when will the bubble pop ?

[whiterabbit]

Originally Posted by wally509

So what y'all are saying is that the buyers of these $100K+ longhood 911's are people making $30-$40k/year and banks are giving them six figure car loans there is no way in h-ll they can pay back to buy them? If I understood correctly, that's what blew up the housing market then (mostly) caused the subsequent overall meltdown.

I've only owned an air cooled 911 for a couple years so I will probably get flamed for chiming in here but...I will share my experience from another until recently undervalued car that I have been involved with for a very long time.

That car is the 4 cylinder Austin Healey made from 1953-1956. They began to "run up" in the early 2000's. In 2002 a really nice BN2 model could be had for about $20K and a 100M for about $40K. They had essentially doubled+ by the crash in '07 and guess what? The crash hardly effected them and today those cars are $60-70K/$120-150K respectively.

My OPINION is what goes on is that one looks at how much he could have bought a fully restored 911S for 5 years ago, sees how much they are selling for now and screams there's a bubble that's going to burst any second on these. What one really needs to do is look back to what a fully restored/top of the line 911S was selling for 30-35 years ago and stick that into a compound interest calculator with 5,6,7,8% rate for a 35 year term and go from there.

FLAME ON BOYS!

You are dead right. All the folks I know buying and looking to buy right now have incomes in the 150k plus range (at least) and paid off mortgages, are in their fifities and looking for a fun car. A classic 911 is a cash purchase to keep for life to enjoy a life experiance. I would think most early 911 (pre 1973) buyers these days have net worth in the 2million plus range at least if not a lot more. That is why a 1972 911s is close to becoming a 300k car and last week a 1972 911t sold on here in a day at 85k.

Nothing to do with finance or QE or any other Glenn Beck BS. People who have listened to this "backwoods" finance chat have missed out on the greatest buying opportunity in decades for all assetts and now it seems have a chip on their shoulder Still I guess they have some gold to use as a paperweight.

[darmahman]

Wow -I guess I shouldn't have just bought my 1985 3.2!!! Someone should have told me I don't qualify.

[whiterabbit]

Originally Posted by darmahman

Wow -I guess I shouldn't have just bought my 1985 3.2!!! Someone should have told me I don't qualify.

I mean't pre 1973 cars. But impact bumper cars are heading the same way. They are sure not going down in value again.

[wally509]

Originally Posted by darmahman

Wow -I guess I shouldn't have just bought my 1985 3.2!!! Someone should have told me I don't qualify.

Well if you borrowed 5-10X your yearly income to buy it, there isn't much to discuss here other than maybe how you misunderstood my post. And well we could also discuss the morons at the bank that gave you that note.

Later,
Wally

[SilberUrS6]

Originally Posted by whiterabbit

Nothing to do with finance or QE or any other Glenn Beck BS.

Exactly.

[wally509]

Originally Posted by whiterabbit

Nothing to do with finance or QE or any other Glenn Beck BS. People who have listened to this "backwoods" finance chat have missed out on the greatest buying opportunity in decades for all assetts and now it seems have a chip on their shoulder Still I guess they have some gold to use as a paperweight.

You had me up to the gold part. In my opinion, gold is very similar to the cars we are discussing, very undervalued until about '06/'07. You're not going to see $500/oz gold anymore just like you're not going to see a $40K restored longhood 911S or factory 100M Healey.

[COLB]

The housing bubble is a dubious analogy for Porsche prices -- and I tend to agree with Wally.

The housing bust was driven in part by the commoditization of home loans, with banks and financial corporations issuing dubious loans in huge numbers, packaging them into securities, and selling them in the market place -- with Freddie and Fannie abetting the process.

There were millions of home loans being securitized, with the whole market driven by debt that could not really be accurately assessed for risk.

Are classic cars bought an sold that way? Not at all. The market for top tier collector cars is smaller in scale than real estate in a single major city. And the broader market for classic case is global in ways that real estate is not -- local economic conditions can tank housing in Las Vegas -- but cars are moveable commodities, providing better durability.

If banks were issuing $100k variable rate loans -- to consumers with crappy credit -- for them to buy rusty $15k 911Ts needing restoration -- in the hope that the $100k would be enough to restore the car, and make up the difference in short term appreciation -- and then packing them together by the thousands, and selling them on the open market as bonds…well, then it would look more like the housing bubble.

