Used Car Prices Are Now Rising Faster Than Bitcoin, Other Assets

You may be better off buying a few used cars for your driveway rather than a portfolio of bitcoin

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Good news if you have a used car but don’t have bitcoin: Used auto prices are rising faster than bitcoin and other assets, market researcher Jim Bianco told CNBC.

“If you want to know what the best investment you probably had in 2021, it’s that car sitting in your driveway or in that garage,” the Bianco Research President told CNBC’s “Trading Nation” on Thursday. “It is appreciating faster than the stock market and lately faster than some cryptocurrencies.”

This analysis is based on the Manheim index of used car prices – which is designed to track pricing trends in the car market.

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Image: Getty
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In the past four months, these prices have gone up more than 20 percent. That is more than the S&P 500 and more than bitcoin itself.

Bitcoin is up about 5 percent over the past four months, and the S&P 500 is up about 26 percent so far this year. This means you’re in a better financial position if you’ve got a couple of used cars in your driveway rather a couple of bitcoin on your hard drive.

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Bianco cites two drivers in the used car market – semiconductor shortage and speculators who want to flip vehicles for a profit.

January 1995 = 100
January 1995 = 100
Graphic: Manheim
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Manheim reports auto prices are at a record high. In November, the average new car prices was just over $46,000 and the average used car was around $27,500. That’s a 27 percent increase from the same time in 2020.

Bianco said that this market has all the tell tale signs of a bubble.

In a market where used car prices are supposed to be a depreciating asset, they’ve continued to rise in price. And Bianco says this year prices have gone up 49-50 percent.

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As for when these sky-high prices could start to come back to Earth, Bianco says it’s anyone’s guess.

“This could go on for another year. It could go on for two more weeks,” Bianco said. “The activity that you’re seeing is probably bubblicious.”