Will rising property values dampen spring car buying in 2024?

I hope everyone had a great holiday season, a great Christmas if you celebrated it, & that you had an awesome New Year’s! Here's me posing my ugly mug with one of my favorite Christmas gifts from my sister. A bobblehead of myself, but more importantly, sitting in what seems to be a cool Corvette with a Mustang logo. Very fitting for those of you who know me well.

Well, we all made it through another year in the auto finance and remarketing business. 2023 certainly had its challenges, but towards the end of the year, we certainly have seen some normalcy in trends that had not been part of our business in several years. The analysts seem to be calling for a more normal year for 2024, so let’s keep our fingers crossed.

Some consumers may be in for a surprise in January 2024 by something that is usually perceived as a good thing, at least on paper. Rising property values could dampen consumer’s spending ability on things like acquiring a new or used vehicle or other expenditures. It won’t impact everyone the same way, as some states do property value and tax rate reassessments yearly and not every 3 or 4 years (or other terms). However, in some states, like Ohio, Missouri, Colorado, and Illinois (I am sure there are others), 2023 was a reassessment year on property values. And while it is a good thing that in most areas that property values are way up since 2020 due to an upside down supply and demand housing equation, it also means property taxes will be going up accordingly in 2024 to reflect the rise in values.

You say, how much? A lot in some areas. Take one small example for my sister’s townhouse. A nice place, but not super expensive. Her property value reassessment has her value rising 57% and with a 31% increase in property taxes in 2024. My house had a similar rise, as we wait to see the tax impact here. Increases will have greater impacts to different demographics. Maybe if consumers were not already dealing with increased costs everywhere else in family budgets it wouldn’t be as severe, but when you figure the cost of living being up substantially and with the cost of cars still being significantly more expensive to start, and then financing with higher interest rates makes this an added burden consumers will be facing in the year to come. Hopefully, will start to see some relief elsewhere in budgeted items though as the year goes on, but as we all know, prices rise faster than they will fall.

Nonetheless, I am looking forward to 2024 and what it may bring for the industry. As a shirt I had during the pandemic said and was certainly felt, “I miss precedented times,” and there’s hope we can get start developing a new set of precedents that closer resemble stability. We will have unexpected challenges that economists and politicians haven’t thought of yet, but the good thing about going through tough times is that they really do make you stronger and wise. Let us use some of that benefit in the year to come. Happy New Year!