All that being said, prices of luxury goods are always affected to some extent by major economic factors. But it you are buying an old car primarily as an investment you are probably looking at it the wrong way, and there are a LOT safer and more productive places to put your money.

The only thing you can say for certain about classic cars as investments is that as toys they have better price stability and upside potential than new cars of comparable cost. Any 1 or 2 condition 911E is going to have as much or more residual value than a 2014 911 five years later, even if the market declines. That doesn't make them "good investments" though.

[whiterabbit]

Originally Posted by wally509

You had me up to the gold part. In my opinion, gold is very similar to the cars we are discussing, very undervalued until about '06/'07. You're not going to see $500/oz gold anymore just like you're not going to see a $40K restored longhood 911S or factory 100M Healey.

No question for a smart person who bought and sold it between 03 and 07 it worked but not now unless you are a very wealthy person maybe having 3%-5% of physical gold in your portfolio in case of a doomsday scenario but for an average person no way. What is a crying shame and statistically proven is that gold is predomently bought by lower income people based on fear moungering. Those people would be better served buying safe dividend stocks or paying down their mortgages. Just turn on talk radio and listen to the non stop fear selling interspaced with adds to purchase gold. I notice the same arguments being used by one poster on here to consistantly state 911's being in a bubble and overpriced

Why the poor's investment of choice is so alarming - The Week

https://personal.vanguard.com/us/insights/article/investing-in-gold

So IMHO gold is not the same as a 911 as you can actually enjoy owning a 911 by driving and becoming part of the club/touring culture. Air cooled 911 the way to go in every scenario

[SilberUrS6]

Those talking heads also spout gold because they are paid to do so. And they work the gold angle into their commentary, and build commentary to help sell gold.

Its a sweet gig. And the useful idiots not only suck up the swill, they regurgitate it for everyone else. Which = more gold sales.

Step 4: Profit.

Owning some physical gold for a SHTF scenario might make some sense. But as an investment seeking return, you're better off with some other physical commodity that has some industrial use. Like palladium or platinum or rubidium. Heck, if you have storage, copper ingots are nice. Even silver is a better commodity investment than gold.

I put my commodities money into 1985 Porsche automobiles. This investment has done nicely the last few years.

(Not investment advice. Past performance does not predict future gain. Porsche purchased for driving pleasure only. Do not try this at home.)

[wgwollet]

COLB. You are correct in the comments above. It's very hard to understand what people in high income brackets are willing to pay for investment cars.

I spoke with some very large Porsche collectors in the pass, collections over 20-30 cars, and they are still looking for good inventory. Once the good cars are bought up, then the next wave of lesser cars are wanted...or these high dollar collectors sell one for a better one...the supply of pre-1974 cars is getting smaller....I was at the track yesterday for our PCA event. I noticed all the track cars are newer Caymans or 911's after 1999. These older LONGHOODS would be common 5 years ago, not today, too valuable to track...

[wally509]

Sorry, I didn't want to turn this into a discussion on investing in gold. I also wasn't trying to say vintage cars and gold are exactly, precisely the same thing. My point was how these items were undervalued for a long period of time (30-40 years) and what we are seeing now is mostly a "catching up" and not necessarily a "bubble".

Also not so sure saying you are a moron if you are invested in gold with the possible exception of if one is all in on gold. Gold worked out pretty well for my great-grandfather. He was a low-income farmer, or as some here would say a "sucker" with a few gold coins. Others in Weimar Germany agreed more with the previous posters that investments on paper were the way to go. But I digress...

I've never used a car as an investment. I've bought what I wanted (and could afford) to work on, look at, and drive...never really gave a crap what others though of my cars either.

Getting way off topic here. My thoughts are; early 911's are not in a bubble although they may retreat a little before settling in to a new, updated final value. I don't dare predict what that is because I really don't know that much about them, including what the cost to restore one is (which I do know about the Healeys). That obviously plays into is because people just don't want rusted or other lower end cars anymore is seems.

[msort81]

It will pop when the people who are paying stupid prices for turds like this one http://forums.pelicanparts.com/porsche-cars-sale/807863-high-option-77-911-s-remarkable-condition.html realize the mistake they have made.

