After a tough couple of years, consumers went into 2022 hopeful that unhinged automotive pricing and lean dealer lots would be a thing of the past. However, analysts and industry groups have gone from being cautiously optimistic just a few weeks ago to fairly sullen about the prospects of North American shoppers locating anything that could be considered a square deal.
Goldman Sachs recently issued a report that attempted to encapsulate the whole picture, citing sustained congestion at the ports, pandemic-related factory closures, market inflation, millions of people just dropping out of the workforce, and continued complications stemming from the semiconductor shortage. It estimated that vehicle pricing would fail to go down — and may even pitch up in the first half of 2022 — until all of the above issues have been addressed. But it was hardly the only group chiming in or suggesting that the hard times could last through 2023, as the goalpost for what should be deemed acceptable is moved yet again.
The National Automobile Dealers Association (NADA), representing some 16,000 U.S. automotive retailers, has asserted that supply chain constraints kept dealer inventories down by a whopping 59 percent in December (year over year). But it’s not expecting a rebound, with the association predicting lackluster inventories through at least the second half of this year.
“The coronavirus pandemic and resulting microchip shortage and production cuts significantly constrained new-car and truck inventory at dealerships across the country,” NADA chief economist Patrick Manzi told Bloomberg on Wednesday. “Constraints further led to suppressed new-vehicle sales, as well as used-vehicle inventory shortages and increased vehicle prices.”
From Bloomberg:
The twin crises of the pandemic and the semiconductor shortage have taken a toll on U.S. auto sales, which totaled 14.93 million last year, up 3.1 [percent] from 2020, when lockdowns hit the economy. Prior to the pandemic, the U.S. auto market had a five-year run of sales topping 17 million. The dealer group said inventory is “slowly improving,” but noted the chip shortage cut global auto production by 11.3 million vehicles.
But dealers don’t have much incentive to change the situation because they made an absolute killing last year. Elevated demand and tight supplies made it so dealerships could charge previously unheard-of prices for both new and used vehicles. By the end of 2021, secondhand vehicles were selling for nearly 50 percent more than they were just a year prior. Measured in dollars, that’s made the typical automotive transaction over $7,000 more expensive in just a year’s time.
Granted, wholesale prices also went up and forced showrooms to ask for more money on each vehicle sold. But it wasn’t a matter of breaking even. Large dealerships are currently enjoying record-breaking profitability and it’s largely been at the expense of consumers.
For now, market analysts have issued reassurances that 2022 will see prices falling. But it’s not clear why that will be happening with the same groups claiming it’s to be another year of insanely tight inventories. Edmunds even claimed the last two years will have encouraged those shopping for a new car to order vehicles they want well in advance to ensure they can actually obtain them. Unsurprisingly, you are unlikely to get anything for under MSRP, which the outlet claimed could be viewed as a “good deal, relatively speaking.”
That’s not true, of course. But we’ve been subjected to bad deals for so long that it feels like people have developed a case of Stockholm syndrome. Consider this. In November, Edmunds was reporting that the average monthly payment on a used vehicle had climbed to $520 per month … for 70 months. But I didn’t see a single story about a dealership being held hostage by a disgruntled patron once last year.
If you’re wondering what can be done, you’ve got a lot of company. While the pandemic did stifle production, the global semiconductor industry has clearly shifted away from the low margins offered by the vintage chips that typically go into automobiles to prioritize modern units providing greater profitability. Automakers really should have seen this one coming and started building their own chips prior to 2020. This is especially true of Western manufacturers, since most semiconductor production is based in Asia — making the shortages a little easier for their Eastern counterparts to contend with. However, manufacturers haven’t opted to branch out into building the components necessary to achieve final production. Instead, automakers have been asking the government to lend a hand by funneling money into the chip industry in the hope that they’ll eventually get the chips they need.
But there are other factors. The public’s willingness to entertain these prices and policies is a big reason they’ve persisted for so long. While many are worried that people shunning the market’s high rates will allow the already delicate situation to descend into complete chaos if people stop buying, it’s bound to make cars cheaper and we’ve probably already set ourselves up for a pretty big fall. It’s also already happening — with annual vehicle sales approaching the low numbers endured during the Great Recession. We’re now millions of sales below the typical 17 million averages.
