Tag Archives: inflation and deflation

Land prices, not house prices, have dropped

in the past few years, as well illustrated by this article from MSNBC.  Homeowner insurance costs generally haven’t declined, because construction costs haven’t declined. (Homeowner insurance covers the cost of repairing or replacing the structure.) If it’s not construction cost, what went down? Must be the land. (ht Rob’t Blau)

I’m struck that an article about homeowner’s insurance doesn’t touch on title insurance, which is having difficulties of its own.

Car price trends

I don’t have a car, don’t want one, can’t afford one, always figured they are just way too expensive for intelligent folks to waste money on.  But someone close to me has “always” had a car, and when her twelve-year-old one became less reliable and more expensive to maintain, decided to get a new one.  Same make, essentially the same model, a Toyota Sienna van.  Of course, over twelve years there were some changes, mostly improvements and extra features (power doors, stability control).  To me, the amazing part was:

  • Cost of new car in 1998: $27,370
  • Cost of new car in 2010: $27,133

The above are current dollars, include all taxes and invented fees, and were the result of negotiation by an informed customer. . Now, in 1998 this was a new model, they were hard to get.  By 2010, production was more in line with demand, inventories at local dealers were limited but there was some choice of color.  The 2010 price was net of a $1,000 rebate, which of course is just Toyota’s way of cutting prices temporarily..

It turns out that this does reflects the general state of the auto industry:  Our friends at the Bureau of Labor Statistics say that car prices in November (the latest available) were 2.8% below the 1999 annual average (Earlier figures apparently aren’t available on weekends.)

Of course, auto manufacturers have a big investment sunk into their plants, and prefer to lose a bit of money to keep them active, rather than taking a bigger hit by closing them down.

It would be interesting to compare these figures to the cost of transit rolling stock.