Dam. And I just bought a house full of Louis XIV.
...and you make my point. At some point the sheep move to something new. When "collector" cars get too expensive or become a bad investment, they will dump them and move on to whatever they feel is next. Then, you've got the con artists who take a rust bucket and make it look pretty and put it up for auction to unsuspecting morons caught up in it. They are the ones who will be forced to dump their "assets" to the next guy. Cars are one of the few assets that oxidize. They still need work even if they are sitting still. Have a little "oops" with a Prius in your side and your asset just became a liability. Nothing is certain. Just ask Reggie Jackson who lost his entire collection in a fire in Oakland. Or this guy.... [ame]http://www.youtube.com/watch?v=fqpa1HB-wOc[/ame]
Great discussion. I'm neither buying nor selling, so I'm not that concerned about what happens in the market. The only significant advantage I've seen as a result of the run-up is that my wife throws fewer (and smaller) objects at me when I rebuild 330 components on the dining room table.
All true, but we are not there yet. The new money, the poeple who really know nothign about cars, the non drivers are just starting to get in. Thats why we see z8's climbing, its because the car ticks boxes on a form. For cars to hit prior bubble prices based on money vakuye boxers need to get to 700K. Muscle bubbled, prices slid back about 20% on good stuff. Some cars are flattening for niw, dinos, for example, but then they are already really expensive for what they are. Yep pealple will jump out of cars, but the market can still double in many items till it gets there. For sure though all the signs are appearing of abubble devloping. More and more car pimps, more money commign in from non car people. Yes the market is limited, they dont make new old ferraris. The money guys have figured coveted item finite supply, a market can therfore be made and pushed. After all if you take classic ferrais lets say up to and including 308', masertais till the bora, Lambos thru the countach and pre DB7 astons, what are w talking about an asett class of afew billion dillars, no new supply. Not going to take too much money to drive it wild, and the money has figured that out. Remeber how thay used to say this price rise is different because it enthusiasts with money, well all the signs are that the non enthusuiast money is enetring the market, big time. Dealers are dicoverign new items to hype, of course it will end in tears, but how many years and how much hype till then, the end is comming but not that soon.
Exotic car prices are definitely in a bubble. Not much needs to be said. In 2 years when people re-read the posts here, justifications etc... none of it will matter. There are a few bubbles going in right now.
But what to do? I've always wanted a dino, I finally have the financial means, if I don't buy now, I'm afraid they will outpace my means. I can't wait for the bubble to burst. I was at Amelia, the dinos, IMHO were rough. People still wanted those cars. There is so much current interest is ferraris, I personally don't see it ending soon.
Life is short so you should buy the car you want now. I love the Dino. Fortunately I got one from a nice gentleman in FL last year and I plan to hold it for a long long time. I'll probably never sell it so I dont care about any bubbles. If you plan to hold it till for a long time, you should not care about any bubble bursting because in 10 to 15 years, a Dino will be in the millions regardless of any bubble that comes and goes. I think you shouldn't look at auctions for good cars IMHO unless it is a car so rare that you cannot find them from private sellers or dealers. Auctioneers wont let you do any PPI so you wont know if you got a rust bucket underneath the shiny paint or if there are holes in the cylinder (nightmare auction stories I have heard). I have a friend who is selling a Dino but it requires some work putting it back together. If you are interested, please send me a pm and I'll see if I can bring you and the seller and a good mechanic together. Perhaps you can get a decent car at a good price. The car is in NYC.
My final word on the Bubble Bursting. I believe over time due to money depreciation as a result of inflation or money printing everything will become more and more expensive. Not perhaps over a short 3 to 5 year time frame but 99% probability in 30+ years. Sure in the mean time prices for everything will rise and fall but they will for sure rise through the falls. I'm not talking about financial securities but real and tangible assets. Thus if a collector or an enthusiast is buying an important classic Ferrari because he/she loves it then they will not go wrong to buy what they love, enjoy driving and owning it over several decades. However if a speculator comes in the market trying to make money by flipping cars, one day in the future, they will surely get caught when there is a price correction. Thus everyone is correct in this debate. If you are long term collector you will always win. If you are a short term speculator, you could lose big.
