NYTimes Auto Affordability Article

[SC Maintenance]

You're correct. I realized my error when I looked at your chart. My number was 2024 median, not mean. I don't think the 2025 number is out yet.

The part about two cars is why I think new vehicles at 25k aren't really a good financial choice for the median wage household. It would be well above that 10% threshold. But there are many used reliable used vehicles priced well below 25k. I'm well above the median, but I have four cars and even I shudder when I think about the cost of ownership. That's a big part of the reason I do my own repairs and maintenance.

I would not want to raise a couple kids on $105K today. I am shocked every time I leave the grocery store and my income is much more than that.

I agree that cheap cars are usually a poor buy. As for cheap EV's - most making $105K likely do not own there own home - so where do they charge?

 

[SC Maintenance]

View attachment 332938
The median household income hasn't kept up with the cost of living, so the bottom 2/3 are getting their dollars stretched further.
So I think 1/2 to 2/3 of households have given up on a new car, especially at $25k for a base model sedan or tiny SUV?
Our US made, 2018 Outback new, was less than $25k USD, and its a capable AWD mid size wagon family vehicle. $25k for a 2wd compact sedan, or SUV, with half the cargo space, made in China or Korea, just doesn't make sense to me, other than the dollar has be devalued that much?

Someone is buying cars - volume is strong. I suggest its actually young people. They have given up on a family and owning a home, and are financing cars. YOLO.

 

[IndyIan]

Someone is buying cars - volume is strong. I suggest its actually young people. They have given up on a family and owning a home, and are financing cars. YOLO.

Yeah, that is an option. Doesn't sound much like the American dream though!

IMHO something in our political and financial systems are broken, to have the cost of living increase so dramatically, in spite of continual improvements in manufacturing, farming, and technological efficiencies.

We can still have billionaires, but also some rejigging should be done to make a few more people able to afford a practical car and a house too if they want.

 

[jghall00]

Yeah, that is an option. Doesn't sound much like the American dream though!

IMHO something in our political and financial systems are broken, to have the cost of living increase so dramatically, in spite of continual improvements in manufacturing, farming, and technological efficiencies.

We can still have billionaires, but also some rejigging should be done to make a few more people able to afford a practical car and a house too if they want.

Restrictive development rules and rent seeking. The costs of everything associated with home building has risen, plus existing homeowners don't want it which means greenfield development on the outskirts. Entire industries such as meat packing, ag supply, etc. have consolidated. Meanwhile, availability of well paying jobs that don't require college has dropped.

I've already resigned myself to the fact that I'll likely retire outside the US to get the quality of life I want. The appeal of living here has dropped. Guess I'll see the grand kids during summers.

 

[SC Maintenance]

Yeah, that is an option. Doesn't sound much like the American dream though!

IMHO something in our political and financial systems are broken, to have the cost of living increase so dramatically, in spite of continual improvements in manufacturing, farming, and technological efficiencies.

We can still have billionaires, but also some rejigging should be done to make a few more people able to afford a practical car and a house too if they want.

Money printer go brrrrrr

 

[alarmguy]

View attachment 332938
The median household income hasn't kept up with the cost of living, so the bottom 2/3 are getting their dollars stretched further.
So I think 1/2 to 2/3 of households have given up on a new car, especially at $25k for a base model sedan or tiny SUV?
Our US made, 2018 Outback new, was less than $25k USD, and its a capable AWD mid size wagon family vehicle. $25k for a 2wd compact sedan, or SUV, with half the cargo space, made in China or Korea, just doesn't make sense to me, other than the dollar has be devalued that much?

@SC Maintenance

A 10% figure in post #18 was mentioned of household income should be for an automobile which these responses and posts are related too.
I showed that is incorrect. No matter if you use Median or Mean a car (any car) did not cost $1,100 in 1975 and using (in this case) the MEDIAN income in 1975 was $11,000 The MEAN was $15,000

I see the point of the use of the word Median VS Mean (average) but it still does not hold water from post #13 stating a car should cost 10% by the way the word used "average"
Cars are more than affordable for anyone and if not they are doing something wrong both new and used. Homes are affordable too. My feeling is people want every luxury that they cannot afford.
BTW "average household income below is incorrect. Average household income is $144,000

from post #18
"jghall00 said:
I have mixed feelings on affordability. My recollection is that no more than 10% of household income should go towards transportation. So for a 25k car at 5% interest and 60 months, that's ~471. Add $75 for insurance and $100 (40 daily x 4.00 gallon @ 30 mpg) for gas and you're at $600.
Average household income is $84,000 . It seems like many households will exceed that 10%. By this measure a $25,000 car isn't even affordable for the average US household. But, having said that, there are reliable vehicles available under $15,000. So maybe expectations regarding new vehicles should be tempered."

