Data Dive

Peaks and valleys: How long does it take a collector car to climb back from a dip in value?

by John Wiley
8 September 2022 4 min read
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A successful hill climb is measured in minutes. Climbing back from a dive in value, on the other hand, can take years.. Photo by Ray Brock/The Enthusiast Network via Getty Images/Getty Images

There is a cycle for everything. That truism of life, intuited at least as far back as the Book of Ecclesiastes, is also important to understanding how values fluctuate, be if for Yeezy sneakers, condos in that trendy neighborhood in your nearest downtown—or your favorite collector car. If values are down, safe to say they’ll go up. If they’re up, they’ll eventually come down.

Knowing when they’ll go up or down, of course, is another question entirely, and the answers can vary. In 1989, the Ferrari market imploded and took a staggering 19 years to recover. Yet other cars seem able to bounce back from a dip in much less time—remember the chatter about 2016 Porsche 911 R values declining? Well, they’re higher than ever now.

With many collector cars selling at or near record prices, we decided now was as good a time as any to take a deeper look at how long we can expect to wait for values to cycle.

First, it’s helpful to think about what causes these cycles. Every year, some enthusiasts enter car collecting, while others leave. New vehicles become collectible. Events where people enjoy those vehicles come and go. There’s old-fashioned supply-and-demand: A few exceptional examples of a particular vehicle sell for incredible prices, which draws more (and possibly less nice) examples to market. And, of course, there are factors outside the buying-and-selling of old cars that have an impact. All these inputs—and many, many more—cause transaction prices to shift over time. The Hagerty Price Guide helps us keep track of changing values, and that allows us to observe these individual cycles over time.

Using Hagerty Price Guide data from 2010 forward, we can measure a cycle by the time between the first peak value, through a dip, and a subsequent second value greater than the first peak. We limited study to vehicles 25 years or older, in order to avoid muddying the data with normal used-car depreciation.

Overall, the average cycle for classic car values from peak to peak is 4.2 years. However, we noted that vehicles with larger dips took longer to climb back: When the drop in value is 10 percent or more, it takes an average of 5.2 years to peak again.

Naturally, your car may vary. The plurality of vehicles we looked at had cycles of just 2 to 3 years. A few took longer than ten to come back. (And of course some vehicles have never dipped while others—some 47 percent of those we looked at—have yet to exceed their first peak in values.) The chart below shows how many vehicle generations (a 1984-1996 C4 Corvette, for example, being one vehicle generation) take how long to trend through their own cycles.

Those caveats in mind, let's look at an example of what we might call a "typical" cycle. The 1984–1996 Chevrolet Corvette peaked, dropped, and recovered in about 4 years. With an initial peak in values in 2011 at an average condition 1 value of $33,096, values then dropped close to 4.4 percent to a low of $31,651 just two years later. However, by 2015, the average Condition #1 value had rebounded to a new high of $34,082.

The 1975–1989 Porsche 930 Turbo provides a snapshot of a more volatile cycle. After peaking in 2016 with an average Condition #1 value of $296,510, the car dropped 29 percent over five years to $209,235. Values are once again marching upward, but they have yet to surpass the high water mark from six years ago, with Condition #1 value sitting at $216,059. In other words, a high, fast rise can sometimes precede a hard, long fall.

Another perspective on market cycles comes from looking at vehicles that have sold at auction more than once. They theoretically provide something of an apples-to-apples view of market cycles, with the caveat that appearing multiple times at auction within a short span can, in and of itself, hurt a particular vehicle's value.

Vehicles sold twice at auction show that after 30 months (2.5 years), there’s a better than even chance the vehicle will sell for more, which is similar to the 2–3 year cycle for the majority of vehicle generations in the price guide. Want more certainty than 50/50? By year 7, the probability of breaking even is 95 percent.

The potential for a gain is quite good if you happen to pick up a car at auction that had sold for more at a previous auction—so long as you're patient. Looking at vehicles that have sold three times at auction, with a dip in the second sale, we see the average time for the vehicle’s value to exceed the first sale price (a rebound) is 4.79 years. The average gain from the first to the third sale is 29 percent. Rebounds happen about 18 percent of the time.

If you're the second owner and paid more than the last person, things look bleaker. While peaks happen less than 28 percent of the time, cars that took a loss (typically 21 percent) on their third sale are still up about 13 percent from their first sale.

Admittedly, the biggest limitation here is the relatively short time span for data collection. Data on collector car values thins dramatically prior to 2010 and is also muddied by dramatic "black swan" events in the broader economy, namely the terror attacks of September 11, 2001 and the global financial crisis of 2009.

That in mind, there are no guarantees in this data for those inclined to "time" the market. But there are some guidelines. If you’ve owned a car for a couple of years and it is up over 40 percent, you can quite safely say it's a good time to sell. If the value is down 20 percent? Might as well hold it another year or two, as the value might rebound, and it probably won’t fall much more either.

For the silent majority of us who buy for reasons entirely unrelated to financial gain, there's a clearer takeaway: There's seldom a "wrong" time to get into car collecting. If you have the patience and the financial means to hold on to it for four or five years, you can fairly expect to break even or better. Considering that millions of people are paying down five-year loans on new cars that are almost guaranteed to depreciate, that doesn't seem like such a bad bet.

