Radio today: Truck demand goes south - Any rumors?

[todayusay]

GM just added a 3rd production line to the Silverado's things will step up eventually and then many will be left holding the bag, used vehicle prices will drop, if anything we are at the peak right now

I'm seeing local dealers that have silverado/sierra inventory and another larger dealer that not only has inventory, but (at least on their website) are discounting in stock trucks...yeah some of the discounts may only be $500 - but there are others listed that are discounted a couple grand or so

%VEHICLE_SEARCH_PAGE_KEYWORDS_CAP_FIRST_LETTER% Vehicles for Sale near %DEALER_GEO_ONE%

Everett BGMC is your new Buick and GMC dealer in Bryant, also serving Little Rock AR. We also have a large selection of Used Vehicles.

www.everettbgmc.com

Doesn't really help the large SUV inventory issues though

 

[Blackcar]

After reading this from FORBES, it's easy to see why Truck and large SUV prices would be crashing. https://fortune.com/2022/03/15/gas-...t-six-months-economic-ripples-even-more-dire/ The sad thing is they are trying to blame the ridiculous price increases solely on the Russians and Ukraine when we know Biden's Energy policies is a larger part of it. Prices were going nutso long before Putin invaded Ukraine.

So, you don't believe article you linked?

 

[Quark]

I don’t think this really applies to the Yukon/Tahoe family.

People who’ve placed their order very late last year and early this year are still waiting for GM to accept there order.

Apparently by the end of the month if GM doesn’t accept you order (not sure the April cutoff) then you get moved to a 2023. If that’s the case, you wouldn’t get your car until the fall. The rest of the orders for 2022s should finish wrapping up by summer time.

I’ve yet to hear anyone on here say they’ve went to a dealer or called one and there multiple Tahoes available for purchase. Almost everything that these dealers get is accounted for before arrival and people get lucky only when a deal falls through.

I called a dealer about ordering a CT5 and was offered an opportunity to take a Yukon Denali with a 6.2L whose buyer backed out. It's the only dealer I have talked to all year so was it chance or a new trend.

 

[xycrazy]

I'm in tech. That number feels pretty high even factoring in cost of living & stock options. If it's accurate, I'm moving out to the PNW. No doubt tech salaries have increased significantly over the past 24 months and its very competitive from the employers side.

House prices are definitely nuts, but Zillow is notoriously out of touch with reality. The Zestimate on our house is 20% higher than reality.

I didn't think a housing crash was coming anytime soon until we talked to a lender about a different house. The amount of money they approved was shocking. I would be comfortable with about 60% of what they approved for and even then felt like we would tighten up the budget. IMO, we won't see this effects from this for a few more years though. It will take housing prices leveling off and buyers remorse setting in before the ball starts rolling downhill.

I also don't think vehicle prices are coming back down regardless of chip shortages. Call it the pessimist in me, but people continue to buy at current prices so what incentive do dealers and manufacturers have to lower their prices? None.

I'm in tech, too and your friend is definitely exaggerating. They can earn a ton of money but base salaray is pretty low at Amazon when talking about these numbers. What they're talking about are RSUs... unvested stock that vests over a period of 4 to 5 years. First, a 2 year graduate doesn't get that many stocks. Second, Amazon is known for canning people before they have the chance to get all their stocks. But certainly, you earn a lot in Tech compared to other industries.

 

[xycrazy]

You do not have to put down 20% but you would incur PMI if under 20%. I'm fairly certain this is across most loan types including jumbo. PMI is a scam IMO, so I do agree that a 20% down payment is ideal.

Our dealership verified our income as well. Although not as thorough as home buying, it was not just credit score.

Nothing in guaranteed, including selling your home for a profit in 2-3 years. Realtor fees alone force a considerable appreciation before you will realize any profit.

PMI is worth the money, IF

1) You get more money (dividends/cashflow) in the stock market than you would get with just paying less without having PMI
2) If you invest the money that you save on the down payment and leverage it...meaning you invest it in the stock market e.g. where you historically get 8-10% per year. It will nicely compound while you pay artificially low interest rates for your mortgage and inflation is eating the debt over time.

