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Used Car Prices Are Rising Faster Than Bitcoin

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Used car prices are rising faster than bitcoin and other assets. This is according to market researcher Jim Bianco.

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Group of cars parked in a row | Used Car

Jim Bianco is president of Bianco Research, a financial markets insights firm. He said that Americans might not realize that their biggest investment isn’t stored in their banks.

It’s sitting in their garage. “If you want to know what the best investment you probably had in 2021, it’s that car sitting in your driveway or in that garage,” Bianco said Thursday. “It is appreciating faster than the stock market and lately faster than some cryptocurrencies.”

Used Car Prices Rising Faster Than Cryptocurrency

Bianco based his analysis on the Manheim index of used car prices. This tracks pricing trends in the market. According to the index, in the last four months, used car prices have increased by more than 20 percent.

That percentage is more than the S&P, and bitcoin, too. “As of December 15, the latest set of data we’ve got, they’re just accelerating higher and higher right now.

There’s no peak at least as of now,” Bianco said. In contrast, Bitcoin went up about 5% over the past four months based on Thursday’s stock market close. Meanwhile, the S&P 500 went up 26% so far this year. 

“In the last four months, they’ve gone up in price more than 20%. Not only is that more than the S&P, but over the last four months that’s more than bitcoin itself.

As of December 15, the latest set of data we’ve got, they’re just accelerating higher and higher right now. There’s no peak at least as of now,” he noted. 

Two Bullish Drivers Pushing Used Car Prices Up

Bianco cites two bullish drivers that push used car prices in the market. The first driver is the rise of new car prices. A semiconductor shortage is severely crippling the automotive industry in making new cars.

In turn, demand is causing prices to surge for the few new cars remaining in circulation. In fact, Kelley Blue Book reports auto prices are at record highs.

Last November, the average price for a new car cost $46,320. Meanwhile, used ones cost $27,569. This is a 27% increase compared to prices a year ago. 

In addition, speculators are pushing prices up as they continue to flip vehicles. Bianco notes the increase of buyers interested in buying now before prices get even higher. 

“What we’re seeing in used cars is a rush for people to buy them, and a rush for people to speculate on them. Buy it now because it’s only going to get more expensive,” Bianco said. He concluded that these drivers are a ‘tell-tale signs of a bubble’

Tell Tale Signs of a Bubble 

Bianco sees the used car market as something that’s slowly bubbling. “It has all the tell-tale signs of a bubble. Used car prices are supposed to be a depreciating asset. They’re not supposed to go up in price. Yet, this year they’ve gone up in price 49%, call it 50%,” he said. 

Bianco also suggested that the used car sticker shock reflects a bigger problem. As prices go up, many people buy items to avoid higher prices in the future.

“This is exactly what they [Federal Reserve] don’t want to see happen because this is that self-reinforcing idea about inflation,” he said. As result, Bianco warned that this year may mark the first inflation comeback in a generation.

While inflation will decrease in 2022, the rate will go slower than most people want to. As for auto prices, Bianco suggests it’s anyone’s guess.

“This could go on for another year. It could go on for two more weeks,” Bianco said. “The activity that you’re seeing is probably bubblicious.”

Watch the Finance Meta News video reporting that Bubblicious’ used car prices are rising faster than bitcoin, market researcher Jim Bianco warns:

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