Supercar pricing headed down?

Greenspan has spoken. Rates will rise and as with every time that happens for a sustained period, valuable but unnecessary luxuries like exotic vehicles and jewelry and semi rare wines will depreciate. True rarity, as in things that can be counted on ten fingers or less will be least hard hit, but run of the mill type "scarcity" like 399 Enzos, will take a significant hit.

My prediction is that as rates rise over the coming months, F50's will drop a couple of hundred thousand first. Enzo's, in very short order will drop under a million dollars. I know this is merely of academic interest to just about every living being on earth, except for the 1,000 or so who have the means and the interest in these cars.

F40's are currently selling at less than their original MSRP and they are truly iconic vehicles. The same thing will happen to Enzos (and F50's) once they are over 12 years old.

Something about being a teenager that is unattractive to adults. We all love kids until they become obnoxious (around 12). They only become interesting again when they are well into adulthood (over 30). I think the same applies to exotic supercarcars.The only real exception is that very well behaved little english boy MacLaren.

 

Truly rare items are not subject to real world market forces. One of a kind things need just one buyer, but that's a very different situation from things that have multiple copies (in the hundreds) available.

 

Cash is a relative term here. Availability of cash is more to the point, and you are correct that when rates rise money is often better employed elsewhere, rather than in items that are being devalued and not appreciating. And I don't believe that anything that has 398 fairly recent exact copies of itself is rare. And don't be surprised to discover that several Enzos are financed. It makes perfect sense to borrow cheap money to purchase that kind of asset, write off allowable depreciation while retaining the market capital increase. You win both ways. You get to write off the interest expense and depreciation and you get to own and use the asset. There's no other way I'd buy one.

 

I guess that it's natural to love the ones we created, but how many other teenagers do you have this affection for?

 

Just watching and waiting......
Any decent 275 4 cams popped up on your radar?

 

Everything's relative. A rise of 3% over the current fed rate would be an massive increase of several hundred percent (4% versus 1%) and that kind of increase translates into huge opportunity for those with access to cash.

Smaller changes, less than an order of magnitude, are significant enough, but changes like the ones I expect are huge in their implications. The flip side of rates being so low is that when they begin to rise off of a very low base, the changes are huge in terms of a percentage increase, thereby having the effect of switching money away from hard assets to interest bearing investments. Nobody cares what happened in the late80's/early nineties, they care about the current situation.