People often don't consider that as they don't understand how wealth building works. As long as you are good with money and don't live beyond your means that's the ideal way to get rich with other people's money. In this case from the bank

 

[firsttimetahoe]

PMI is worth the money, IF

1) You get more money (dividends/cashflow) in the stock market than you would get with just paying less without having PMI
2) If you invest the money that you save on the down payment and leverage it...meaning you invest it in the stock market e.g. where you historically get 8-10% per year. It will nicely compound while you pay artificially low interest rates for your mortgage and inflation is eating the debt over time.

People often don't consider that as they don't understand how wealth building works. As long as you are good with money and don't live beyond your means that's the ideal way to get rich with other people's money. In this case from the bank

Yeah, but there is this thing called taxes that people also do not generally consider lol. Taxes are your enemy when investing. You want to avoid them when you can. You don’t want to incur them to meet expenditures, especially when you’re young.

If you’re selling from your portfolio every year to meet capital payments, you’re probably generating some level short term cap gains. Based on your income level, those are costly. Certainly not ideal to generate. It chips away at your overall appreciation, which is always the goal.

Unless you income stream is entirely tax free in state specific munis. At that point, what are you investing a few hundred grand in a SMA where you own the bonds individually and then kick the income in an account to earn a few thousand a year in income payments?

But by your - “Historically you get 8-10 percent a year” analogy….that’s if you’re invested purely in the Sp500….But doing so means you’re not really generating income. SP 500 dividend yield is barely over 1%. So when you add in Higher income producing assets, you now tend to lower those returns because your portfolio isn’t entirely US large cap equities. Or you invest in high yield / junk bonds, which they won’t tend to default…but will add volatility to your overall return .

Also you have to note That is also an annualized return over a very long time span. So some years (possibly consecutive too) you can be down 10% or more. That’s not when you want to sell. You want to add.

I do investing for a living. Wealthy people never sell from their investment portfolios to get access to money. They borrow against it for a really. Low rate. They avoid taxes doing it that way too. They certainly don’t pay PMI. In fact, if anything they'd rather have 20% down because their LTV is lower and they can take out a larger HELOC to invest if their property value has gone up.

Older people use investment income to pay for expenses. Older people also don’t tend to buy homes and expensive items like cars.

 

[xycrazy]

Yeah, but there is this thing called taxes that people also do not generally consider lol. Taxes are your enemy when investing. You want to avoid them when you can. You don’t want to incur them to meet expenditures, especially when you’re young.

If you’re selling from your portfolio every year to meet capital payments, you’re probably generating some level short term cap gains. Based on your income level, those are costly. Certainly not ideal to generate. It chips away at your overall appreciation, which is always the goal.

Unless you income stream is entirely tax free in state specific munis. At that point, what are you investing a few hundred grand in a SMA where you own the bonds individually and then kick the income in an account to earn a few thousand a year in income payments?

But by your - “Historically you get 8-10 percent a year” analogy….that’s if you’re invested purely in the Sp500….But doing so means you’re not really generating income. SP 500 dividend yield is barely over 1%. So when you add in Higher income producing assets, you now tend to lower those returns because your portfolio isn’t entirely US large cap equities. Or you invest in high yield / junk bonds, which they won’t tend to default…but will add volatility to your overall return .

Also you have to note That is also an annualized return over a very long time span. So some years (possibly consecutive too) you can be down 10% or more. That’s not when you want to sell. You want to add.

I do investing for a living. Wealthy people never sell from their investment portfolios to get access to money. They borrow against it for a really. Low rate. They avoid taxes doing it that way too. They certainly don’t pay PMI.

Older people use investment income to pay for expenses. Older people also don’t tend to buy homes and expensive items like cars.

Totally fair points. If you invest in the S&P then dividends will be just a little bit over 1%. However, what pays off over time is the compounding growth when constantly keep investing in it. I agree that it's a bad idea to sell shares to live from them.
That should be only the last resort. But think about mixing an S&P 500 with high paying dividend stocks like from the energy sector. You find stocks paying 5+% in dividends easily. Since decades. Now if you consider stocks like Rio Tinto you even get 10% at their value right now. You can choose to either reinvest the dividends or to pay them out. Of course, that's taxable income. However, let's assume even the worst case would be 30% taxes then you still make 7% in dividends while you're paying a loan of 3-5%. A surplas of 2% while you write off mortgage and PMI fees every year and bring down your APR by almost another percent.