Moving into 2022, NADA anticipates new-vehicle sales of 15.4 million units. This represents an increase of 3.4 percent from 2021 and is fairly close to what’s being estimated by IHS Markit (15.5 million) and a glut of other outlets. But most analysts overestimated last year and just about everyone is convinced that automotive production won’t rebound until late in 2022 or early 2023. That’s roughly the same pitch we got at the start of 2021 — just with everything being pushed another 12 months down the road.
My advice? Get handy with a wrench.
[Image: David Touchtone/Shutterstock]
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I would have thought with so many more people working from home, a big increase is online ordering, that we would see a big fall in miles traveled. And as a result a decent fall in vehicle demand. But miles traveled are at the pre-pandemic peak…where is everyone going?
@jmo – I’ve done more backcountry riding or driving since there isn’t as much to do.
In 2020 I drove about 5,000 miles and in 2021 I did about 6,000. I was doing around 12,000 per year before that.
Myself and most people I have talked to are hopping in their cars more than ever due to being sick to death of having been cooped up in their homes for so long. Also with so many businesses, restaurants, retail and other things closed up and gone one must travel to other larger cities just to buy everyday things like clothes, shoes and common household items. Even if you want to go out and bowl, ski, eat out or do something fun like a mall etc it’s often that one has to travel a while to find these things. Very difficult times we live in!
“ But there are other factors. The public’s willingness to entertain these prices and policies is a big reason…”
Exactly. Good old law of supply and demand.
A couple of years ago I was thinking that I would trade my 2014 Mazda CX5 in the near future.
Not because it is running poorly because it is not, but simply to refresh.
No way I will pay crazy prices. I will continue driving it a couple more years.
But if you’re getting $5k more for the CX5 but the price for the new one is also $5k higher – isn’t it a wash? That was my experience anyway.
Likely in many cases, I agree its a wash. Those who will be hurting are those who do not already have the assets to sell or trade to obtain the wash.
Yea, it depends. If you bought a new crew cab truck for $11K off MSRP in 2018 then you’re probably in quite good shape. If you have an ’06 Malibu then you probably aren’t.
“If you have an ’06 Malibu then you probably aren’t.”
Someone will likely pay at least $4K for such a POS. You should see the nutty stuff people say they are shopping on Reddit.
Yes, some one will pay $4k for the POS 2006 Malibu. Maybe…
And how much will the replacement vehicle cost?
Now, if the owner can no longer drive…then, it’s a good time to sell–but it would be better for owner if he/she would still drive
Depends on the situation. A lot of this older stuff is people cleaning house or estates. For those who may be trading, dealers are still lowballing people on trades from the “offers” I have seen so why not get actual value from the street than give the dealer 20%?
This was me. Sold (not traded) for more, paid almost sticker for new.
schmitt trigger… exactly. There is no way that I am buying a vehicle in the current climate unless absolutely necessary – meaning my 2016 Forester would have to be totaled first.
I don’t understand most people. A certain number of us really do need new cars and trucks every year. But the vast majority – I estimate on the order of at least 80 percent – can just wait things out for a couple more years.
It seems to me that too many of us are used to instant gratification and are addicted to the new and shiny. Perhaps I’m wrong. Maybe someone can enlighten me?
I have started viciously mocking everyone I know who purchased a car unnecessarily over MSRP. This is followed up by sending them the episode of King of the Hill where the dealership convinces poor Hank that paying sticker is a good deal.
At least in terms of new cars a lot of upper middle class and above people have a lot of extra money. The stock market has done well, they haven’t been traveling, going out to dinner, kid activities have been curtailed and on and on. There are certainly people out there who think an extra $3k or $5k just isn’t worth worrying about.
“Maybe someone can enlighten me?”
Resale values are higher than ever and interest rates are still low.
“My advice? Get handy with a wrench.”
Yellen, 2014: Get ye some assets!
28, 2022: Get ye some classics!
None of this is happenstance and the used car situation will continue into at least 2024. 2021 closed around 14m units sold, I expect 2022 to decline probably to 12.5-13m units, and 2024 to stabilize just under 2023 or possibly continue to decline south of 12m units. EV share will increase as share of production of overall products decreases, again by design.
