Another Credit Crunch Victim? Classic Car Values Plung

The fallout from the credit crunch and housing market turmoil has reached the garages of classic car collectors. The value of some vehicles has declined by a third from two years ago.

Over the last decade, rising home values helped many Baby Boomers recapture their youth by buying American muscle cars and hot rods that were popular from the late '50s to the early '70s.

"Home equity was the ATM out of which a lot of people were withdrawing money to have fun," says McKeel Hagerty, CEO of Hagerty Insurance Agency, which specializes in classic cars. "What the credit crunch has affected is the bottom part of the market."

Ford Mustangs, Chevrolet Bel Airs and similar mass-market vehicles occupy what the collector-car industry calls the "enthusiast car" segment, with typical auction prices between $30,000 and $50,000. These cars are typically bought by casual owners rather than serious collectors.

"Many of these cars were built or bought using home equity loans," says Art Spinella, president of CNW Research, a Bandon, Ore. market analysis company.

w209w114 - 3/11/2008 2:44:40 PM

+1 Boost

Its a shame. You have to remember that classic cars are infact investments and just like Gold and Silver, their prices fluctuate depending on the current market.

Tighter wallets mean fewer people will have enough disposable income to afford one of these and sellers who are looking to sell will have to lower their asking prices in order to do so.

nybimmer - 3/11/2008 3:16:40 PM

+1 Boost

Classic cars are most definitely NOT investments and are really discretionary 'hobby' purchases. O

nly at the rarified top-end of the market, where there are a select few cars that have both extreme scarcity and high desirability, can classic cars be considered investment.

By and large, classic cars have more in common with a recreational boat than an investment asset. A classic car must be continually maintained, fixed, insured, and housed to preserve its value.

I suggest you try an experiment - purchase a $25,000 classic car, record every penny you spend keeping it for 10 years and then check its market value - you'll most often find that it 'cost' you money and hopefully provided 'entertainment value' in return.

EnnNorak - 3/11/2008 3:39:49 PM

+2 Boost

w209w114, I'm not surprised since prices of these so-called classics (which are really just "collectibles") have risen far too high -- its about time some of the speculators involved get burned; nybimmer is absolutely correct in his assessment of the situation.

toolatetorace - 3/11/2008 10:33:25 PM

+1 Boost

Coming out or losing out is a matter of good or bad luck when it comes time to sell . I saw a Silver Aniversery Corvette that was on Barrett Jackson this Jan. that was a one owner extremley low mileage car that went for a lot less than what his total expenses were for the timeline that he had the car for . There were other cars that got into a bidding war among two bidders where the owner came out real well. Granted, the prices were down quite a bit from last year but that is reflected in the general economy .

toolatetorace - 3/11/2008 10:40:47 PM

+1 Boost

P.S. I't also a good idea to read the entire article before coming out with a bar stool type comment