The good cars which have been looked after, have complete histories and wearing original paint and especially in period Porsche colors will always be worth the high $ figure. Its the speculators that don't know what to really look for and end up buying cars like the example above, who are building what 'bubble market' there is. They have a limited tolerance for loosing $. There will be some getting burnt im sure over the next couple of years as things calm down.

[PushingMyLuck]

Why is the '77 a "turd" ?

[msort81]

Originally Posted by PushingMyLuck

Why is the '77 a "turd" ?

Because you don't own it. Believe me you were made for one another.

[COLB]

Looks like a "fully apart" repaint. Amazingly clean on the outside. No real looks at the interior, other than the dash -- which looks a little warped, and showing 120k+ miles.

Wonder what he is getting for it -- the $45,900 ask is eye popping no matter how clean it is.

Pretty slim ad when you are asking more than "all the money" for a mid year. But ad claims car is "sale pending"…so there must be method to his madness.

[SilberUrS6]

Originally Posted by wally509

Others in Weimar Germany agreed more with the previous posters that investments on paper were the way to go.

LOL, nobody said that - you're making it up.

If you're going to invest in commodities, gold is not the one you want. For a bunch of reasons not germane to the discussion. But investing in automobiles is an even more ridiculous thing.

Does anyone remember the Ferrari bubble? And it seems like garden variety muscle cars are kind of stagnant currently.

Cars are not investments. Cars are for driving. If you happen to buy a car that's fun AND increasing in value, well, that's a double win. But speculation on car values will get some folks seriously burned. If I had been really interested in making bank, I could have had lakefront property cheap at the bottom of the recession. The same property just sold for ten times what I could have had it for. And you know what I'd have right now if I had purchased it, and then sold it?

Money.

In the meantime, I have had hours and hours of fun driving my car. The kind of fun no amount of money could buy. Buy a car to DRIVE IT. That's what they were made for in the first place.

[wally509]

Originally Posted by SilberUrS6

...But investing in automobiles is an even more ridiculous thing.

...Cars are not investments. Cars are for driving. If you happen to buy a car that's fun AND increasing in value, well, that's a double win. But speculation on car values will get some folks seriously burned. If I had been really interested in making bank, I could have had lakefront property cheap at the bottom of the recession. The same property just sold for ten times what I could have had it for. And you know what I'd have right now if I had purchased it, and then sold it?

Money.

In the meantime, I have had hours and hours of fun driving my car. The kind of fun no amount of money could buy. Buy a car to DRIVE IT. That's what they were made for in the first place.

I'm with you man! Even if my '87 was now worth half what I paid for it, it wouldn't matter because I enjoy the car so much. I don't know why I check out these threads about air-cooled 911 values because the monetary value truly doesn't matter. However, I find them to be like driving past an accident. One shouldn't look, but...

[msort81]

Originally Posted by COLB

Looks like a "fully apart" repaint. Amazingly clean on the outside. No real looks at the interior, other than the dash -- which looks a little warped, and showing 120k+ miles.

Wonder what he is getting for it -- the $45,900 ask is eye popping no matter how clean it is.

Pretty slim ad when you are asking more than "all the money" for a mid year. But ad claims car is "sale pending"…so there must be method to his madness.

'There's one born every minute', and this goes to show that ... terrible warped dash, rattle canned motor parts, muffler and heater boxes, the vaunted 'options' are unremarkable, 120k miles with no mention of motor re build.
The car is a million miles away from concours level and not worth anywhere close to $46,000. If he really has found someone to pay his asking price then the buyer is a fool.

[darmahman]

Markets are strange beings. It is possible "whenever " the party is over, that it will be a slow leak and not a pop. Doomsdayers want to think pop since that fits in with their scenario and optimists want to think this is never ending. Maybe it will just slow down and weed out the people who are buying just to "invest". Many scenarios are possible.

[COLB]

Originally Posted by msort81

'There's one born every minute', and this goes to show that ... terrible warped dash, rattle canned motor parts, muffler and heater boxes, the vaunted 'options' are unremarkable, 120k miles with no mention of motor re build.
The car is a million miles away from concours level and not worth anywhere close to $46,000. If he really has found someone to pay his asking price then the buyer is a fool.

I am amazed any 77 would sell for 46k. Even one that has been taken apart, steamcleaned, and reassembled.

I couldn't judge a true concours car in person, much less in a half dozen pictures.