When they eventually start pressuring the existing cars, classic/antique will be the last to be examined because of limited use. Trucks qualify for this status in most states, and when you’re traveling in another state those restrictions will not de facto apply. Family truckster could be a classic Suburban while we’re all forced into golf carts or mass transit.
All of the above seems plausible enough to me, minus the mass transit situation. While ridership is moving back up, it’s still about half what it was at the start of 2020 according to the American Public Transportation Association. The largest cities that are heavily reliant on busses and subway networks have also seen a mass exodus of residents. I literally just moved out of NYC myself and noticed fewer people just about everywhere, especially while using mass transit.
Perhaps that’ll change on a longer timeline if cars remain prohibitively expensive. But I’m not sure how that’ll work if people continue heading out into the countryside or how an already unstainable market hopes to endure the building pressure beyond next year. Prices cannot continue to climb at their current pace without things imploding and everything is starting to feel very pre-Great Recession.
“mass transit situation”
That may take a decade or two but from everything I’ve gathered that is where they want to go. If you artificially raise the cost of fuel (or organically via genuine peak oil), you squeeze out 60-80% of the populace in terms of regular travel. The proles will be restless, but using ManBearPig as cover they will offer the electric bus as the alternative. One which very likely will require the mark of the beast to enter, or dropping the religious overtones, one which will require the prole’s control chip/passport/watch/RFID collar.
“without things imploding and everything is starting to feel very pre-Great Recession”
Depression, I implore you to stop using their newspeak. A second great depression papered over by liquidity, and its been ongoing since 2008 but I argue has its true origins in the Dot Com crash of 2001.
The NYC metro area lost less than 2% of its population during the pandemic, and is on track to gain them back in 2022.
Seattle actually gained population during the pandemic, but you’d have the same experience of many fewer people if you were downtown or in the subway. The white-collar workforce are mostly at home and it definitely affects street life.
Cities that are losing population for real—San Francisco comes to mind—are doing so because housing costs have become detached from local incomes. But if we don’t start building housing at a national level soon, the rest of the country is soon going to have the same problem. We are short somewhere between 5 and 10 million dwellings nationally.
The last time I crunched some numbers, about 4.5-5% deficient on SFH demand with 2019 construction permits being about 0.5% of the total I sourced. So roughly 8-10 years at 2019 construction rates to meet today’s demand on a national level.
Boston and Eastern Massachusetts have been gaining population.
@dal 2 percent of 8.5 million people is significant and I don’t believe people will be rushing back into NYC in 2022. I just know too many people that moved away or have made plans too. But it’s also suffering from the same problem of housing prices being totally detached from reality and what regular people can afford.
I 100% agree about the street life problem. Quality of life noticeably declined during the pandemic and the city has been mismanaged for far too long in general. I will always love NYC but it’s suffering from the same problems as the California’s biggest cities and losing its citizens at roughly the same pace. I’d have even stuck out the elevated crime rates and stayed in the big apple if housing was more affordable, good and services didn’t totally crater during the pandemic, and the city had not introduced restrictive mandates. It was like the place died, making everyone I knew ask themselves what was the the point of living there. Nobody was going anywhere and the few interesting things that sprung up were always a giant hassle to attend and ran the risk of being cancelled anyway.
Matt, the same people who left will probably not move back, but they will be replaced by new arrivals. NYC residential rents tell the tale of demand—they collapsed in 2020 but came surging back in the second half of 2021 and are now higher than ever. NYC is benefiting from the second-tier cities’ explosion in housing costs; when you have places like Austin up 25% or more, it’s more of a relative bargain than it was two years ago.
You’re right that the pandemic is still affecting some of the reasons people are attracted to cities, but not all of them. Assuming you’re vaccinated you can now dine out and even go to bars/clubs with minimal trouble. Outdoor cultural events are back (except for the really big concerts etc.) and, in my experience, a lot of in-person business is now happening, just in the coffee shop setting rather than the office.
I felt that having to provide documentation to eat indoors was incredibly dehumanizing and the city cancelled so many events over the last two years I wouldn’t trust it not to stomp on the brakes again. I just couldn’t get behind a papers-please society. I also noticed those in-person coffee house meetings and it made me feel like every business had reverted to being a sad startup. Things have gotten dirtier, people seem on edge, homelessness is way up, parking has been ruined by curbside dining locations that nobody has bothered to take down, and the city has started letting non-residents vote in elections.
