For many, the thought of buying a reliable car that won’t break the bank can seem like a pipe dream. Prices have risen steadily since 2017, and until automakers overcome supply chain and labor challenges to get more cars off the assembly line, pent-up consumer demand will only lead to To raise prices. With dealer stocks dwindling, car buyers turned to used cars instead, creating fierce competition in the new and used car markets.
But it’s not just about cars – the housing market has also seen a huge jump. As of the second quarter of 2022, The median home sale price was $440,300– 15% increase over the same period in 2021. Historically low interest rates and increased housing demand during the COVID-19 pandemic have led to Shortage of homes for saleA record price hike across the country. Although prices remain high, the number of home sales has declined since their pandemic heights: in July 2022, the number of Home sales are down 20% from the previous year.
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To examine the general trend of the American consumer in car and home prices, Jerry Data collected from Bureau of Labor Statistics And the Realtor.com To understand how prices for two of the largest consumer buying categories have changed over the past five years. Consumer price indices for new and used cars measure the price paid by urban consumers, which includes about 88% of the total population. Changes in the index measure the rate of inflation between two time periods.
Home prices have risen in the past five years
Median home prices have risen steadily by 54.6% in the past five years. Two years into the pandemic, buyers are facing a tough market filled with low inventory and housing affordability. In the past year alone, average home prices have risen Almost 20%.
New car prices have also gone up, but not nearly as much
Prices for new cars have been rising fairly steadily, increasing by 14.3% over the past five years. 2020 has been a worrying year for auto dealers due to a new wave of economic uncertainty caused by the pandemic. inflation Facility with The shortage of chips Create a perfect storm for new car price growth exponentially.
Used car prices have skyrocketed
The headwinds of the epidemic have made their way all the way to the used car market. Used car prices have increased 47.0% since 2017, According to CNNPrices rose more than 30% between May 2020 and 2021. In addition, car rental companies sold a third of their fleet due to reduced tourism in 2020. With tourism now returning, car rental companies are short on cars and are not inclined to sell any of their limited inventory to wholesalers. , as they usually do. This resulted in used car prices dropping initially, but they quickly rose to nearly match the prices of new cars.
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How has COVID-19 affected the demand for cars and homes
COVID-19 has had a major economic impact and is the cause of many supply and demand problems. Pandemic lockdowns Auto production slowed. This caused a shortage of used car supplies, especially for newer models. The chip shortage has also driven up demand for used cars, which has led to additional price increases.
Supply chain issues drive up prices
Despite the recent housing shortage, new home construction is on the rise. but, Supply Chain Issues Things still slow down. With a shortage of materials and a lot of late orders, it takes longer to build new homes. As the housing market becomes more abundant, housing prices are likely to stabilize.
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Inflation makes cars and homes more expensive
caused by the epidemic inflation Home and car prices have skyrocketed. This happens when the price of services and goods rises, reducing the purchasing power of consumers.
In October 2021, the annual inflation rate jumped to 6.2% – the highest level in more than two decades, since November 1990 – and continued to rise. From July 2021 to July 2022, Americans watch The consumer price index increased by 8.5% Inclusive. Meanwhile, starting in 2022, mortgage interest rates have risen, resulting in an average The monthly payment for new mortgages goes up about 50%. compared to before the epidemic.
This story originally appeared on Jerry and was produced and distributed in partnership with Stacker Studio.
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