Rising Ferrari prices........Bubble in the

making? Many rare and lesser Ferraris seem to be actively trading and at record setting prices. Any observers have thoughts on the current market and how it may compare to the '89 bubble burst? Nobody has a crystal ball, but are these cars being bought by true collectors or have speculators returned to the market?

 

Not speculators, just people who are willing to pay more for a rare and historically significant ferrari. They have the money and want the car.

 

I see just collectable Ferraris keeping up with inflation values thats all, nothing speculative yet, now classic muscle cars such as a Hemi Cuda Convert selling for $2,000,000 is a bubble, I had those types of cars as a teenager and they were nothing great IMO and I don't get the demand for these cars, you could take that $2M Cuda give it a few dings and not wash it for a month and it would look like a $3000 car at the grocery store parking lot.

 

Don't you guys think that price run-ups like this tend to creat their own markets?

As the prices run up, more and more folks who own these cars get a sense of inflated value for their cars. Makes them either take the car off the market, or raise the price expectaction of a car they have.

That in turn tightens the market, reduces supply, and increases the asking price of cars that are available. It also sometimes creates a feeding frenzy, due to the run up and limited availability, like the one we're seeing in the 250 and 330 cars right now.

 

Dave, I think that you're right. There is more than inflation going on here. Don't forget that the average baby boomer is just turning 50. These are guys who have some mad money and have always wanted a vintage Ferrari. When you figure that the potential buying pool might consist of maybe 50,000 guys compared to, what, 10,000 old Ferraris, you do the math.

Dale

 

you old geezers screwin' up the market for the rest of us!!!!!



now cut the crap or all us young folk will stop working - we'll see how y'all do without that 12.4% of our earnings

doody.

 

Yup, that's our aim in life. Screw up the market for all you loonie youngsters thereby making the cars of our youthfull dreams our private territory.

Wait 20-30 years, and you'll get your turn.

DM

 

Several things are moving us into uncharted waters.
9/11 made many realize it can go in a heartbeat.
There are more very wealthy people.
Wealthy people don't have to sell.
A Picasso recently sold for over 102 Million $.
This number and the number (todays WSJ) of 100 Million + yachts being built shows at people are paying WAY up.
How high will great cars, great Art, great homes, etc. go?
IMO within 20 years there are paintings that will trade for 500 million $ and cars that will trade for 75 million $ and those sales will only occur because heirs don't want to own them.

 

Housing prices have almost doubled, gas prices up 40%, a sandwich meal deal at Arbys or Subway costs $7-$8 vs $4-$5 a few years back, classic collectible Ferraris going up 40% in value doesn't seem out of line to me.

Maybe a few select models have some speculation, if so things have just started since about 1.5 years ago, these types of trends last about 5 years so things could get crazy for awhile, get 'em while you can.

 

I was comparing the Mercato section in the Jan. '02 Cavallino with the latest issue and even the lowly 330 2+2 has shown some significant appreciation on the asking end at least.

I certainly wouldn't sell mine for anything less than I have in it, and would probably tack on a premium for "grease and sweat equity".

Its a moot question anyway:at age 55, this is probably my one shot at Vintage ownership, I'm happy.

 

its a bit of everything.
there are a lot of wealthy people out there. they are aquisitive and price is not necessarily an issue. true.
9/11 has made people want to enjoy life while they can, cause you cant take it with you. true.
but the dollar is also low, which is causing a lot of people to look at what they can buy on a dollar denominated basis either as a hedge or as a way of taking advantage of 'bargains' if the object is located in the usa. luxury goods sales in nyc are exploding this christmas. is this because everybody is rich? maybe, but i also looked at the prices, and because i can, i compared them to the same items in london and geneva (they are on my wife's xmas list) and i found that they were very close to half price in nyc - and i cant be the only one who figured this out - hence the big sales figures.

