It’s no secret that New Jersey was one of the slowest states to recover from the 2008 recession. In this East Coast state, unemployment rates remained high and the government frantically grasped for straws in an attempt to re-allocate state funds and invest in higher education to stimulate job growth and encourage students to enter trades. Along with all this came a spike in the costs of used vehicles – because so few New Jersey residents could afford to buy a brand new car, the demand for used vehicles was on the rise, and high demand always results in bigger pricetags.
But now we’re coming out of the recession – one of the biggest indicators is the fact that people are buying new cars again. That doesn’t necessarily mean that all New Jersey residents should hop on the wagon, though. Because the demand for used vehicles has dropped again, so have the prices.
Used Cars: One of the Last Standing Commodities
There aren’t many markets in which prices are as heavily dependent on supply and demand as in the used car market. Used car buyers need to keep an eye on carbuying trends if they want to figure out the best time to buy a used vehicle. Not only does it lower the demand for used vehicles when people are buying new, but those who are buying new are also often trading in their used cars. Thus, there’s a large supply of good quality, pre-owned vehicles. Buying when the demand is low and the supply is high could mean you spend a few thousand dollars less than you expected to, and still get your hands on a high-quality vehicle.
Unemployment Rate and Used Car Prices
NJ used car dealers noticed a strong correlation between how much they could charge for a used vehicle and the current rate of unemployment in the state. For example, unemployment rates were extremely high between 2009 and 2012, and have only recently begun to improve. According to a study by the National Automobile Dealers Association, the average cost of a used car increased by 4.7 percent in 2009, by 11.5 percent in 2010, and 11.4 percent in 2012 before finally slowing down as people got jobs and began to purchase new vehicles again.
Used Cars: Always a Smart Buying Decision
The same study indicated that even though used car prices soared with high unemployment rates, they still carry a pricetag that’s half the size (or smaller) of a brand new vehicle. The average price of a car fresh off the lot is currently about $31,000 while the average cost of a pre-owned vehicle is around $14,445, the same NADA study suggests. Though, of course, the rebound of the new car industry is a positive sign for the New Jersey economy, buying a good condition used vehicle will never cease to be a sound investment, especially if they’re only a few years old. This is especially considering the current used car market, in which dealers are struggling to sell even the best vehicles on their lot: the ones they fought hard to get thinking they’d sell like hot cakes.