CarMax: Random thoughts... Running thread

Sure, but that was true before the pandemic (and subsequent anomalies in both used and new car sales) and after. So the effect of that is probably muted. The larger, I would argue much larger effect has been on perceived cost. New car costs have increased and interest rates have gone up, a double whammy for income bound buyers. That has put a bucketload of buyers in the “used” camp who might have otherwise been new car buyers.

At one point I looked up those rates, historical and now, but have lost the pages. What I found to be true is that both sets bumped up, before and after. Not perfectly evenly but close enough for chart work.

Well of course that’s always been true, too, right?

The trend line will likely return, but not until interest rates take a tumble (and when have they ever been so low for so long?) and then add a year to bake simmer, stir. I don’t think it’s that soon even after the rates come down (again, absent recession, which if it happens, all predictions fail.)

Wholesale used car prices dropped by 14% in April!!! The decline is accelerating, at last.

Separately, the used car price has outsized influence CPI, and the drop means the inflation numbers will come lower, meaning enabling FED tax cuts.

New car and used car price deceleration has resulted in -0.05 in CPI numbers. No surprise, it is expected. Separately housing and car insurance are the primary drivers of the inflation, while many think there is no pathway to 2% inflation target, I think if housing cools we will get to 2% in hurry.

Florida and Texas Show Signs of Home Prices Falling

Robust home-building activity in recent years has helped boost the number of homes for sale

It’s starting. Probably won’t really take hold for 6 months to a couple years, if even then. The velocity won’t really pick up until mortgage rates come down and people start to move again. I have a buddy who does home remodels - baths & kitchens mostly. He says he’s never been busier. It was crazy during the pandemic when everyone was locked in, he says, but it’s worse now because people are still locked in because they won’t consider a new home with a higher mortgage rate.

Housing on CPI is driven by rent. The rent increase will abate and I believe it is disconnected with mortgage rate.

It is disconnected. Sort of.

Mortgage rates influence home pricing to a degree. Falling interest rates would buoy real estate markets and support higher OER.

The below information is from
Calculation : Handbook of Methods: U.S. Bureau of Labor Statistics (

Owners’ equivalent rent of primary residence (OER)

The OER approach to price change for owner-occupied housing is designed to measure the change in the rental value of the owner-occupied housing unit; the investment portion is excluded. In essence, OER measures the change in the amount a homeowner would pay in rent or earn from renting his or her home in a competitive market. It is a measure of the change in the price of the shelter service provided to the homeowner by the owner-occupied housing unit.