Data Dive

The Hagerty Market Rating just hit a new high, which is even wilder than it sounds

by Adam Wilcox
18 February 2022 3 min read
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The word “unprecedented” gets thrown around a lot these days. How else are we supposed to describe what is happening in the world?

After a year-long buying frenzy and record breaking auctions at Kissimmee and Scottsdale last month, the classic car market is receiving the same level of bewilderment. But, here at Hagerty, we’ve been keeping a close eye on the classic car market for decades—even going as far as creating our own Hagerty Market Rating. This gives us the unique ability to look at the “unprecedented” heat of the classic car market and see some, um, precedent.

The Hagerty Market Rating conveys the performance of the classic car market as a 0-to-100 number. The higher the number, the hotter the market. The Rating is calculated through a comprehensive algorithm of fifteen weighted measures including the Hagerty Price Guide, auction transactions, insurance data, opinion from industry experts, and the world’s largest database of private sale transactions. A detailed explanation can be found here.

Since its inception in 2007, the Hagerty Market Rating has never been as high as it is now. What’s more surprising is the exponential growth since the pandemic. After hitting a 5-year low in September 2020, the market rating jumped nearly 16 points in just 17 months.

That may not sound like news—we've all seen the prices at auction of late. Yet it's notable because the Market Rating is designed to take those headline sales with a grain of salt. Those of you who took statistics in high school might remember the bell curve distribution. The (very) boiled down refresher is that certain numbers in a dataset are more probable than others. In baseball, a hitter at the bottom of the lineup might have a .100 batting average, and a hot lead-off man might be hitting .350; most players, however, are going to fall around .265. For the collector car market, we assume the probable performance, as represented by the Market Rating, will be "flat." So, the higher the rating goes, the more market activity it takes to keep moving the number up. The inverse is also true—it takes more than a few poor showings at auction to crank the needle to 0.

The only other time we've seen growth like this was after the Rating hit its all-time low in December 2009 (47.4). When it then grew 14.4 points in 19 months, it was assisted by the Market Rating's desire for balance. The growth in the early 2010s was mostly a market correction after the Great Recession and resulting drop in the classic car market. The Rating then went on to grow slowly for the next several years to its previous high point in May 2015 (71.9).

Similar to the peak in 2015, nearly all 15 components are contributing to the current strength of the Market Rating— four of which are currently at an all-time high.

Those components include "correlated instruments," which measures the health of the economy through a combined look at housing prices, retail sales, gold and the S&P 500; auction and private sales activity, which has broken previous records as the volume and average prices have skyrocketed; and the Hagerty Price Guide, where median #3 condition values have never been higher.

These are the same components that led to the peak in 2015, but what's different is the velocity. In the previous peak, it took more than three years for the rating to move from 60 to 70. Now, it did that in a third of the time. Last month, the Market Rating jumped nearly 3 points, the second largest single month jump ever. What makes the most recent exponential growth even more impressive is that it occurred when the Rating was already above 60—the "Expanding Market" range—where the any further Market Rating growth needs even more increased market activity.

Those of you who follow along regularly might be wondering how the Market Rating can be so hot when the 300SL Index is trending down. The answer is that they're probably both right but look at different things. Stocks can be up, but average wages can be down. What matters, at the end of the day, is your wallet and, in the case of collector cars, your garage.

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Comments

  • Michael K. says:

    The big shots and auction houses have totally pushed average Joe gear heads like me out of the classic and collector car market. Sad.

    • the dude says:

      No, it is the federal reserve and the Govt policies that have pushed you out of the car market. Same with first time home buyers, first time car buyers and just about everybody else for anything. Your country is being stolen from you. Elections have consequences.

  • George Dormani says:

    Yes, absolutely!

  • Joe E says:

    I was thinking the same thing and watching the auction prices for resto mods made me curious. While the prices seemed really high it’s also likely that those prices barely (if maybe not in many cases) covered the cost of restoration. Many cars, that had significant restoration, did not break the six figure number and you know that costs of restoration probably approach that number.

  • Jerry says:

    The auction houses aren’t pushing up the prices, buyers are. There are lots of Bitcoin millionaires with money to burn, Baby Boomers spending their 401k profits to get one last chance to reclaim their youth, foreign buyers, investors who see returns better than the stock market, and to top it all off, having an old car has become a national fad and the “in” thing to do. It’s simple supply and demand. As long as there are buyers willing to pay money for a limited item, the price will continue to go up and it’s nobody’s fault but the buyers.