The price increases are heavily biased towards carburettor cars, Ferrari's total production up until 1980 was about 20 000 cars, of which perhaps 80% still exist. Now I see that a lot of Ferrari owners hold their cars for a long time, say 10 years, that implies globally around 1600 cars are transacted annually, and for prices to be stable, demand and supply have to be in equilibrium. What changed is that the wealthiest generation in history ( baby boomers ) are entering the phase of their life when they have the kids off their balance sheet and are financially able to enjoy life by spending money on themselves, buying the things they always wanted. Ferrarichat is a pretty good microcosm of that demographic. Now if 400 "extra" people globally decide they want a carburettor Ferrari, that's a 25% increase in demand over the baseline 1600 transactions, which has a massive effect on prices as the supply is fixed (or even diminishing as cars are destroyed) Compounding the demand is that the number of people that can afford a Ferrari has also increased dramatically since the last boom 25 years ago, Wiki states that globally around a million ADDITIONAL millionaires are created every year and it's not hard to imagine that some of them are going to want to buy an older Ferrari. Factor in low interest rates and the opportubity cost of owning a collectable car is also very low compared to the late 80', so why not? Finally, this is all happening despite a subdued global economic climate. The US is in better shape than it was, but the European economies are still very flat. Imagine if there was a boom and there where higher levels of consumer confidence. Nothing can go up for ever and at some point the market will overshoot and correct, but I think we are witnessing a significant fundamental shift in prices for these cars. M
Yep thta is why I see no reason to sell. I nejoy owning and rivign the car, and at this point in the curve for the next few decades it will ba as good if not better than any other assett I have. The bigger question si what cars can you buy now faily reasonably, that will hit the same curve in the enxt few cycles.
I'm not sure who told you this but if you're a knowledgable and respected auction attendee, the best auction houses like rm sothebys and Gooding will arrange for a ppi for you if there is enough notice so that you can conduct your proper due diligence. You can also bring your own mechanic or restoration person to inspect the car on site. Also, they have "research rooms" with loads of documentation on the cars, including recent inspections and such. They really try hard to be as transparent as possible. Now if you see a car in the morning and buy in the afternoon with no due diligence or inspection, it is more possible for bad things to happen. I'm not saying that auction houses are the greatest or best way to buy a car but there is no reason to be make an ignorant purchase at auction. As with everything else in life, you just have to know what you're doing.
Look it's a demographic thing. Baby boomers are in their peak age and a small % of them are are extremely wealthy. So cars from their youth are being bid up for nostalgia reasons. When you close to the end, time more valuable then money. Baby boomer generation was the most materialistic in history, most defined by consumer toys and nostalgia for youth is a big thing. Once they pass away the next generations will not care too much about cars from the 1960's because they have no nostalgic attachment to them. On the economic side you've got trillions upon trillions of worthless dollars, euros being dumped onto the system. If you have tons of money where do you keep it? Bank accounts aren't safe, so you look what's very rare and limited quantity. At the same time, majority of these auctions are fake just like the art market where all sorts of shady activities take place and the same work gets resold a dozen times in the span of a few years... The combination of nostalgia, dollar inflation + massive wealth concentration = high fiat money value for collector cars. A Ferrari Enzo cost roughly 1600 ounces of gold in 2003. In 2015 it still costs 1600 ounces...
