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ST. LOUIS NEWS TODAY - Sunday, November 9, 2008
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Consumer Interest in Bigger Autos Rebounds As Gas Prices Take a Precipitous Drop in St. Louis Area
ST. LOUIS, MO, (PRNewswire-USNewswire), November 9, 2008 - Interest in larger new vehicles may be returning, as gas prices take a precipitous drop and dealers and manufactures offer special pricing and financing.
On the used car list, the top six models in October 2008 were exactly the same as the top six models in October 2007, but prices on the larger, lower-MPG models continue to fall, according to AutoTrader.com's monthly Trend Engine report
Larger new models making big jumps in page views on AutoTrader.com in October included the Honda Odyssey (from No. 35 in October '07 to No. 9 in October '08), the Honda Pilot (from No. 53 to No. 12 year over year), the Chrysler Town & Country (from No. 32 to No. 17 year over year) and the Toyota Highlander (from No. 51 to No. 20 year over year).
"In spite of the economy and gas prices, there will always be a market for larger vehicles," said AutoTrader.com President and CEO Chip Perry. "While many buyers can downsize to a smaller vehicle, many others can't because they have large families, need a larger vehicle for work or for other reasons. These people may be able to delay the purchase of a new vehicle, but they can't delay it forever."
Two new models realized double digit increases in their average list prices year over year, according to the AutoTrader.com Trend Engine. The average price for a new Toyota Corolla jumped 10.35% from October '07 to October '08 and the average price for a new Chevrolet Malibu jumped 20% from October '07 to October '08. Demand for the Corolla remains high as many consumers continue to purchase more fuel efficient cars and demand for the Malibu continues to be driven by strong marketing and good buzz about the car from automobile writers and the public.
Larger Used Vehicles Continue Price Drops
The top six used vehicles on AutoTrader.com's Trend Engine list for October '08 held the exact same position in October '07. In order from No. 1 to No. 6 on the used vehicle list for this October and October '07 were the Ford F-150, the Ford Mustang, the Chevrolet Silverado, the Honda Accord, the Honda Civic and the Dodge Ram 1500. Average prices for the larger vehicles in the top six on this list fell between 8.19% and 17.72% while average prices for the used Honda Accord and the used Honda Civic increased 1.17% and 6.97% respectively.
Almost across the board on the Trend Engine used vehicle top 20 list, average prices for larger vehicles fell by double digits year over year while average prices for smaller vehicles fell by single digits or rose slightly.
"Falling prices for these larger used vehicles mean we're continuing to see some excess inventory of these larger cars, SUVs and trucks," said Perry. "But as manufacturers continue to cut production of larger vehicles and demand for larger vehicles normalizes as gas prices go down we may in the coming months actually see a shortage of some historically popular new SUVs and trucks, which may make this used inventory more attractive to the buyers who need these vehicles to accommodate their work or lifestyles."
Thanksgiving Travel by Car Saves Money, Headaches
ST. LOUIS, MO, (PRNewswire-USNewswire), November 9, 2008 - With gas prices dropping and airlines making drastic cuts to the number of flights they will offer over the Thanksgiving holiday, the Car Care Council suggests that driving may not only save you money, but will also save you from plenty of travel headaches.
According to USA Today, "airlines will offer almost 3,000 fewer domestic flights a day during the Thanksgiving season, promising fewer choices, fuller planes and higher fares for millions of Americans. Compared with last Thanksgiving season, there will be 11% fewer flights - 2.6 million fewer seats - on non-stop domestic routes from Nov. 20, the Thursday before Thanksgiving, through Nov. 30, the Sunday afterward."
"It is going to be very stressful to fly this holiday season. Fewer flights and full planes mean more delays, missed connections and canceled flights. That doesn't paint a pretty picture for those thinking about flying," said Rich White, executive director, Car Care Council. "Driving is simply more convenient and less hectic than flying, and with improved gas prices, the cost of driving is a much better deal. The cost for a family of four traveling by car is about the same as one person traveling by air."
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Mortgage Relief Legislation May Produce Winners and Losers
ST. LOUIS, MO, (SLFP.com), November 9, 2008 - If the U.S. experience during the Great Depression offers any guidance, imposing a temporary ban on foreclosures in response to the current financial turmoil could create unintended costs, based on an analysis from the Federal Reserve Bank of St. Louis.
David C. Wheelock, an economist with the St. Louis Fed, wrote the analysis for the November/December issue of Review, the Reserve Bank's bi-monthly journal of economic and business issues.
Nearly 1 percent of U.S. home mortgages entered foreclosure during the first quarter of 2008, and almost 2.5 percent of all home mortgages were in foreclosure at the end of the quarter. In contrast, as many as half of urban home mortgages were delinquent on Jan. 1, 1934, the height of the Great Depression.
During the Great Depression, state and local governments responded to the rise in mortgage foreclosures primarily by changing their laws. Several states enacted temporary moratoria on foreclosure, while others made permanent changes that limited the rights or incentives of lenders to foreclose on mortgaged property.
Wheelock's report shows that 27 states adopted foreclosure moratoria during the Great Depression. Moratoria were especially common among states in the Midwest and Great Plains, but were also imposed by several states in the Northeast and Far West.
"Foreclosure moratoria generally applied to both farm and nonfarm residential mortgages," said Wheelock. "However, the pressure for foreclosure moratoria was particularly intense in Midwestern states where farm foreclosure rates were especially high."
He noted that these moratoria and other changes to state mortgage laws enacted during the time favored borrowers over lenders. He also said several states enhanced the rights of borrowers to redeem foreclosed property and limited the rights of lenders to sue for deficiency judgments. Not surprisingly, these changes led to lower farm foreclosure rates -- but with a cost.
"Although the economic and societal benefits of lower foreclosure rates are difficult to measure," Wheelock said, "research shows that the foreclosure moratoria of the Great Depression imposed costs on future borrowers."
He cited several studies -- some looking at the Great Depression and some considering more recent data -- that suggest foreclosure moratoria tend to encourage lenders to reduce the supply of loans and may lead to higher average interest rates for subsequent borrowers.
"The evidence from the use of foreclosure moratoria during the Great Depression demonstrates how legislative actions to reduce foreclosures can impose costs that should be weighed against potential benefits," Wheelock concluded.
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