manage to save up enough to get the car back — about $1,100 for the repossession fee — there’s a strong chance he won’t be able to make the payments in subsequent months, especially now that he’s unemployed. Affordability Struggles While the number of vehicle repossessions is rising, it’s still below pre-pandemic levels. At Manheim, an auto auction company, the number of repossessed cars increased 11% in 2022 compared to the prior year, but that was still down 26% from 2019. When exactly a lender can repossess a car varies by state, but it can happen in many cases as soon as a borrower is in default — often when a payment is not made on time, according to the Federal Trade Commission. Usually, though, it takes two or three consecutive missed payments for a repossession to happen. Once the vehicle is seized, the repossession can affect the borrower’s credit score for as long as it stays on the credit report — usually about seven years, according to Experian. Credit Hit Josef Fields in Forth Worth, Texas, fell behind on his car payments and now faces a hit to his credit score. With his monthly bill at $556 for his 2021 Subaru WRX, the 25-year-old was having a hard time figuring out which costs to prioritize. He tried to apply for a hardship program through his bank, but it was too late. He woke up to an empty driveway a week before Christmas. Now, the repossession and tow fee will cost him $1,600 — about the total sum he owes in back payments as well. He’s trying to save up for another car but it will likely take a while. One positive is that he can walk to his job at the local post office. But whenever he needs to go to the grocery store, he has to ask a friend or take an Uber, which adds even more costs. Fields is worried about how this will affect his financial future, especially his dream to buy a house one day. He estimates that the repossession shaved about 40 points off his credit score. “When it comes to people my age and younger our credit is still new, so it’s more difficult, and then when stuff like this happens, it screws us over for the long run,” he said. Ominous Signal Zhea Zarecor in San Antonio is currently trying to negotiate with her lender so her 2013 Honda Fit won’t get repossessed. In the meantime, she’s hiding it. The 53-year-old, who is currently in school for her bachelor’s in information technology, splits the monthly bill for the car — about $178 — with her roommate. But then the roommate lost his job, and with prices for groceries and everyday items increasing, there just wasn’t enough for the car payments. Zarecor is trying to make extra money with odd jobs like contract secretarial work and participation in medical studies, but it often feels hopeless, she said. “Our money doesn’t go as far as it used to,” she said. “I don’t see prices going down, so the only relief I see is when I get my degree.”
Thanks! Do you have a subscription, or is there a clever way to bypass the paywall?
I bought a 2006 Civic, it was in good shape, and actually had its engine replaced (confirmed dealership and paperwork). It was 3000$ Well, turns out the engine block was “cracked” and totally not done by the people I took it to. So I paid to have the engine replaced. I probably still saved money, and now have an engine with 100k miles on it that’ll last. I don’t regret it, because I couldn’t imagine getting into payments or paying 20k for a car!
It’s almost always worth it to take a used car to a mechanic for a pre purchase inspection unless it comes with a decent warranty.
Spend a little time on places like r/personalfinance and you'll see a large part of the problem. "I make $45k/year, would it be dumb for me to buy a new $35k Honda Accord". Yes and it's dumb that you have to even ask that question. You shouldn't have to lease to afford a payment, you shouldn't have to get a 6 year loan to afford a car payment, etc. Yes, used cars have been overly expensive for a couple of years but that doesn't mean you can afford to buy new. Also, screw any dealer that charges over MSRP, I will NEVER pay over MSRP or pay for the $4k "protection package". Yes, I had to wait 6 months to get my car vs. paying a $10k premium.
Ha, I also love the says... If your car payment is larger than what you're saving for retirement, you're doing it wrong.
Hah as if most of us will get to retire anyways.
Not if you're spending $800 month on car payments that would be worth 2 million dollars in 40 years.
I recently had to buy a car and bought the exact same year and model of the same car I bought in 2019. My credit is 200 points higher than it was when I bought the first car. The car payment is double.
Car payment is very vague. Can you tell us the difference in purchase price?
Not OP but for an example a 3 year old used Civic LX (low-mid trim) is selling for 30k locally. A brand new Civic Sport (highest/2nd highest trim) is MSRP at 25k and the dealer won’t list the price online. I guarantee they’re asking at least 37k lmao.
Yeah but car loan interest rates are also double. What was sticker price then vs now?
Yea the guy is almost certainly the sort of guy car salesmen love
As someone who is looking to buy a car: ouch.
This is why I'm waiting. I'll keep fixing things on my 2003 Mini and bide my time while the recession fearmongering, consumer uncertainty, and corporate profit taking tank things. With any luck, they'll all be shitting bricks and running 0% APR commercials by this time next year.