and i think we are seeing this translate into higher priced art, higher priced cars,and higher priced companies being sold to foreigners. hence there is a certain amount of speculative inflation creeping into the pricing as well. my guess is that come 5 years from now when the dollar is no longer the cheapest currency out there, that things will come back into line. does this mean a drop or crash in vintage ferrari prices? i dont think so. it will just mean a tapering off of the hype and velocity of exchange of these goods, and inflation will take care of the rest.....so that $400k spent this year on a 275gtb, will still get $400k in 2009, but not more....and that is why you will see people exiting this particular 'investment' unless they are true die-hards (come on, how many of the merely wealthy do you know that will want to deal with the maintenance issues on a vintage ferrari just to have it hold its value....).
net/net imho, if you want the 275gtb, it will probably not get any cheaper than $350k, but do you want to buy that with 2004 dollars or 2010 dollars?

 

In the long run the rare muscle cars will hold their value better than even the rare Ferrari because there are so many more people that want a rare muscal car than there is that want a rare Ferrari. Don't forget, us on FC don't represent the average car nut! I have a lot of friends who make millions a year that have never even considered a Ferrari of any vintage, yet they all seem to want an original Superbird, or Cobra Daytona, or GT350 or hemi Cuda, ect...

 

Let's try something here. That is, let's put together a supply/demand formula.

First, let's define a few things:

1. Number of vintage Ferraris existing in the world = _____________

2. Number of vintage Ferraris up for sale at any given point = __________

3. Number of potential buyers of vintage Ferraries in the world = __________

Opps, I guess we need to define "Vintage Ferrari." Okay, let's first draw the line at 1975. Second, let's exclude the multi-million dollar cars because they live in their own little world. Let's also exclude the full-blown race cars. Given this, what is your guess as to how many cars fit this definition. Gerald, Old Guy, Carbon, Wayne, Tom S, anybody?

I'll go ahead and make a SWAG of 12,500 based on 25 years at an average of 500 cars a year.

Now, how many are for sale? Again, I'll SWAG it and say 10% or 1,250.

Now, for the really hard part, how many real buyers are there for these 1,250 cars? Who knows? I'm gonna say at least 1,250. Just for grins, let's double it so that we have 2,500 potential buyers chasing after 1,250 cars.

Dale

 

Dale, while I agree with your SWAG numbers for points 1 and 2, I'm not sure about the number for #3. While I think there are lots of people who would love one of these 1975 and earlier cars, many are going to be turned off by the maintenance requirements/costs. These costs are not getting any lower, and many people will not actually buy a car once they realize that they will never be able to get their money back after paying the maintenance. For example, I give you Urotrash and his quest to buy a 330 GTC.

So, maybe you have 2500 potential buyers, but how many are actually going to bite?

Dom

 

Thats a very good point...my 330 is a big hit at the local hotrod drivein - and there is some serious, expensive rolling iron there - but one of those guys going for a vintage Ferrari...nah. But then the name Ferrari in itself carries such a cachet and snob factor with it, along with great expectations of huge purchase and maintenence costs. That has to scare a lot of financially able but uninformed prospective owners off. I had a guy pulled up at a service station next to me ask "what did you pay for that--200 grand?"...and he wasn't joking. I thought I would never be able to own a vintage Ferrari until I idly started looking on Ebay and also found Tom Yang's board. And, once I got through the reconditioning process, which included a lot of my own grunt labor, the 330 hasn't been any more expensive to keep up than the '69 Corvette noted below.

I've owned three significant pieces of American machinery: New '66 Pontiac GTO, with as many performance/roadhandling options as I could afford, used '63 split window Vette coupe (bought for $2400.00, sold for $2400.00), and, much more recently, a '69 427 Vette roadster...a rolling monster if there ever was one . Any past yearning for an American vintage car is now gone.

It's easy to daydream about being a mutimillionaire and getting a $900 grand cashiers check to pay for that black 410 Superamerica on Mike Sheehan's website...my mind can't even formulate the picture of buying a '67 Dodge street hemi coupe for the same amount. (I had a chance to buy one in '68 for $2000.00). I've never been surprised at the prices wealthy-collector quality Ferraris fetch but it is astounding to hear of a million bucks change hands for Detroit models that were cranked out by the thousands 35+ years ago.