Or another example: Let's assume you have to pay $130 in PMI for a house that costs 500K. Down Payment is just 10% instead of 20%. So you only pay down $50,000 instead of $100,000. The 50K that you "saved" will work in your stock account with let's say 8% per year. That gets you to 110k in 10 years, without adding a single dollar out of your pocket. Whereas saving the PMI for 10 years (and investing it in the stock market with 8% gain per year) would get you to only $23K. You could also say you don't invest at all, just keep the 50k in your savings account and pay the PMI rate every months from that bucket... 50,000/130 = 32 years! So you could 32 years pay the PMI from this bucket... without even investing it. Would it makes sense financially to let the money sit in a savings account? No... would it get you a lot of options and flexibility? Absolutely!

What people also don't know about PMI... as soon as your equity in the house reaches 80% you get rid of the PMI payments. The moment when the house appreciates significantly or you upgrading it by adding a new kitchen, etc. it could be already eliminated. You don't have to wait for years to get rid of it...

 

[firsttimetahoe]

But think about mixing an S&P 500 with high paying dividend stocks like from the energy sector. You find stocks paying 5+% in dividends easily. Since decades. Now if you consider stocks like Rio Tinto you even get 10% at their value right now. You can choose to either reinvest the dividends or to pay them out. Of course, that's taxable income. However, let's assume even the worst case would be 30% taxes then you still make 7% in dividends while you're paying a loan of 3-5%. A surplas of 2% while you write off mortgage and PMI fees every year and bring down your APR by almost another percent.

Can you stomach the volatility to have a large allocation in energy stocks? Last year they were down over 30%. Yield also isn't the greatest barometer when looking for income in the energy market. Dividends are fixed, for the most part. Yields increase and becomes attractive because the stock price is getting hammered downwards. Dividend yield = annual dividend total divided by stock price. Lets say a energy stock pays a $1 dividend every quarter for the last year and the next 4 quarters.....and it's a $40 stock. Your yield is 10% ($4/$40). Now next quarter that stock price is $20. Your yield just went up to 20%. Your dividend income remained the same. But you also just lost over 50% of your principal.

Also, a lot of energy stocks the last few years had actually cut their dividend or flat out suspended it.

 

[drmoose]

I'm not in tech, so I don't honestly really know. But I think the person I know was talking about specific group in tech, namely quality programmers. But honestly IDK.

As far as home prices, YMMV, but in my area, house are going for 250-500k over ask, routinely. And that I know as a fact (and not from the below articles - from 3 friends/acquaintances who have sold recently - but I suspect that article is pretty accurate). How are people affording these prices? I can only assume they are making a lot of $$.

‘Brutal,’ ‘crazy’ housing market has Seattle-area homes selling half-million over asking price

A wild housing market is forcing many Seattle-area home buyers to pay $300,000 to nearly $1 million over asking price.

www.kiro7.com

 

[xycrazy]

Can you stomach the volatility to have a large allocation in energy stocks? Last year they were down over 30%. Yield also isn't the greatest barometer when looking for income in the energy market. Dividends are fixed, for the most part. Yields increase and becomes attractive because the stock price is getting hammered downwards. Dividend yield = annual dividend total divided by stock price. Lets say a energy stock pays a $1 dividend every quarter for the last year and the next 4 quarters.....and it's a $40 stock. Your yield is 10% ($4/$40). Now next quarter that stock price is $20. Your yield just went up to 20%. Your dividend income remained the same. But you also just lost over 50% of your principal.

Also, a lot of energy stocks the last few years had actually cut their dividend or flat out suspended it.

I'm not betting on energy stocks only. I was just picking it as an example. Take other stocks into consideration... Stocks like insurances, banks, consumer, etc. The leverage of having the money in your stock account is much higher than just sittting in a house. What you gonna do if you need money? Can you selll a chimney? A wetbar? Some bricks? No, you can't! But you can take your money out of the stock market every day if necessary and bridge the time in between. You will be able to keep your home in that case. What you gonna do in the other case? Selling the house to the bank? Don't put everything in one basket...

What would you recommend to do differently then? What is it that you suggest your customers to do?