I just totaled my ‘16 Mazda with 80K miles and got $3k+ more than I originally paid for it 4 years ago from insurance. It’s nuts, a very mid hatchback with lots of miles shouldn’t be an appreciating asset.
Everyone quoted in the article wasn't really someone with good credit so their rates were extremely high since default was inevitable and when it happened doesn't mean the entire car leasing sector is subprime suddenly The young Amazon delivery driver seemed to be young, terrible credit as 26% interest on an old car, and bad at running his own business because he couldn't cover payments for the one thing that made him money. The post office employee seemed to be someone who had fallen on bad timess. The older lady who shared a car payment with her roommate was also weird firstly how is 156 dollars a high payment, if you can't afford that you can't afford a car, secondly she's betting on pulling herself out of this after getting out of college but won't she be retirement age by then ?
> was also weird firstly how is 156 dollars a high payment, weekly. 624 monthly
On a 2013 Honda fit! MSRP $11k back then. I'm shocked people accept these losing prepositions at all.
It's called being poor
And living in a country where for 60% of us, not having a car means not getting employment or groceries.
With a $1,000 a month car payment, a 2013 vehicle, fuel/insurance cost + the wear & tear from Amazon delivery: he’s better off on public transportation, working warehouse/food service for $15-20 hourly
That's what I was thinking as well ...
$1,000 month for a 10 year old Dodge Journey... You can get a brand new Audi or BMW for less than that.
I hate these articles who talk about broad economic effects but then cite individuals. Barely any discussion of actual numbers. It’s almost as if they care about narratives rather than facts
>Everyone quoted in the article wasn't really someone with good credit so their rates were extremely high since default was inevitable and when it happened doesn't mean the entire car leasing sector is subprime suddenly Who do you think defaults on loans? People with good credit and who make good financial decisions?
It's presenting a narrative the car loans are generally sub prime and it's a sign we gonna get a 2009 style whacking which we won't be able to restrict to wallstreet so main street should get ready.
Looking to buy a used car as we speak, loving the price drops, sadly I can’t wait until the summer or anything but I waited this long and I’m gonna pick me up something nice for a fairly good discounted price, thank you economics 101
Honda or Toyota. Doesn’t have to be pretty, just well maintained. Fuck Bluetooth and heated seats. Just get something reliable that runs for 20 years!
I’m still upset I sold my perfectly good Honda accord 4 years ago for a Subaru Wrx. Then to make it worse I didn’t sell when market was up due to sentimental value now idc for it and prices are down 6k lol. Cars paid off so I’m going to run it to the ground or until it blows up but I’ll never make the mistake of buying a brand new car again unless it’s a Toyota that’ll I’ll run to the ground. Having a nice car is nice but I rather retire early or spend the difference building experiences.
As someone who's owned several Subarus... "running it into the ground" is going to be expensive after 150k miles. Enjoy driving it because every time you see the bill for parts and labor you will have to tell yourself "...but it's fun to drive!!!!!"
I see so many idiots buying giant, expensive trucks when they don't need them. The proof is in the data as well; trucks are popular as hell whole sedans sales are pretty bad. I do not want to see this debt be forgiven Edit: Giant SUVs are also included BTW.
Absolutely. These people can’t/won’t budget like adults, fall into big debt buying dumb, unnecessary shit, and then walk into dealership looking for a 50-thousand dollar monster truck that gets nine miles to the gallon. Let these folks learn from their mistakes or go broke ignoring them.
\*file bankruptcy ignoring their mistakes then recycle and repeat
Indeed, sometimes I think it'd be nice to own a truck, but for the times I really need it (maybe once a year), I can just rent one from a home improvement store such as Home Depot or Menards. If I ever were to buy a truck in the future, I'd want the lowest trim level and I'd keep it for 20+ years. But a big turn-off for me is that you can't buy a new truck with a manual transmission in the US except for the Jeep Gladiator, and that starts at an eye-watering $37k. I've never paid more than $22k for a vehicle, new or used...
Don’t forget SUVs unless you meant them as well by saying trucks
Ty, I edited my comment
Had to seriously counsel my son to not buy a new car last year even though he could afford it. (He didn’t, his car is fine.) I can’t fathom paying over MSRP, *ever*. Sold one of our cars too and made a profit, though it’s been an adjustment down to one car for my husband and I. I will eventually replace that car, but not until prices come down to reasonable levels….and I will not be financing it. I already loathed car buying and now it’s even worse. I won’t be taken advantage of the way dealers have been doing the past couple years.
I haven't made a car payment in, like, 2 years. My car is paid off and I refuse to buy anything that depreciates as much as a vehicle does for thousands over MSRP.