 

Dale.

Skipping the more esoteric cars, and just sticking with cars that they made more than 50 of, I get roughly the following:

Approximately 12,400 (good guess on your part) no 308's in the count. Last car I included was 365GT4 2+2. You can probably add about 800 total to that if you include all of the low production cars that I originally excluded.

I used Cavallino's Guide to Ferraris produced from the last issue.

I think 10% might be high.

I only really follow the 246GT/S, so lets use that number.

Total 246GT - 2,487 total GTS 1274

If we use 10%, that would mean there should be 376 for sale. As far as I can tell there are maybe three or four dozen for sale in the US at any given time, and maybe that many in Europe. By "for sale" I mean actually available, and can be had at or around market price. Not the fishing expeditions that are out there at in excess of $100K.

And, I know personally of at least a half a dozen serious shoppers right now just within our bandwidth, and a couple more outside of it, and they all seem to be looking at the same three cars.

So, at least as far as the Dino is concerned, it's probably more like 60 or so cars total available from the 3,761 that were made originally. And I think that 60 number may be a little high. That's less than 2% of the cars manufactured.

 

Sure there are less Ferraris on the market at any given time, but there are also less people who want them. As a FC poster we all tend to think that all car guys out there want a Ferrari...they don't. There are many more 40+ car nuts out there both here and abroad that long for the cars they remember from their youth in the school parking lot they couldn't then afford, which were rarely Ferraris. While they may have seen Ferraris in magazines, only a few later end up buying one even when they can later afford it. In fact, even though I have owned 6 Ferraris over the years, I still long for a SS396 convertiable or big block GTO like the "rich kids" owned when I was in high school and will likely buy one some day soon.

 

I think lots of people still want them. What they don't want are the hassles:

Q from F Novice: So how much for that beautiful Ferrari 330 GT.

A: Only $30,000. But, the maintenance is going to cost you another $30,000 in the next few years (paint job, rust removal, rebuild carbs, valve job, etc., etc). Oh yeah, and you'll never get that money back, because after you are done, the car will still be worth only $30,000.

F Novice: Umm, no thanks, I think I'll buy a vette.

I think it will take a "special" (crazy?, Demented?) type of person to buy one of these cars. I'm one of them, and probably many on this board, but there aren't too many like us.

Dom

 

The less expensive non "iconic" vintage V12 Ferraris are being parted out with their parts being used on more expensive "iconic" Ferraris. Their frames and titles being used for SWB, GTO, Cal Spyder, and Testa Rossa rebodies. An iconic 330GTC, Lusso, or Daytona etc. will always be restored and never parted out unless beyond repair. As less and less real parts become available from "donor" cars, the values of iconic Ferraris will rise and the value of a donor Ferrari will also rise. The best, most complete donors will probably be restored by willing enthusiasts as long as it is cost effective. In 20 years there will be less vintage Ferraris out there but no less Ferrari enthusiasts and collecters.

Freeman

 

I was looking at an old Cavallino magazine from the mid 1980's which had a photo of the FCA national meet. It looks like 30 or so cars. Look what has happened in 20 years. Obviously more people are into Ferrari, but no more vintage Ferraris are being produced.Supply and demand. I think many people, myself included, started with a modern Ferrari, then after reading about the history of Ferrari, visiting the factory, and going to shows, you start to appreciate what Ferrari is all about. You want to own a piece of history, something that was created by hand by the old timers at the factory. The other type of Ferrari owner is the person who all of a sudden makes a bunch of money and goes out and buys the latest and greatest Ferrari because he thinks that is what he is suppose to do. The thing I like about vintage Ferraris is that you cant just go out to the nearest Ferrari dealer a buy one. You need to really search one out and be patient to get the right one or pay the consequences.

 

I agree - and at the rate the "donor" models are being consumed, they may end up being the rarer cars in some cases. It has been my contention for the past several years that there a far more remaining Lussos than there are PF Coupes which have been parted out/"donated" like crazy. Of the 353 PF Coupes, the best guess is that 150 to 175 remain as PF Coupes. No one is hacking up the 350 Lussos made - any best guess on how many remaining Lussos there are? 300? 250?