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Comments

  • Paul Ipolito says:

    I question the C4 Corvette values due to the range included. There was never a 1984 base Corvette worth anywhere near what your chart says. The values listed can only be applied to the 1990-1995 ZR-1 or the 1996 Grand Sport. Callaways should also not be included due to their overweighted effect from such a small sample.

    • Robert Brooks says:

      I was just going to post the very same opinion. I have previously noted the inherent conflict of Hagerty in “inflating” car values that drive their premiums.

      • John Wiley says:

        Inflated values lead to inflated claims. Every week I tell plenty Hagerty agents that someone’s car is worth less than what the owner thinks.

    • Matt says:

      Agree. The only base Corvette that would approach those numbers would be from 92-96 when the magic number of 300HP was attained for the standard engine. Even still, most cars are below $34,000. I bought my 84 for $7500. It was a blast. Even got out of a ticket because of the blinky digital dash. lol

    • John Wiley says:

      The values are averages of the entire C4 Corvette generation.

  • Gary says:

    Much of the argument in this article seems to be based on ‘too limited’ information, or possibly just BS…

    • John Wiley says:

      Do you consider 37,000+ vehicles updated 3-4 times per year in the Hagerty Price Guide going back to 2010 (close to 1.5 million data points), and nearly 14,000 paired sales of the same vehicles limited?

  • Brian James says:

    Great data gathering, detailed analogy, and insight.
    I’m sure though, that some armchair readers will be critical that it’s not perfect, or complete enough, nor even very good…

  • Jonathan says:

    Just me, but I say leave the “investing” in classic cars to “investors”. For the rest of us, just buy what we like for what seems a reasonable price and enjoy. One of my fun things happened again yesterday: a new corvette screamed around a corner, me stopped at a red light. He stopped dead, holding up traffic, window down, and yelled “Hey great car”! (’59 Willys Wagon, at best in rough fair condition) Sort of nice to realize: In one year his car will have depreciated more than I paid for the Willys. If you’re sort of careful, buying and enjoying a classic in #3 or #4 condition is a “no cost” hobby. If it turns out to be a good investment years down the line? Well, great, but that’s not my reason to buy.

  • RJ Russell says:

    I have some question as to whether post WWII Packards…and even lesser valued cars from earlier series….are likely to rebound . In 2010, 1955-56 Caribbeans were valued in the $150-200k price range for restored cars. Now, it is rare to see any hit $100K and more common cars are going unsold or selling for near salvage value.
    I think that those who aspired to own Packards in decades past are dying off and the shortage of parts, qualified mechanics and escalating costs for chroming, upholstery and mechanical work will continue this spiral.
    I hope I am wrong but I think that there are cars that will not rebound since those who drooled over them when they were young and broke is a pool that can dry up

  • Dr. Who says:

    A few years back I bought a car that I love to drive. It was inexpensive with low mileage. I go to various Cars & Coffee events where the average cost of the cars is five to ten times mine! As a car photographer it is a great hobby and everyone has been very friendly.

  • don cox says:

    If your looking to make Money-I think the stock market adage is applicable –Buy low-sell high– Every Old car will increase in value–It seems likely that in the not too distant future that old cars that are ignored today will make you good money in the future –I’m thinking about cars you can buy cheap right now–the way you bought mustangs & dodge Darts in the 70s & into the 80s -What comes to mind are the 70s/80s Granada’s/Fairmont’s ect ect–Dirt cheap right now-

  • David Dalton says:

    I think every car purchase is an emotional one. I’m old now, but when I was a kid I wanted what I saw on TV or in movies, Ford Mustang Eleanor from Gone in 60 Seconds, the 1970 Dodge Challenger R/T from Vanishing point, The TV series Batmobile, The Monkees Pontiac GTO, etc. I’ve never wanted a Model T, an Auburn, a Cord, or a Dusenburg. To me that’s Grandpa’s thing. I’m sure you might find a few guys my age that might want those, but the majority of my generation wants 60”s and 70’s muscle cars or 70’s and 80’s Jeeps, Trucks, Mustangs, Trans Ams and Camaro’s.

    I’m sure the cars I own today (1993 Nissan 300ZX, 1986 Corvette) won’t be wanted by kids that are going to be born today or the next ten years. They will have no emotional attachment or nostalgia for ICE cars. They won’t see them on TV or in movies or on the street. All they will see are electric SUV’s and lots of them. They may not be able to buy cars at all. There might just be a subscription fee for autonomous cars to pick you up and drop you off where you want to go. Most people might work from home and won’t have need of a car.

    In 2038 they will be sixteen and they will be desiring the electric cars that haven’t been drawn up or dreamed of today. They will look at my cars and think what I think about cars from 1940’s and older “That’s grandpa’s car. I don’t want to be seen driving that”. By then a Model T will be 130 years old, my cars will be 45 and 52 years old. I expect that my cars will probably sell for scrap prices, that’s if my heirs don’t have to pay to have them taken away.

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