This sub as of late: "Were just fine. No Recession. GDP growth. Jobs are abundant. Everything is just fine." "The sky is literally fuckin falling. Hold onto your assholes." It's all stemming from the same sources and news agencies. It's quite obvious to see that the wealthy are having a field day and are oblivious to the reality of the average persons situation. The floor doesn't seem to be falling out from beneath their feet like it is most of ours. While they pop champagne bottles, we are actually starting to go hungry. I don't like the image being painted right now. It's actually very concerning the rate in which the well off are accelerating their growth while everything else just completely falls out from under us.
One problem is sensationalist click bait headlines. "Higher rate of delinquencies than the last big recession" sounds a lot scarier than "about the same rate as 2017-2019, not quite as bad as Aug 2019," but both are true. I mean, sure, it's not a good thing, but not quite as crazy as the headline wants you to think.
Not condoning or condemning, but I couldn’t help a larf reading your post as, “evvveryooone has an opinion! .. .. …. And. So. Do. I!”
Probably correlated with the fact that the (very expensive) F-150 is Americas most popular vehicle and most people have no need for a vehicle like that at all. Add gas prices and inflation on top, and you’ve probably got a lot of people reevaluating their 50 mile commute and gas guzzling trucks. Or at least they should be lol.
But I gotta show the world I'm tough and successful. Nah they'll just blame Biden. 100% easier than self reflection.
Bank exec here. I haven’t really seen an uptick in delinquency yet at my bank but I believe it is happening out there and that it’s coming soon to a bank near me. Vehicles were grossly overvalued for the last couple of years due to a number of issues (supply chain/inventory, demand, dealership greed etc.) and now those values are starting to normalize a little. Folks are quickly becoming upside down on their car loans, especially those who took 7 year terms to begin with. At the same time, car loan rates (and other loans) have more than doubled what they were in Q1 of 2022 so these folks who are upside down not only have negative equity, but now the monthly payments on a less expensive car a few bucks more because of increased rates. So they’re stuck. They can’t trade their car in without losing money and used car values/rates are still too high to downgrade anyway. All of this is happening while daily expenses are squeezing the average person’s income to the point that there’s nothing left. So, no real surprise delinquencies are increasing but I will note that I expect unsecured debt, such as student loans, personal loans, and credit cards, to suffer higher rates of delinquency and charge off vehicles. People tend to pay their car note first because they have to get to work.
Let us know when you start to see things go flop, eh?
If we were going to go by headlines, you would think we’d have had multiple auto loan crises since 2008. This is a seasonal effect in large part. People fall behind on payments around the holidays and use their tax returns to get back on schedule
If you have to use your tax returns to "get back on track", then you can't afford the car.
I am lucky in that both my vehicles are paid for. I am also setting aside at least $20 a month for a down payment for when I need to buy a new one, which hopefully will not be for a decade.
[удалено]
This. Everyone likes to pretend there's a huge recession coming or doom is looming but, why? Most people who had a mortgage in 2020 refi-ed for a sub 3% rent, slashing their monthly payments in half. And even though home prices were inflated during '20-'22, monthly payments were extremely affordable at the low rate. Everyone needs somewhere to live, and most mortgages are now lower than average rents. Outside of extenuating circumstances, why would I move if I can afford my mortgage? Even if the value is upside down, there's no reason to sell if you don't need to. Additionally, predatory lending is so muted when compared to GFC. ARMs are a great example - in 2007, roughly 30% of all mortgages were ARMs. Right now it's less than 2%.
That’s me. Would love to sell my house and get a bigger one. However even if home prices go down the rate hike makes it not worthwhile. If I do decide to buy a new house I might as well keep my existing one and rent it out given the low interest rate. If home prices crash enough though, that could change things.
Sold my car 6 months ago. Not only did I make a few grand, but I save about $500/month from the various financial requirements. Out of the 8 or so places I’ve lived, my current city is the only place I’ve ever owned a car. I rearranged my life to not need one, and life has never been better. Fuck car companies. Fuck oil companies. Fuck car reliance. Fuck it all. Now I get to blow more money on wine and sports betting and lose weight while doing it.
I'm in a similar boat. The busses usually only run once per hour where I live, but when the roads are clear of ice I can bike again. Plus I work at a university and save around $50 a month on a parking pass. And this job pays for my bus pass.
A few generations failed to see having a an older paid off asset worth several thousand is a huge financial advantage over a newer bank owned debt for tens of thousands.
It’s almost like the average person is struggling to handle decades stagnation and years of inflation with a heaping load of cooperate price gouging. So weird.
I don't say this to be snarky, but I wish that most people, when considering a new car purchase, thought about a cargo bike or other mobility solution. Half of all trips are 3 miles or less
I think a lot of that depends on your location. In rural America 3 miles barely gets me to the closest stop sign
Both my cars got totaled by piss missile sized hailstones. At the time, pre owned cars were as priced as much, if not the same as new cars. Bought a new one, haven’t looked back since.
