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The State of the Market 2009 by Spencer Trenery

February 2nd, 2009

The State of the Market 2009 by Spencer Trenery

For over 30 years, Fantasy Junction has been supplying the world with outstanding, historically significant automobiles at market-correct prices.

Longtime enthusiasts of collector cars will recall the 1989/1990 correction in pricing, which occurred after an apparently similar upswing. The correction of the late 1980’s was brought about by the collapsed US stock market and receding Japanese real estate market, and exacerbated by the collapse of the speculative sector of the collector car market wherein borrowed funds were used to purchase options on cars, which inflated prices to exceptional levels. Japanese and US Nationals controlled a significant number of rare and interesting cars, and when the deflating stock market sparked a selloff, the collector car market was flooded and values plummeted accordingly.

Values remained stagnant for some time before creeping back upwards. As we entered the 21st century, the rate of appreciation began to increase, and finally, in recent years, values have dramatically increased once again.

In contrast with the 1980s, the more recent appreciation during the last five years occurred because of factors intrinsic to the cars themselves. With more rallies, shows, and club get togethers, people have more reasons to buy cars. The technology boom and upswing in real estate and stock markets generated a huge amount of wealth around the globe, increasing the level of disposable income available for indulgent purchases. Enthusiasm for collectable cars has grown to mainstream proportions. We are no longer obscure collectors on the lunatic fringe. Speed Channel has brought Barrett Jackson and the Monterey Historics to every living room in America. There are chat rooms and message boards buzzing for every conceivable make of car. Informative websites such as www.barchetta.cc, and www.anamera.com give current listing of cars for sale and complete historical backgrounds for thousands of cars, and are just a mouse click away.

Virtually every variety of investment worldwide has experienced a significant correction during 2008 and into 2009. Investment grade collectable cars are no exception. Using data points issued by the major auction houses during the Pebble Beach weekend in August of 2008, and the Barrett-Jackson Scottsdale weekend in January of 2009, along with sale prices achieved by Fantasy Junction during these months, it appears that while liquidity and turnover remains quite strong, prices are down by approximately 20-30%, measured from the peak time—arguably August of 2008.

The most recent correction in pricing experienced by the collector car market is directly in line with the aggregate of the real estate, stock, and art markets. Most buyers of collector cars are investors in other fields, and collector cars offer many benefits not found in other investments. As such, the owners of collector cars during this period have not actually experienced a disproportionate loss associated with owning the cars, since alternative investments have also receded. It is also worth noting that you can always use your Alfa 8C Monza on the Mille Miglia, or drive your Ferrari 330 GTS through the Napa Valley—no matter what their values are. Your Citibank stock certificates, however, are barely thick enough to use as beer coasters.

Indeed, this correction occurred quite rapidly and took many by surprise. We are most likely down the steepest part of the curve, with prices from most cars now leveling in the 2004-2005 range. Cars that experienced phenomenal appreciation in recent years seem to be those which have dropped the most as a percentage of their overall value. The most exceptional cars in terms of condition and rarity, appear to be the most insolated from our current economic environment, with prices remaining very strong.

As history has proven, the values will bounce back. The 2008 value peak was not nearly as sharp as that of the 1989 correction, nor was it based on such shaky and speculative foundations. Ironically, a Ferrari 275 GTB/4 was worth about $1,400,000 in both 1989 and 2008, but when adjusted for inflation, the 2008 price was really only $790,000 in 1989 dollars. During the last 20 years, an enormous amount of international wealth has been generated around the globe, and coupled with an increased understanding of and enthusiasm for collector cars, the marketplace for important and historically significant automobiles continues to expand while the supply remains static.

For over 30 years, Fantasy Junction has been an industry leader in the collector car world. Recognizing that values across the board have changed, Fantasy Junction has adjusted pricing on almost all our inventory to reflect current market expectations. Well over $1,000,000 has been shaved off asking prices. In some cases, these reductions have been as much as $375,000 on a single car.

We invite you to scroll through our newly priced inventory and contact us with questions or interest. Fantasy Junction takes pride in representing the world’s most fantastic special interest automobiles at today’s market correct pricing.