It’s been impossible for me to find a silver lining to any of what’s been going in big cities lately. There’s a lot about NYC I’m gonna miss but most of it was taken away in 2020. That said, I still hope it rebounds and gets rid of these wildly restrictive policies and confusing laws. If that happens, maybe I’ll move back someday.
@dal, Matt:
The pandemic also had one unexpected byproduct that is causing migration out of places like NYC, San Fran or L.A.: remote working is now the norm in many industries. Paul Programmer, who made a hundred and a half in starvation wages in San Fran, can now take that salary to Salt Lake City, or Austin, or Denver and liver far better on it. If he moves to a place like Detroit, he can live like a feudal baron.
I think a real estate correction is definitely coming in these psycho-cost places – the markets were unsustainable to begin with. The main beneficiary so far has been Texas, but I predict that the medium-sized cities in the Midwest will also see an influx – places like Indianapolis, Kansas City, St. Louis, Cleveland, and so forth. Honestly, it’s damned tempting to take my salary and move out of Denver, which is marginally affordable for me, and move back home to St. Louis, where I could easily afford a very nice house. That’s going to be appealing to a lot of other people as well. If these cities are smart, they’ll design programs to cater to the “imports.”
The other big question is this: what happens when all these companies who invested hundreds of billions of dollars in physical office facilities realize that the employment market has shifted to a remote-working model? What about all those leased-out office buildings? I think a commercial real estate correction is coming as well.
A CRE real estate correction is possible, as is stagnation in RRE prices in the very most expensive markets (that is, the big California markets). But there’s not going to be an overall RRE correction or even stagnation as long as the country overall is short millions of housing units. And indeed the next tier of cities are still exploding. My Seattle house has gained $150k in value since the start of the pandemic and that’s small potatoes compared with what you’re seeing in Austin or SLC.
@dal:
I’ll just quote the Eagles here:
“Call someplace paradise and you’re kissing it goodbye.”
The country is short housing units in the high demand areas. Other areas have no shortages at all.
@FreedMike–Companies as well as the Federal Government are now realizing they can get by with less office space. That happened in my job where my employer went from at least office space in 3 buildings down to 1 with less space because of telework. The savings in rent and utilities amount to about 2 million a year. They are still building commercial real estate and converting former retail space into office space but I agree there is an oversupply of commercial real estate on the horizon and there will be a bust.
In the markets where RRE is the most crazy, I expect the economics will support demolishing a fair number of older office buildings and replacing them with apartments or condos.
The geeks are just telling automakers what they want to hear. Actually the market was flat and falling long before China-19. That’s despite millions more drivers every year.
In unrelated news the auto aftermarket has been growing exponentially for years.
^^ This. Such stories ran right here on TTAC.
I’ve pretty much given up on seeing a return to “normal” this year or maybe even next. So MSRP it is. However you can’t even get that! I emailed a dealer yesterday about removing their fake $1,500 “delivery package” but no dice. This was even with the OEM offering $500 cash back for using their financing. I was looking at a fully loaded $40k vehicle so they had maximum hold back. On flip side I’ve got 3 dealers emailing weekly about selling my 20 year old truck to them.
I’d buy a new vehicle tomorrow if I could find one. Checking inventory it is down 1/2 what it was 3 months ago. So whatever does show up is bought off the transport.
My local Honda, Kia and Hyundai dealerships look closed, they have so few cars.
While some are buying, most aren’t. Take a slog on a metro interstate and just look how old all the cars around you are. Last data indicated they are 12 years old, on average.
Who gets taken to the cleaners are the buy and hold car buyers. Sure you can get 20% more on the value of your old car but whats an extra 1500 bucks going to get you on a new car at current pricing?
I literally just walked by a 12 year old ES350 in our parking lot with the “Certified! 14,900$” block letters still on the windshield. Poor lady probably financed it at 7% and paid 2k extra for a 3rd party warranty on top of the 14,9 she paid.
Remember gang if you received extra 1000 dollar payments from government (multiple times), if not only did you get state unemployment but Federal unemployment even after initial pandemic shock wave was gone, if you keep getting extra payments for every kid you got, this is what you get. Inflation at highest rate since 1982. Cars are no exception.