    • Larry says:

      Reply to Jerry

      Having an old car is a fad?

      Hardly

    • RR65 says:

      Jerry, It is so refreshing to hear sane logic and reality. It’s in very short supply these days. And as the owner of a number of classic cars, which I love, it’s been fun to sell a few at auction as of late and there is no reason they should have sold for what they did, other than the fact that the buyer had money to burn. I would never have bought my cars for what they sold for.

    • Michael Kerr says:

      Jerry is right. high demand and low supply will always drive up prices. But there is a frenzy out there, a hype created by and at the auctions and it is easy for people to get caught up in the bidding frenzy as it happens so fast, that before you realize it you just bought your first classic car. Add to that all the stupid money that is floating around and you have the makings of a hot market. The only ones getting really rich aren’t the ones selling, its the one’s running the auctions.

  • ParaboTech says:

    Thank you Mr Jerry. You are absolutely correct. In this free market country, we can choose to buy our not to buy for whatever reason. When we stop buying, the prices will drop.

  • Hyatt Cheek, Jr. says:

    Is this the brilliant flash before it burns itself out? Do we have a coming storm via Ucraine (sp)?

  • RONALD D SIEBER says:

    If this is a true free market, it will be interesting to see values a year or two from now.

  • Jason says:

    Any readers have an estimate of what a ~85-90 point 57 Speedster would bring today at auction? Asking for a friend. 🙂

  • Rustaholic says:

    I’m no economist but we are in an inflationary economy. Everything’s overvalued just like housing etc. There will be a correction there always is.

  • James Rosenthal says:

    I think the department of quick and easy answers is closed permanently. The hot market for vintage cars should be looked at in context, and some of the items mentioned above are relevant. ( lots of dollars pumped into the economy, lots of wealthy people looking for amusements, collector cars as an item of public popularity) Unfortunately, the hot market HAS priced a lot of people out of the market altogether, which is a shame, as they may possibly be the folks that kept this hobby going before it was popular. There are also some new auction systems, BaT and its imitators, which have made it easier to buy cars, with the result that there are more buyers out there.

  • Tom says:

    Lots of easy money buyers who are rookie ignorant car collectors. Attendees appear to be in the “inheritance ages.” So Perhaps recent beneficiaries of deceased relatives hard earned monies.

  • Tom Claridge says:

    Those who blame the sellers, auction houses, dealers er al for the price of collector cars or houses or art work or old watches are displaying their ignorance of economics very simply! These examples of what is simple and wide spread INFLATION! Inflation is classically described as too much
    money chasing too few goods. The “too much money part” is the Federal Reserve and the Federal Gov’t spending way way too much money and spreading that money mostly UNEARNED throughout the economy. The US Debt has increased from abt $22 TRILLION to abt $30 TRILLION in just a very few years abt 36%! Monetary policy is at fault for several recent years the money supply was increased by over 10% per year and the last year it was increased by OVER 1/3rd an unprecedented for the US of 37%! You could reasonably expect on average for your collector car that you own or WISH to own to have a similar increase in price (falsely called value)! Auction house merely asks us all what we are willing to pay and the highest OFFER gets the car if the seller agrees to sell!? I ask you if your home has increased in it’s possible selling price on Zillow? If so is it because you are such an astute
    buyer and knew it would go up in price? If you think so you don’t understand economics very well! Check the value of the US Dollar against the Swiss Franc or the Singapore Dollar. You will find you could get 3 of each not many years ago but today you can only get a bit over ONE of each! Learn from what is happening around you and don’t be the victim of those who are lying to you when THEY are at fault!

  • Robert Wingerter says:

    I am surprised no one has commented on the dramatic rise in prices potentially related to every major manufacturer announcing some form of “going electric” implying the end of internal combustion engines (ICE). While its highly probable electric cars will outperform the old school ICE cars in every way (trust me, not an advocate, I don’t plan to ever own an electric car) — but what is more visceral than the ICE automobile? The sound, the smells, and the mechanical motion of banging through the gears with a manual transmission — none of that exists with electric cars. Therefore, it is a perceived end of an era. Now add in a a two-year pandemic – I’m comfortable speculating many questioned their own mortality and what matters in life. To that point, much like beach front land, manufacturers ain’t making more, so what we are witnessing is the “land grab”. How long it will last? When ICE cars outnumber ICE buyers – which happens every hot cycle when the current generation of classic owners (currently us boomers ) decide to cash out… or die.