 

[jghall00]

@SC Maintenance

A 10% figure in post #18 was mentioned of household income should be for an automobile which these responses and posts are related too.
I showed that is incorrect. No matter if you use Median or Mean a car (any car) did not cost $1,100 in 1975 and using (in this case) the MEDIAN income in 1975 was $11,000 The MEAN was $15,000

I see the point of the use of the word Median VS Mean (average) but it still does not hold water from post #13 stating a car should cost 10% by the way the word used "average"
Cars are more than affordable for anyone and if not they are doing something wrong both new and used. Homes are affordable too. My feeling is people want every luxury that they cannot afford.
BTW "average household income below is incorrect. Average household income is $144,000

from post #18
"jghall00 said:
I have mixed feelings on affordability. My recollection is that no more than 10% of household income should go towards transportation. So for a 25k car at 5% interest and 60 months, that's ~471. Add $75 for insurance and $100 (40 daily x 4.00 gallon @ 30 mpg) for gas and you're at $600.
Average household income is $84,000 . It seems like many households will exceed that 10%. By this measure a $25,000 car isn't even affordable for the average US household. But, having said that, there are reliable vehicles available under $15,000. So maybe expectations regarding new vehicles should be tempered."

@SC Maintenance

A 10% figure in post #18 was mentioned of household income should be for an automobile which these responses and posts are related too.
I showed that is incorrect. No matter if you use Median or Mean a car (any car) did not cost $1,100 in 1975 and using (in this case) the MEDIAN income in 1975 was $11,000 The MEAN was $15,000

I see the point of the use of the word Median VS Mean (average) but it still does not hold water from post #13 stating a car should cost 10% by the way the word used "average"

As I said in my previous post, the $84,000 is the median for 2024, not average. That was a misstatement on my part as the average is inflated by high earners and I mislabeled the number. The median (midpoint) seems a fairer to assess where most households fall.

Cars are more than affordable for anyone and if not they are doing something wrong both new and used. Homes are affordable too. My feeling is people want every luxury that they cannot afford.
BTW "average household income below is incorrect. Average household income is $144,000

Yes, 2026 family (not household) average is $144,000, but the midpoint will likely be far lower, which illustrates the impact of high earners. For 2024 it was $84,000 household median and even if we used $100,000 for 2026 household median, which is not available yet but likely generous, that's $8,300 gross take home. That's fine if there's only one new vehicle in the household, but if they're trying for two vehicles they're going to be well over that 10% number. Even if one is new and the other is used.

Now, what the cutoff should be for affordability is different discussion, but I don't think $25,000 is really even affordable for a median wage household with two drivers. That being said, there are cheaper alternatives that are viable, so there is some degree of consumer preference here.

 

[SC Maintenance]

@SC Maintenance

A 10% figure in post #18 was mentioned of household income should be for an automobile which these responses and posts are related too.
I showed that is incorrect. No matter if you use Median or Mean a car (any car) did not cost $1,100 in 1975 and using (in this case) the MEDIAN income in 1975 was $11,000 The MEAN was $15,000

I see the point of the use of the word Median VS Mean (average) but it still does not hold water from post #13 stating a car should cost 10% by the way the word used "average"
Cars are more than affordable for anyone and if not they are doing something wrong both new and used. Homes are affordable too. My feeling is people want every luxury that they cannot afford.
BTW "average household income below is incorrect. Average household income is $144,000

from post #18
"jghall00 said:
I have mixed feelings on affordability. My recollection is that no more than 10% of household income should go towards transportation. So for a 25k car at 5% interest and 60 months, that's ~471. Add $75 for insurance and $100 (40 daily x 4.00 gallon @ 30 mpg) for gas and you're at $600.
Average household income is $84,000 . It seems like many households will exceed that 10%. By this measure a $25,000 car isn't even affordable for the average US household. But, having said that, there are reliable vehicles available under $15,000. So maybe expectations regarding new vehicles should be tempered."

I was just pointing out your error.

I have never said cars were unafordable - and pointed that out in post 42. Someone is buying them. By definition that makes them affordable.

I have pointed out that houses, college educations and health care is unafordable. That I can prove.

Either way I won't be buying anymore new cars. Not the $45K median priced ones nor a $25K Trax, and no new EV either. They simply do not offer me enough utility for the price warranted. Luckily my last 3 were new - so this doesn't bother me in the least. Future needs will be filled with well used options.

 

[SC Maintenance]

As I said in my previous post, the $84,000 is the median for 2024, not average. That was a misstatement on my part as the average is inflated by high earners and I mislabeled the number. The median (midpoint) seems a fairer to assess where most households fall.

Yes, 2026 family (not household) average is $144,000, but the midpoint will likely be far lower, which illustrates the impact of high earners. For 2024 it was $84,000 household median and even if we used $100,000 for 2026 household median, which is not available yet but likely generous, that's $8,300 gross take home. That's fine if there's only one new vehicle in the household, but if they're trying for two vehicles they're going to be well over that 10% number. Even if one is new and the other is used.

Now, what the cutoff should be for affordability is different discussion, but I don't think $25,000 is really even affordable for a median wage household with two drivers. That being said, there are cheaper alternatives that are viable, so there is some degree of consumer preference here.

The 10% number is flawed - not due to it but because that number comes from a time when housing was 1/3 and student loan debt wasn't really a thing. So the math does not math which may not be cars fault. You can argue about which is broken, but clearly people are choosing cars not houses.

 

[Torrid]

I was just pointing out your error.