I disagree a little w/ the statement that donor cars will be restored as long as it is cost effective - I think there will always be a lunatic fringe, like me and lot of the guys at Tom Yang's site, who will make the economically illogical choice of pouring money into a 2+2. Of course, the current market direction is making me look like a genius; but the hope of an increasing market has not factored into my thinking for the past 5 (almost) years. . .

 

The guy that ownes the body shop that painted my Boxer is the typical muscle car collector, he has a very successful accident body repair business with 2 separate large shops, he can afford whatever he wants I am sure as he has a $90k Custom Harley and many other toys includimg 2 mid year classic Vettes, his image of Ferrari owners comes from experience of dealing with them, their is a large GM dealership here in town since the 70s and the owners had brand new Boxers and older Dinos which he painted back then, his opinon of Ferrari owners was not favorable, they think they are better than everyone else and want everything $$ for nothing, not worth dealing with in his opinion, I met him when I had him first paint my 930 Turbo and we went from there to end up painting my 512, I guess he figured I wasn't a total PITA to deal with.



When I first brought the car in we talked about him buying a classic Ferrari, but as the car developed the typical Ferrari PITA problems he said no way was he buying one and often would joke about the flimsy Italian design and how impractical and what a toy they are, but something changed in his attitude as the car was being completed and he drove it a few times to his other shop for detail work I could tell by the look on his face after the first time he drove it his whole attitude about Ferrari changed, and he is now actively looking for a Boxer, the point is most of these classic muscle car buyers just don't know what they are missing and think a 70 Hemi Cuda is it.



Concerning classic Ferraris, they appeal to a small audience,you typical new Ferrari buyer wants something they can hop in and drive with no hassles along with the latest technology in the car, quite different from a classic buyer that enjoys a much larger spectrum of the car from its heritage and history due to Enzos involvement, to working on the car to the thrills of the sounds and driving experience, they are also typically very knowledgeable on Ferrari and its history, sort of the experts of the mark much like other experts in art or other hobbys.

When speculation gets involved they are no longer owned by the core enthusiest that wants a piece of Ferrari history that Enzo was involved with and that can drive, work on and enjoy them you start getting people with money they want to park and are looking for a quick buck and know nothing of the history or care to, unfortunately they make it hard for the core enthusiests to own them and shut them out with crazy prices.

 

Looking just a bit further, to this thread: http://ferrarichat.com/forum/showthread.php?t=41726

maybe you're a bit optimistic in how many cars are available. Even if Andy's site is new, and does not have ALL the cars available, he's still at less than 10% of your SWAG number..........(±130 cars).

Maybe the truth is that there are not as many cars for sale as we think? Of course, "at the right price, anything is for sale", so double the number shown......Still not many......(and some are high 6-figure and above).....

Thoughts?

james

 

I would like to think that in the future I can justify the expense of restoring my car to 95+ point condition. It's one of those good "donors" you're referring to, a mechanically excellent, rust free, and very good looking driver. For the time being, though, expenses will be limited to maintenance and jobs like fixing the tach, finishing interior repairs, and trying to get the history completed.

 

Good point. Hey, I was SWAGING. However, because most transactions occur off line, any online list will be understated. (BTW, this list of is one heck of a lot of work!) So let's triple it to 400 cars, worldwide. That's not a lot of cars.

My guess is that there are significantly more than 400 potential "real" buyers out there. Maybe the troll in San Clemente can chime in with a guess as to how many buyers are out there.

Finally, not to be disrepectful Frank, but I don't think the US muscle car market has any impact on the old Ferrari market. Different stokes for different folks. If you don't believe me, hop on a plane to B-J. It is a completely different world.

My point is that there are a lot more buyers of vintage Ferraris than sellers. There are a lot more than compared to four years ago, and there will be even more in four years from now. If I remember my undergraduate economics, this means that the per unit price has gotta go up.

Dale