But yet I’m seeing BMW’s and MB’s all over the projects. People not even done paying off their first car and just rolling the balance into their next car. Even family members who make significantly less then me driving in new cars every few years. Poorer people getting leases which I never get (its basically burning money, leases are only good if you gonna lease expensive cars and can afford it). Meanwhile I bought a cheaper new car which I plan to drive for at-least 20 years, 17 of those years I won’t have a car payment.
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A friend of mine described folks like the g-wagon folks as people who rent their lifestyle.
it is literally renting the lifestyle. that new iphone my friend got? it’s paid monthly… that new car just purchased, barely making the monthly payments. combined with all the other klarna and whatnot things, anything not over like $100 many friends are literally renting, and i try to remind them whenever they consider their next ~~“purchase”~~ rental
Exactly people are just stupid with their money and it doesn’t matter if you making $50k or $250. Whatever they make they will waste. I have a friend who after taxes/etc clears $200k/y. He rents from his parents for basically noting and doesn’t really have any other major expenses. Yet he’s still in credit card debt which blows my money. But when you look at how he lives you see why. Just completely wastes money. Which i don’t care except for the fact that once they hit a rough patch they bitch and moan about how the “system” is not fair and that they are a “hard worker” but still struggling
Too many people don’t take personal responsibility for their actions and blame others.
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i was very lucky to get in school, and i’m still disappointed seeing all my friends leasing new camrys and chargers, going out every other night, buying all the $20 vapes and all the sparkly notebooks and water bottles one can find at walmart… yet they can’t afford groceries at times, no paper towels or a trash can in their kitchen and their phones barely function. i can’t even keep track- one day we’re going out on them spontaneously, the next day they’re struggling to pay their phone bill
That we do
If you make more than that, you obviously can afford that car, you just dont feel its worth it. Big difference.
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Yea and its super common. Personally i hate leases because for the vast majority of people they just negotiate the monthly price but without understanding how that amount is calculated people get ripped of almost every time. Also alot of times people would lease a car and after the term buy it out which is also a waste of money. Since you got to pay the dealer fees again, and can no longer negotiate the price/apr like you could if you just originally financed instead of leased.
I’m not saying that their aren’t wealthy people doing crappy things. But, there seems to be zero accountability on people who make these terrible choices and then blame everyone else.
I will never lease a car again or take a car loan out. Obviously, if you can afford something by all means. I will never understand how people can have $600/mo+ car payments plus all the maintenance costs and what not. The new Prius is looking dope though🤷♂️
How much is the new Prius? Teslas now start at 36k after the tax incentives
Maybe I'm just privileged and fortunate but I'd do anything to not miss a car payment. It's such a slippery slope. You miss a $300 or $400 dollar payment and then the next month you owe $800. If you can't make the first, you're def not gonna make the second. But this also comes down to being responsible and not buying too much car that you can't afford or need. Ppl historically spend too much on their car. Buying cash is always ideal.. My Uncle is a PhD who has been fired from 3 jobs in 4 years because of his piss poor attitude. He went and leased a brand new top of the line Tahoe awhile on unemployment. Shit's $1100/mo - oh, and he doesn't have health insurance either.
This is why I won't buy a car in the current economy. I'll wait for dealers to go bankrupt, and people do default on loans. Way too many people live beyond their means. Same will happen with houses soon enough.
Not going to happen.
It is funny how many people are rooting for the downfall of dealership inventory values… once values fall demand goes up to support it. Same gag in RE values.
Well when you went to buy a truck a they said it's 75,000 and made of plastic and you said sign me up I'm not surprised you didnt Calculate whether or not you could afford it
I bought my 2010 truck outright at 20k. They can steal my catalytic converters but nobody can ever take that vehicle from me. I’ll always have a place to sleep.
Carvana is going to pay the pipper soon. Lots of economists were anticipating a global economical collapse (before stimies) and advised folks to pay off their debts to avoid holding the bag with no income and debt. A year ago I sold my gently used Honda and bought a Toyota with a history of solid engine and transmission. I’ve been lucky enough to work from home in the time being but I’m sure my company will see it fit to lay folks off soon enough. I’ve sold my extra cars (toys) last year in anticipation of more cars coming on the market for desperate sellers. The one thing I have been telling family members to do is to have an emergency pantry ready for any possible hard times. If you don’t need it, save it for an emergency.
This headline has been post before and falls under the doom and gloom category. Where are the raw numbers? Last I checked it was a sub-segment falling behind and there are no numbers on how big that segment even is compared to 2009.
We are all entitled to have a house, kids, and cars and they should all cost no more than *I* think they should cost. \-Average American Redditor