Branden wants to do another deal to put extra money in people’s pockets that don’t work. This is what you get.
High Gas prices. High car prices. High home prices. High chicken and meat prices (assuming you can find chicken and meat). Fire Branden and his acolytes. Return this country to greatness of work hard for your money. Until then, be ready for high price on everything. IT IS NOT TRANSITORY.
Um… you obviously do not realize that this is happening everywhere.
Der Brandon isn’t all that influential globally. But hey, why let the big picture ruin your myopic rant!
Didn’t realize Biden caused global inflation. Agree that Government stimulus hasn’t helped inflation but a pandemic and people staying at home not spending as much on travel and eating out over the past couple of years has a larger effect especially when those people have saved up and are willing to spend on big ticket items like new vehicles and homes. Supply chain issues and pent up demand have more to do with inflation than stimulus payments that have recently been cut. I am now retired but my wife and I have saved a lot over the past 2 years I have worked at home under Covid-19. We are readying our home for sale and waiting for our new retirement home to be built and I am waiting for my new hybrid Maverick to be produced. I have the money to buy a new vehicle but I don’t want a large expensive vehicle. I don’t mind spend the money for something I want and can use.
Jeff S, you seem to want to minimize the effect that Branden has had on inflation by saying people just have not spent enough money because they are staying at home. You fail to realize the extra money he is putting in people’s pockets by giving stimulus payments, extra unemployment payments, college loan deferrals, rent free living because landlords not able to force you out if you don’t pay your rent, and encouraging increase in minimum wage.
All that meant and means extra $ in people’s pockets.
Add to that idiotic policies on limiting oil production such as stopping pipelines day 1, limiting fracking in Federal lands, limiting oil exploration in our Arctic strategic reserves, and well oil price impacts everything.
Good luck with your hybrd Maverik. My Tahoe RST arrived at dealer this week. Now getting ceramic coated and should be ready by weekend. My daughter’s Tacoma ordered with 2,500 market adjustment thanks to Branden, on the other hand, won’t be here for probably another 2-3 months.
The trolls are out in force, every day, on every website, on every article. They derail the topic at hand and create unrest, hostility and division. It’s a huge industry in Russia, and for some reason semiliterate Americans fall for it hook, line and sinker.
Lou_BC, stay current with times. You seem to use the same stale logic in how it(inflation) is affecting everywhere or not. As though we see this high an inflation rate in China or Saudi Arabia.
For the love of God, even Fed reserve chairman who used to parrot something about inflation being transitory, now says it is persistent. And his focus has changed to fight inflation. Because, while pandemic started supply chain constraints, Branden policies exacerbated everything else. Read my reply to Jeff S. to understand details as I won’t repeat it again in this reply.
I’m sure it’s fun to rant but many of those prices have structural explanations that have little or nothing to do with Uncle Joe or stimulus checks.
Gas, food, and durable goods prices are high because (1) suppliers went overboard in cutting production during the first part of the pandemic in the face of (2) not just a recovery in demand, but actually higher than normal demand as people are consuming less services and using more of their money to pay for stuff, and now (3) the tight labor market means it’s even harder to recover production.
House prices are high because we’ve mostly banned the building of new houses in most of the places in the country that have lots of jobs, so that the neighborhood character is preserved (while existing homeowners make out like bandits).
“so that the neighborhood character is preserved (while existing homeowners make out like bandits).”
Lol. I’m pretty sure the reason is 90% due to what you put in the parentheses.
Being in such a neighborhood, and having made half a million dollars off my sorry-a$s teardown house in the last five years, I have zero doubt of that.
dal20402, it is not a rant if it is true. This president has caused the inflation. He kept saying inflation comes down with pandemic. He does not realize putting extra money in people’s pockets has caused it.
Why don’t you understand? Extra money in your pocket means people are willing to pay more to get what they want. Deferral for college loans, rental forgiveness because landlord can not collected payment because of pandemic, extra unemployment payments, extra credit for each child, stimulus payments. For God’s sake he was trying to pass an over trillion dollar bill for now stopped thankfully to even put more money in people’s pockets. Encouraging higher minimum wage.
