Is It Time To Buy A New Car? Or A New Home?

As I have blogged before, new cars are a better buy, overall, than used cars for two reasons:  Interest rates on new cars are low, and discounts are available, including some very cheap lease plans.  Used cars were in high demand the last two years, driving their prices dangerously close to new cars in many cases.

Today, a news report says:

1.      Half the cars in America are now 11 years old, or older  -- an all time high

2.      Car sales fell from 17 million a year to 10 million a year in 2009 .. huge drop

3.      Pent up demand has pushed new car sales up dramatically this Winter

4.      They were up 16% over last year in month of December.

5.      US based car factories are approaching 90% capacity (could that trigger price increases ?)

6.      While Detroit based auto companies are smaller, so-called foreign cars are now made in the USA and so, overall, the USA is producing a lot more cars than before.

Other economic factors – young people in the recession bunked in at home with parents, that is not going to last, they want to leave the nest, and now.  It used to be that household formations followed population growth, but now, for the first time ever, they are lagging --- because so many people are remaining single, living at home, and half the adults in America are not married (maybe an all time high).  This trend has not been good for the home building industry, but should not affect car buying, as people do like to be mobile.

There is no change in American underlying society, kids do not WANT to be at home, so, once they get a job, they will leave their parent’s homes, and that should drive smaller home sales, and condos or at least apartment building.  Any thoughts?  Please leave comments.