Katherine Mondo has been car hunting for more than three months. From her Berkeley home, she has sidestepped an online car scam, mourned a vehicle in Texas that slipped through her fingers, and is now considering an old, almost-too-old Subaru in Sacramento.
With used car prices skyrocketing to over 40% higher than last year and buyers outbidding each other for vehicles, Mondo’s dizzying journey is the norm in one of the most maddening times to buy a used car in recent history. Think Bay Area housing market maddening. The past year ranks among the largest price increases ever, according to the Consumer Price Index, with new cars also up 12%.
“I’ve realized that this is the worst time to buy a car ever,” said Mondo, who has her hopes set on a Toyota RAV4 with fewer than 150,000 miles. “Instead of scrolling through Instagram, I scroll through Craigslist.”
Across the country, used-car buyers are being forced to lower their expectations and increase their budgets by hundreds or thousands of dollars.
These jaw-dropping prices are symptoms of a market still coping with the after-effects of the pandemic, as manufacturers struggle to ramp up vehicle production and meet booming demand amid a chip shortage.
“Everything in the market right now is being driven by this shortage of new vehicle inventory,” said Mark Schirmer, a spokesperson for Cox Automotive, which owns Kelly Blue Book. “That shortage has pushed more buyers into the used market.”
The average used vehicle list price is now a whopping $27,633 with an average of over 71,000 miles on the car, according to a Cox Automotive analysis.
Meanwhile, people who bought cars in the past few years are seeing their cars retain value and – in some cases – appreciate in value.
The best piece of advice for prospective used car buyers from the mouths of several car dealers? Wait, if you can. The market is still too hot, they say, and if you don’t urgently need a car, delaying the purchase by a couple of months or even longer is a smart move.
“I don’t think I want to go on The Mercury News telling people not to buy cars, but it’s the truth,” said Jerry Griggs, who runs the Buggy Bank in Berkeley, a car display lot that serves as a middleman between private sellers and customers.
Currently, Griggs has a 2018 Subaru Forester that is being advertised at $29,600 – $3,000 over the original sticker price four years ago. “If you do buy, don’t go for that two-year-old car because the newer it is the more you’re going to lose,” he added.
In the Bay Area, car prices have been on a tear, tracking with national trends. Prices spiked in the summer and dipped over the fall to land at 26% higher year-over-year. Then sticker shock got even worse, as costs jumped to 36% higher in December, according to the most recent Consumer Price Index data for the region.
This has led to jaw-dropping list prices. A new Toyota RAV4 Prime was listed for nearly $97,000 – a $40,000 markup – earning the scorn of social media. One Bay Area man sold his car to Carvana, an online car dealer, for $90 more than he paid seven years ago for the brand-new vehicle.
Schirmer said there may be a slight increase in used-car prices over the next few months, in line with the traditional springtime price rise that coincides with tax refunds, but Cox economists expect the market to stop skyrocketing and stabilize this year around the current levels. But there’s no sign of returning to anywhere near pre-pandemic levels.
“Do you know anything that gets cheaper over time?” Schirmer joked.
Nate Myler, sales director at One Toyota in Oakland, has had a front-row seat to the new car shortage. Before the pandemic, the dealership’s motto of only selling cars at MSRP, or sticker price, was nothing special. But now the dealership has over 1,300 people on waiting lists for new vehicles, with waiting times for the especially coveted electric hybrid RAV4 Prime as long as two years. He has fielded requests from dealerships as far off as Florida wanting to buy new cars and sell them used at a markup.
“Our dealers have gotten comfortable,” said Myler. Instead of dealing with frugal customers looking for cost savings, they now mostly take calls from people willing to wait months and pay sticker prices. “Be patient,” he advised. “If you jump on something for $5,000 over MSRP you’re going to be in a terrible position for reselling.”
Mondo, the Berkeley resident, knows she entered the used car market at possibly the worst time in modern history. But she’s hoping by spring she can find the needle in the haystack – a perfect RAV4 at her budget. When she does get the car of her dreams, she plans to fill it with camping equipment and take a trip to Yosemite.
“I get tired of thinking about it,” she said. “Until I start thinking about it again.”
Have you entered the car-buying market or recently purchased a vehicle? Share your tips and tricks to scoring a good deal in the form below. We may use them in a future story.