All that and his policies on oil and gas which impact everything caused inflation. This inflation is Branden’s alone.
Housing has many reason why it has gone up. Mostly because Millennials are coming to be of age they want to own homes and now years of government overreach in wanting efficient homes, and various rules and regulations have handicapped builders in how cheap or quick they can make new homes. This has made it such that there is bidding war for existing homes which help people like you and me. Add to that in many cities like Atlanta, Blackrock and Invitation Home America and many other hedge and pension funds that keep buying homes and take inventory out of market. Hence you have shortages.
Yes the country that will be here in 100 years will be very different. It will be a country with kids graduating with half a million in debt, who can’t start their own business, who can’t buy homes, we be slaves to blackrocks and hedge funds while a few will own the rest.
If I were president, first I stop guaranteeing student loans so that colleges default and many of them go out of business. High education should be a privilege for a few, not a right. But policies of this and prior governments allowed outsourcing everything so kids have no recourse but go to college. Stop allowing things built overseas, stop outsourcing IT and call center jobs, and things return to their proper place. Till then the vicious cycle of losing what we have to others continues. Including home ownership for future generations.
@pmirp
Your take is closer to reality than the others, but I don’t agree with it.
I would say Biden has thrown buckets of gasoline and napalm on the dumpster fire (by doing everything you have mentioned)
Trump tossed a Molotov cocktail in the dumpster fire (by being co-opted to close the economy during the “pandemic”–OK, that was an honest mistake. But the $1200 check. The extra unemployment. Really?)
The Fed and US government fed the dumpster fire from 2008 until the plandemic. (and they created the dumpster fire with deficit spending and fiat money) The money they created since 2008 has helped the wealthy in the form of higher asset prices, but didn’t trickle down to middle America. If it had, it would have sparked price inflation for goods and service.
The truth is, even absent the pandemic, which overshadows everything now, the USA and probably the world were headed for an economic “correction”
People like summer. Unfortunately, summer is followed by fall and winter (unless you can travel to the other hemisphere, and back). It can’t be summer all year. You can’t have deficits all the time, and bigger and bigger ones over time.
The economy would naturally ebb and flow. All this fiat money has distorted it. Basically, we are collectively living beyond our means–even if as individuals, YOU have savings in financial assets, the financial environment is fragile crap, and the wave will hurt a lot of responsible people. Like @pmirp, and even his Democrat detractors here, who probably have THEIR lives together, even if their understanding is way off.
The pandemic, global warming, and all these other superficially sounding noble causes will be used extract some more $ value and rights and foist a new order. At least, that seems to be the plan.
Consciously or not, people seem to realize this. In CY2021, it appears almost 15 million vehicles were sold in the US. That about a 20% reduction, and really not a bad year by the standards of the last 20 years. Yet prices have skyrocketed. They won’t be coming down–ever, especially if/when GM and other carmakers start peddling electric cars that few people want (electric vans for commercial use–that’s different, there is a market for that).
The won’t be coming down because the prevailing perception now is “it will cost more later”. If this was 1982, it would take about 3-4 years for people to accept the “new normal” of stable prices.
But it is not. We may have iphones and gaming, but financially, America is in a much worse place than 1980. And, the policies that @pmirp1 states guarantee that the supply of new vehicles probably will not recover. And this is what the PTB want–they want you out of ICE, into an EV, which you won’t like, then into an AV, and finally, NO V.
Like Alice Cooper sang “Welcome to my nightmare, Joe Biden is presiding, and you’re not gonna like it, my friend…”
@dal:
+1 million, though I’d say “banning new construction” isn’t quite the case – there are places where there just isn’t anywhere left to build low-density housing, Seattle being one of them. Same story in Denver, to a lesser extent. The solution is to increase density, but the existing homeowners aren’t usually crazy about that; yes, greed explains part of that, but would you want a ten-story apartment building across the street from your house?
“but would you want a ten-story apartment building across the street from your house?”
I think there’s a big amount of space between “a large apartment building *literally* across the street” and the current restrictive zoning, construction, and tenant laws.
Here in Denver, infill in the city is actually limited mainly by lack of available parking, which is a major reason why infill is difficult to do and unpopular.
