The Enthusiast-Car Market Is Cooling Off. Sort Of.

"Sellers are showing me comparable sales from 10 to 16 months ago and insisting I set the reserve to match top pricing," Doug DeMuro, auto YouTube celebrity and founder of auction site Cars and Bids wrote. "Many people, even when confronted with more recent sales evidence, just don’t believe the market has declined from its peak."

For the last few years, it seems like the dominant conversation among car enthusiasts is how expensive everything got. Of course, quite literally everything is expensive these days, but for the purposes of this story we're talking about mass-market enthusiast cars. The pandemic and its resultant effects on the stock market in 2020, a chip shortage that's led to a lack of new car inventory, and growing interest in enthusiast cars, combined with various other factors that led to skyrocketing prices across a spectrum of vehicles.

There are signs that the market is cooling down, however. At least, it is in certain segments. DeMuro—who is, in the spirit of full disclosure, a friend—has unique insight into this as the owner of Cars and Bids, an auction site exclusive for cars built after 1981. Earlier this month, he shared an informative thread on Twitter based on his experiences setting reserve prices for auctions on his site.

In an interview with Road & Track, DeMuro expanded on his thinking. "I think in an inflationary period, and especially if we believe it was an inflationary bubble period as I do, then by definition, there was overvaluing," he said. "Things kind of got a little out of control and obviously the federal reserve, and the government in general, are trying to change their monetary supply tactics to try to make things less inflationary…But you know, I really believe that stuff's worth what people pay for it at the end of the day. People thought they were worth that at the time, but that was in a situation where everything was getting crazy expensive and interest rates were really low, so debt was cheap."

The market is still hot for a variety of reasons, including limited supply of new vehicles. So while there are now perhaps deals to be had, a softening isn't happening across the board, and if you think now's the time to pick up a rare, classic Ferrari for a song, I'm sorry to say that day may never come. "We deal in a different caliber of car than some of those online auction houses, so we really haven't been affected by it at all," said Gord Duff, head of auctions with RM Sotheby's, in an interview with Road & Track.

RM Sotheby's has seen the same huge increases as the rest of the car market over the last two years, but Duff says its clients aren't really affected by the same factors leading to a softening elsewhere. "We're dealing with people of, you know, a certain type of wealth that those things aren't really, you know, affecting them too much day to day," Duff said. "[Now, they] even more so probably more of a reason to, you know, put their cash into, you know, very blue-chip type vehicles."

For those looking for more attainable, yet still aspirational enthusiast cars, the realities are very different. "What we're seeing right now is that the markets have tightened, especially the stock markets," DeMuro said. "People don't quite have as much money as they thought they did six months ago."

Kyle Stock, a Senior Correspondent with Bloomberg agrees that the stock market is playing a big role here. "There's always anomalies with vehicles and buyers, but I think generally, the heart of the market does kind of track with the stock market and the economy overall," he says. "And I think it would be really strange if it weren't cooling right now because the COVID boost was a real thing."