Is the bubble finished?

I believe several factors exist. The auction market is now mostly speculators and without enthusiasts and collectors can't keep the market up. Second people are not willing to pay a premium for a car they can get elsewhere for less money.

This is starting to happen here with real estate. Buyers are not willing to pay high prices and are waiting on the sidelines for the prices to drop.

 

Where is "here"? In the SF bay area, properties are still trading hands at an alarming rate/ price.

 

Southern California real estate is very hot.

 

Should have said Vancouver. The Vancouver real estate market was/is one of the hottest in the world. You can see the bubble bursting. Only speculators left in the market.

 

To my sensibilities, the vibe in most rooms was pretty decent, with sprited bidding on many lots. Things seemed healthy enough, especially when one considers that the yen and euro are both worth 20% less to the dollar than last year.

One factor to consider is the potential for market saturation. If 5 real buyers have 8 examples of a car to choose from, the best examples will be expensively bought, and the rest may not do as well as they would have had they been the only one for sale.

 

I think the easy money has been made, either way.

 

I have bought and sold at auctions. Most recently I sold a car at one of the big auction houses during Monterey car week.

Don't believe what you are seeing when at an auction...especially Monterey. Think of it as auction-theatre.

Its mostly fake. Few examples for your reading pleasure....

1) Its LEGAL in CA for the auction house to allow 'sellers bids'.

A sellers bid is where they bid the car up as if there were 2 or more people bidding. Why do this? To raise the final price the one real buyer. I was bidding on a very nice classic mini last year. I was in the back of the room with a handful of people in front of me. I looked around the room and there were no other bidders. The guy running the auction noticed I was looking around and he immediately put his cell to his ear to act like he had a phone bidder. The auctioneer was 'seller bidding' the car. I told the bidders assistant that I wasn't going to bid against myself...and he more or less told me that was what they were doing.

Turns out the seller wanted too much for the car and I passed.

2) The other game is harder to understand..the auction house has NO bids on a car and they want to set the market for the car to be for sale again. Allow me to explain...

The auction houses don't want to piss their sellers off. RM is rumored to play this game. No bids..no worries. Act like there are 2 bidder that never make it up to the reserve. Its a no sale at a high price. Next auction everyone says 'that car was bid up to X last time'...setting the stage for a new sale to be at the previous auctions high price.

3) Pre-arranged sale. There was a well known Porsche that sold at an auction 2 years ago for a crazy price of $300k+. It was a 72T. There was rumored to be an agreement in place with the sale price being around $200k. The bids above $200k were fake. The seller had record crazy price that set the stage for his future sales ("So and Sos cars are worth more because of his name"....). Fake.

4) All the auction houses share intel on cars and their sellers. They will let each other know what their 'lots' are so they aren't directly competitive. Notice in Monterey how there really weren't that many directly comparable cars for sale?

5) The reported sale prices are mostly BS. The reported total sale results are mostly BS. No one checks what they say.

Do you really think XYZ auction house is going to admit they didn't have a record year selling 99% of their cars? No way. The houses brag about their sale rate..its a USP.

Even tho the auction houses make money regardless of the markets direction its easier for them to make money in a sellers market. Buyers are less selective and lots of sellers are flipping cars. In a down market they have to deal with angry sellers who are selling for less than they paid and deal hunting buyers. In other words the auction houses have all the motivation in the world to keep the illusion of an sellers market going...

It was the observation of many seasoned sellers that I know the froth is off the market and due for a leveling off...or...drop in values.

 

I just sold two beautiful building lots I was hanging on to in the Vancouver area because I thought we may see a down turn but it may be short lived. I watched a program on population growth numbers and they are all going to need a place to live. It is expected that the Vancouver area will see an additional 1 million people move here over the next 20 years.

 

The problem Vancouver faces is the mainland Chinese. In the higher end of the market, 70% of buyers over $3million was mainland Chinese. With the meltdown in China and the falling Canadian dollar, many of them are now cutting their losses. Oil meltdown has created a recession in Western Canada. Add in the recession, banks not willing to lend $1million plus to the average buyer. Vancouver is slowing, data lags a few months, so we won't know how much until then. Once resources bounce back, the recession is over, it will be hot again. Short term, not good, long term catch the next cycle you'll be fine.

The U.S stock market has been signaling the sort of the same for the U.S. Dow now down over 400 points. The brakes will be slammed there by winter.

 

Which car did you wind up selling?

 

I always thought a lot of things you see at the auctions are staged. I guess that's why they have that famous statement. " believe nothing of what you hear and half of what you see"

 

And you would be even wiser to believe slightly more than nothing of what you read in that post. The peanut gallery is strong with this one.

There are a whole bunch of here who have bought and sold at the three high end auctions over the last few years and have never seen or heard of any of this. And we are far from naive. Some of this is so far fetched, it's just not even worth commenting on.

But of course, if you're simply just looking for something else to bag on and be a wet blanket about, then by all means, this is as good a topic as any.

 

If the stock market continues to shed 1,000 points per week or translated to $7.4 trillion lost in the week. We'll see a correction in every market. I believe the U.S. has been in a minor recession for the past few months. Its now snowballing into a major one. $40 oil supports the minor recession "theory".

 

Futures are saying its going to be another bad week in the stock market (down 400)