  • Greg Anderson says:

    Great summary there by Tom Claridge and I’d like to add a couple more thoughts to that based on what I’ve seen recently. On top of the insane amount of cash injected into the system since the pandemic started and rock bottom interest rates, there were also significant tax cuts for top earners in 2017 which gave them more money for luxury purchases like vintage cars which is likely boosting the high end of the market. It’s basically like free money to them so might as well splurge and spend it on a toy.

    I also think that the “second generation” muscle car fans who came of age in the late 70’s and through the 80’s are now into their peak earning years and often with their kids finished college or university so they now have the money for the cars they also wanted in their youth. They’re also at the point where their parents are now past the average life expectancy and starting to die off and leaving huge inheritances due to the high real estate prices. The real estate prices are also making homeowners feel wealthy so they’re pulling out equity to finance those dreams as well.

    One last thing is due to fear of continued high inflation and volatility in the stock market, people are desperately looking to park their cash into something they think will hold value and many figure classic cars are a good investment so they jump into the car market with limited knowledge of the cars and values and buy up what they perceive to be good cars at whatever they’re willing to spend.

    One last thing could be because the pandemic has limited peoples options for discretionary activities and spending, a lot of dormant project cars have been dusted off and given some attention and some have been re-evaluated and the owner decides to just go buy a finished car instead with the extra money they haven’t been spending on travel and other activities.

    It seems like a perfect storm of many factors all coming together at the same time to create a lot of demand and a huge amount of money chasing what’s out there. I think a few of those factors will change but the momentum will take awhile to stop and prices will continue to climb for another year at least.

  • Eric Sieber says:

    Watching Saturday of Barrett-Jackson on TV, I heard one of them (Craig Jackson I believe) say they had 6,000 bidders with a collective $2 BILLION in buying ability (I think I heard “credit”). That is approximately ten times the amount of money that was spent on winning bids. I would be very interested to know how the numbers of bidders at the January auctions, and their buying ability (money available whether credit or otherwise) compared to past auctions. My bet is it was much higher. And I’m betting B-J and Mecum know that historical info precisely.

    There were still some “buys” at B-J – mostly earlier in the week when I was there, but the AVERAGE price at B-J topped $110k this January. What I saw personally was many more cars than I have seen before selling for more than their restoration cost. Could this be at least partially a function of so many businesses today doing resto’s for profit? It seemed that Camaro’s and Chevelle’s were off the chart this year.

    Obviously there are many possible reasons for the dramatic price increases, but basic economic theory says that when too many dollars are chasing a limited number of goods, the price increases – inflation. Like the current bubble in housing, etc. Our government/The Fed has pumped $5 TRILLION into the economy the last two years. That money is chasing after goods…

    BTW, not related to the other person who posted here with the same surname.

  • Rich Marschner says:

    As the stock market sours in reaction to higher interest rates, we’ll get an eyeful of how the tug-of-war plays out between higher-cost car-buying loans and the draw of collectibles as a way to benefit from inflation. Up, down or sideways — it’s anyone’s guess.

  • Jocko McNeal says:

    Its right in front of all of you. Right now in fact. You can analyze, algo, postulate, yadda-yadda-badda-bing. 2 words; TANGIBLE ASSETS. I mean right here they’re also talking about a watch. How’s fine art doing? Top tier antiques? Didn’t I recently hear of a table that sold for $20M? Stocks are highly volatile, other investments are dipsy doodle, supply chain issues interrupt regular biz investments. The “money” then shifts to those 2 words. Happens every time so don’t take my word for it, look it up. Their analysis points to a huge post-2009 spike. Note how afterward the market may have dropped but not by much, then here we are again with Hair Sniffer in office offering no direction for market capital that has any real interest to the funds that support an economy like ours. If foreign policy keeps urinating down it’s own leg you can expect a dip again. Investors will make new firecrackers and such then we bounce back up again. Got something? Need money? Sell it now. No? Well don’t buy “just because” either. Never forget rule 1 which is BUY WHAT YOU LIKE more than anything. Forget this whole topic as you close on that new collector car. Feel free to sling monkee shines all over this but look it up 1st.

  • Susan says:

    How do I sell my classic car? It isn’t Mecum worthy but it’s a good fun car that has a couple of trophies behind her.

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