Prices have never been higher, and they won't last for long.
Used car prices are positively exploding right now. There are many reasons, but most of them relate to the global pandemic. First, there's a new car shortage. That's because there were shutdowns when the first wave of the virus hit the US. The computer chip shortage happened shortly after because chipmakers started supplying parts for laptops, PlayStations and phones instead of cars, because demand dried up.
There are now more customers in the marketplace too. Covid slowed and stopped ride-sharing services like Uber and Lyft, and public transit ridership dropped as well. Those customers are now back in the market as well. There's also more money to spend for a certain selection of consumers who have saved money staying home, and then there's the stimulus. All of this makes for a hot market.
According to CarGurus in the last three months used car prices have jumped more than 6%. Pickup truck and SUVs are up, expectedly, but sedans are up 6% too, and no one buys sedans. Prices were steady from three years ago until last June, when everything went crazy. The average price of a used car is now $23,816.
But on the flip side, the average price of a trade in is up from $14,000 a year ago to $17,000 now. So you'll get more money for your ride. And sites like Kelly Blue Book, True Car and Carvana are giving good appraisals.
We told you a few weeks ago that Carvana is selling cars at a rate of one every 2.2 minutes. The car vending machine company also bought a vehicle from a customer every 2.5 minutes. For instance, we put in one of our daily drivers, a low-mileage 2014 Ford Mustang GT, and it came back with a price of $24,214. That's only about $6,000 less than we paid for it six years ago.
The key thing to note here is that this is all temporary. Factories are getting back to business, and lawmakers are working on ways to improve the computer chip shortage. The cold snap in Texas that slowed down petrochemical production is gone and the Suez Canal is unblocked. If you have a used car, or even an over-mileage lease, now is the time to sell.