Markets are impossible to predict, but the universal symptom of a bubble is more supply than demand. I don't really follow the Dino market, but it seems like they would have had nicer Dinos at Amelia if there was a glut of cars on the market because the auction houses could have had their pick of the best. If this assumption is true, then that might signal prices won't go lower soon. One good yardstick for vintage car supply might be the "for sale" section of 330gt.com site. Obviously, it only covers a single model, but it is updated constantly to track (as accurately as humanly possible) the total number of cars available at any given time. I don't look at the for sale page very often, but from memory the number of cars seems to be about the same as before the market run-up. The prices are much higher, but the total number of cars seems is about the same or maybe even lower. No market can't go up forever without some retrenchment (not necessarily a bubble pop), but these two "supply" data points might suggest that it has more room to grow.
All true. Demographics suggest that the interest in '60's cars will probably wane in about 20 years, just like the interest in pre war cars seems to be declining now. But that's not a bubble, just a gradual decline and I don't think we have reached the top of the curve yet. And there are more wealthy people being created every day yet the supply of classic cars is finite. What makes 60's and 70's cars an attractive long term ownership proposition is that they offer a blend of a modern driving experience, nice styling and are mechanically and electronically maintanable. M
This has been my position throughout the thread. Look no further than the other thread 'prices from the golden years,' where there is very good documentation for this. Even if you paid top dollar during the '80's price spike, you did fine if you held on long term. It is the speculators that get hurt when the music stops. The true aficionado who plans to enjoy the car long term has historically done fine.
What possess someone to pay $10M for a car? There are only a few reasons 1) He has so much dough it's like buying a dollar item at McDonald's to most. He won't even feel it. 2) He's just got to have it before he dies. 3) He's just got to have to tell his other rich buddies he has one and they don't. 4) He's just got to show how freakin' wealthy he is. ... and the correct answer is: 5) He knows he's going to make a $1M on it in a year. Take away number 5 and the market for these cars gets really small.
Any, all or none of the above. All depends on the buyer. Even if you know for dead certain that a car will sell for less in ten years the time wasted waiting can be a bigger expense.
U know, I really don't think so - I think it is #1 more and more. I used to be in the large yacht repair business and yachts would come in worth 50 million and have a "major service" and spend 1 million. All while the entire 15 person crew and 5 star chef are put up in a water front mansion to have access to Newport RI for the summer. Monthly Bill for interior refit and @ anchor active stabilizers 500K, invoice reviewed by Captain - Money wired into our account that day. Perini Navi 150' in for work and new sails, 250K for new sails, and I was walking all over the boat I noticed the artwork....... I asked the Captain if it was all real Picasso's and Monet's - Yes he said, the value of the art is twice the value of the sailing yacht. I think at the time the boat cost 30-40 million new. The best was when they would tell me the avg owner uses the boat 2 weeks a year, that was my introduction to wealth in the United States. Then you have all the wealth in the world. Take your guy that is worth 250 Million, lets say he has everything in the world he wants - Fly's private, 3,4 homes, zero debt, and really has nothing to spend his 15 Million dollars in extra cash flow he has sitting around. He's in his sixties and wants a few of the "best" because why would he settle for anything less. A guy like that who starts collecting stuff, gets it all - and goes overboard. What about the same guy who is in his late sixties that is worth 1.5 billion? Same scenario, however has about 100 million a year in excess cash? These guys already have EVERYTHING they need. I talked to a friend of a recent GTO buyer that bought the green one for 50 million ish. Guy is late in life and makes 250-400 million each year, MKT has a great year and BAMB he makes a Billion in one year. So many people have so much money today that buying a car for 10 million later in life is like many of us buying a Bike.
There are more millionaires "created" every year than there are classic Italian coach built cars/sports cars etc. Demand is to ever increase and supply is limited to a relatively small number of cars compared to the number of people with the means to purchase. Prices will rise and fall, demand will not, IMHO, until the food/water/petrol supply are threatened; which may happen sooner than people expect it to. ________________________________________________________________________________ "Live life like you're gonna die,....because you are!" -- William Shatner
How about because he loves it? No idea (and don't care) what my Tdf is worth but I own it because I love it.
And when he loves it and money doesn't matter you have real organic price appreciation. I used to be a naysayer, However I think these prices are real and sustainable.