So, let’s skip the 10-story building and go with a three-story, 15 unit condo building, or townhouses. Assuming two occupants per unit, that means you will likely need to find space for 20-30 cars, in a place where street parking is limited to begin with. That means the footprint of the development has to include parking, which makes it more expensive. And if I owned a single family home with street parking or a single spot adjacent to my house (a typical arrangement here), I wouldn’t want that across the street from me for that reason alone.
Let’s go with a triplex then. That’s not going to change the world, but it is two more households that would otherwise be commuting an hour away or paying massive amounts in rent.
Just anecdotally, my suburban street could comfortably have 2x the number of *single family homes* on it but the zoning and building codes wouldn’t allow it and no one is really interested in changing them because people are reaping the benefits of the real estate price increases.
Yes, I would unironically love to have a ten-story apartment building across from my house. Along with quite a few others in the neighborhood. Allowing that would support a corner store in my neighborhood, so I wouldn’t have to walk ten minutes up a steep hill to get a beer. And, more importantly, it would stop the exodus of my friends from the city because of unaffordable rent.
“The solution is to increase density”
Probably not going to work so well if the surrounding utility and road infrastructure was not designed to handle it.
@dal:
To each his own, but I’d be in the “no way” camp.
@28:
Large cities are set up to handle large populations, so I don’t think that kind of infrastructure would be that big a problem. Sprawl is harder and more expensive to figure out.
That may or may not necessarily be the case as every design has capacity limitations. If your small city or suburb was zoned for X properties with expected Y water flow, gas, and electric demand and someone drops an 80 unit building next door, may not all jive so well thus any zoning board not accepting bribes would haver to reject it.
Right, but we’re talking about large cities thave have been large cities for a long time now, and Seattle probably falls in that category. Denver would as well. Cities like that built up over time, so they have the basics in place. The infrastructure challenge here is building OUTSIDE the city, not in it.
I think what you’re talking about would be more germane for a city that started small and got far bigger very recently. Austin would be a good example of this. Everything there has to be built from scratch, more or less. But in an established place like Seattle, the stuff you need is there – it just needs upgrading.
I think this makes a good argument for trying to refocus growth in cities that started big and shrank – Detroit would be a perfect example. It was built to support well over a million people, and now has half that, but the “bones” are still there. Ditto for Pittsburgh, St. Louis, Cleveland, and on. I think the pandemic is making remote working the norm, which means people who had to live in a place like Seattle because that’s where the office is, and pay through the nose. Not necessarily true anymore – they can cash out and move somewhere far cheaper. That’s what you’re seeing in California, and I think you’re going to see a lot more of this in the years to come.
There is only so much you can do to “refocus” growth. If it were easy, we would have refilled Detroit, Cleveland, and St. Louis years ago, and Chicago wouldn’t be losing population today. Remote work doesn’t undo the network effects that draw clusters of like-minded people together. That’s why there hasn’t been a collapse in the Bay Area, and it’s also why the fastest-rising home prices in the country are in formerly mid-priced places like Boise and Austin that have existing networks of knowledge workers, rather than the remaining places where houses are nearly free today.
28, infrastructure is overrated as a problem with densifying. Development in any mid-price or higher place can easily pay for needed upgrades to water, sewer, electricity, and internet, and also can pay over time for more schools and other public services. Transportation is trickier because geometry requires a transition from more car infrastructure to less car infrastructure once housing density reaches a certain level. But lots of cities in the world have navigated that transition.
@dal
I had the shall we say privilege of experiencing downtown Pittsburgh for several years (or as we say, dahntahn). Using existing population and 2018 Port Authority transit data, I estimated density during the work day to be 71 proles per sq-ft as I recall. Manhattan was somewhere around 102, and Manhattan is a larger island which obviously features more buildings and definitely more tall buildings with living space. My personal experience with this led me to never want to occupy any physical space with any regularity with a density 60-70% of Manhattan’s ever again, because at some point it becomes too ridiculous.
Now while it is certainly more cost efficient to build water mains and electric lines capable of servicing up to 1m in a 20 sq-miles radius than the same amount over a 50-sq mile radius, my skepticism lies more with what is the size of the existing infrastructure because complete replacement is going to be impossible. If in Seattle’s case a giant trench or trenches needed to be dug in order to increase engineering infrastructure, is that cheaper/easier than expanding out into lesser occupied territory? I’m really not sure, but I do feel as if eventually there will be diminishing returns trying to create MegaCity 1.
Jakarta, Indonesia, if outlaying areas are included has a population of 30 million and its physically sinking partially as a result. Just looking at the pictures, the locals are not even close to all having a proper apartment but that’s what would have to happen in a US megacity. I just don’t see it happening and at some point an event horizon is reached at X population in Y sq-miles/foot it ceases to work.
“The city proper has a very high population density of 14,464 people per square kilometer (37,460/ sq mi), while the metro area has a density of 4,383 people/sq km (11,353/sq mi)”.
https://worldpopulationreview.com/world-cities/jakarta-population
https://www.wired.co.uk/article/jakarta-sinking
Love being lectured on the causes of inflation by a guy who happily paid over sticker for his car…
Derpity derp derp.
Its far more nuanced than “its X” but none of this is surprising and most if not all is being done in purpose.
“Automakers really should have seen this one coming and started building their own chips prior to 2020.”
Sure. (Massive eyeroll)
Pick your favorite automotive OEM – VW? Stellantis? (thinking like an automotive journalist here) Do you really want the integrated circuit that VW would have produced in 2020 with one whole year of experience? I don’t.
Monk:
What is this?
Nacho:
Leftovers. Enjoy.
Monk:
There is no flavor. There are no spices. Where are the chips?
@dal20402–Agree you brought up some very valid points. I do agree that the stimulus payments caused some of this but not all can be credited to it nor to Biden. As for the pipeline most of that oil was being sent to the Gulf Coast refineries to be refined and exported as refined product. Having worked years in the oil and gas industry the biggest issue is the lack of refinery capacity. Just in Time has much more to do with the issues we are currently having with supply issues which are causing inflated prices for goods. There is little room for error if there is an interruption in the supply chain and the consequences can be long lasting. I also never heard of calling the current President Branden I thought his name was Biden. Seems if our current President had that much effect on our economy he could just mandate instead of having to go thru Congress. How much have we as a country spent on Defense and rebuilding Iraq and Afghanistan while letting our roads and bridges and infrastructure crumble? Why haven’t the car companies either adapted to the new generation of microchips or start making their own? It is over simplistic to just blame a President for all the economic woes that are happening but at the same time politicians do share some of the responsibility. I don’t see either political party stepping up with a viable solution just more political bickering.
I suppose if one party proposed a viable solution, the other would have to stand in opposition and prevent a chance for the proposing party to look good.
Also house prices in my neighborhood have almost doubled in the last 10 years and the restrictions on building new homes is causing shortages of homes and has priced many Millenniums out of the housing market.
My younger son recently had mechanical issues with his Rav4 last year. The cost to fix said issues was in the $3-4000 range. He decided he wouldn’t fix the Rav as, due to life changes, his vehicle needs have changed. I forwarded articles like this one to him so he would be better informed. He called around and got an offer from a dealer for the Rav that was about half of what he originally paid for it even with the unrepaired issues.
Good for him. How old is his Rav4 and how many miles does it have?
Are the OEMs still building and stockpiling chipless vehicles? At what point do those get chips and released to the market? Will that mean shutting down production and assigning everyone to retrofit, or will we be suddenly ready to ship NOS vehicles alongside ones built today? Or is the overall stock of chipless vehicles much smaller than we are lead to believe?
Ever wonder how Tesla avoided being basically shut down by chip shortages? They used the chips they had and reprogrammed them in house.
https://www.theverge.com/2021/7/26/22595060/tesla-chip-shortage-software-rewriting-ev-processor
Turns out the manufacturers aren’t just outsourcing the chips – they outsourced the firmware on the chips as well.
I don’t see how you blame that on anyone but the companies that chose to outsource and weren’t prepared to reprogram the chips they had.
Agree the companies choose to outsource. There is little flexibility to adapt to changes in technology especially when it comes to newer generations of microchips.
“Get handy with a wrench.”
Glad I can, for nearly all repairs. But I’m worried about rust under my 2009 that could force a hard decision.
I can’t imagine spending $520/mo for 70 months for a *used* car. Ugh.