I have never said cars were unafordable - and pointed that out in post 42. Someone is buying them. By definition that makes them affordable.

I have pointed out that houses, college educations and health care is unafordable. That I can prove.

Either way I won't be buying anymore new cars. Not the $45K median priced ones nor a $25K Trax, and no new EV either. They simply do not offer me enough utility for the price warranted. Luckily my last 3 were new - so this doesn't bother me in the least. Future needs will be filled with well used options.

I'm just done trading cars on a regular basis. Cars are good enough to last 15 years expecially when purchased new and for no reason should the battery not last that long. The gas savings alone helps out with the initial cost of the car. Yes I know depreciation sucks, but on a daily driven car no matter what it is powered by when the thing has over 200k miles on it in 15 years it's not going to be worth much anyway and the difference between an EV and ICE at that point will be much less than what I saved in gasoline. The way I take care of cars there's no reason why 20+ years wouldn't be a problem being serviceable, but it would have so many miles on it that it's probably not worth maintaining cost wise. Something bothers me about a chassis with 300k miles on it even if every bushing has been replaced.

I do share your sentiment though. I will now only buy new and I had bought preowned in the past with varying degrees of success. I'm just driving them now until they're no longer viable to make up the cost instead of buying every 5-8 years used which is what I have typically done. It's mostly because of my on call work needs. I don't trust someone else's used car. I know any car I have from cradle to grave was properly maintained and I don't have surprises from previous owners.

 

[alarmguy]

As I said in my previous post, the $84,000 is the median for 2024, not average. That was a misstatement on my part as the average is inflated by high earners and I mislabeled the number. The median (midpoint) seems a fairer to assess where most households fall.

Yes, 2026 family (not household) average is $144,000, but the midpoint will likely be far lower, which illustrates the impact of high earners. For 2024 it was $84,000 household median and even if we used $100,000 for 2026 household median, which is not available yet but likely generous, that's $8,300 gross take home. That's fine if there's only one new vehicle in the household, but if they're trying for two vehicles they're going to be well over that 10% number. Even if one is new and the other is used.

Now, what the cutoff should be for affordability is different discussion, but I don't think $25,000 is really even affordable for a median wage household with two drivers. That being said, there are cheaper alternatives that are viable, so there is some degree of consumer preference here.

And I was pointing out that the median

As I said in my previous post, the $84,000 is the median for 2024, not average. That was a misstatement on my part as the average is inflated by high earners and I mislabeled the number. The median (midpoint) seems a fairer to assess where most households fall.

Yes, 2026 family (not household) average is $144,000, but the midpoint will likely be far lower, which illustrates the impact of high earners. For 2024 it was $84,000 household median and even if we used $100,000 for 2026 household median, which is not available yet but likely generous, that's $8,300 gross take home. That's fine if there's only one new vehicle in the household, but if they're trying for two vehicles they're going to be well over that 10% number. Even if one is new and the other is used.

Now, what the cutoff should be for affordability is different discussion, but I don't think $25,000 is really even affordable for a median wage household with two drivers. That being said, there are cheaper alternatives that are viable, so there is some degree of consumer preference here.

I understand to everybody here I screwed up the words, median, and mean, mean meaning average

I am pointing out that using your 10% number would mean a car would have to have cost either $1100 or $1500 in 1975 using either one of those words so that 10% number is not a good number to use

“I showed that is incorrect. No matter if you use Median or Mean a car (any car) did not cost $1,100 in 1975 and using (in this case) the MEDIAN income in 1975 was $11,000 The MEAN was $15,000”

https://www.multpl.com/us-median-income/table/by-year

 

[alarmguy]

The 10% number is flawed - not due to it but because that number comes from a time when housing was 1/3 and student loan debt wasn't really a thing. So the math does not math which may not be cars fault. You can argue about which is broken, but clearly people are choosing cars not houses.

The 10% number was not even valid in 1975, which is what I’ve been trying to explain to everybody.

Yes, I know you were correcting me. I was just bringing you on the conversation that I was trying to explain to everybody.

Median income in 1975 was $11,000 mean income was $14,000
Clearly cars in 1975 were not $1100 or $1400

I will stick with cars are not that much money.
Americans are spoiled and want luxuries they can’t afford
Listed are up to a dozen cars around the $25,000 price mark. Let’s not forget everybody voted for all these safety mandates, which is absolutely incredible.
Our new car will not even let us run someone over even if we wanted to
When my wife got her new car, we both tested it out on each other

 

[KrisZ]

Honestly, I also don't see where the 10% car price to income level came from. Perhaps it's the poster's personal rule, but I highly doubt it was something a lot of people adhered to. as @alarmguy pointed out, the math simply isn't mathing.

 

[JeffKeryk]

Arithmetic gives me a headache. You guys just gave me one. Sheesh. What's a poor boy to do?

 

[PWMDMD]

They make it work exactly how I explained it.
I know few engineers working for Apple and they can go on nice vacations simply from the points collected for their company travel to China. To overlook all aspects of production.

I guess I'd also say the rest of the world also seems to be in a race to the bottom as far as QC/QA and if we keep going there isn't going to be much of difference between Chinese made and everything else. The last 5 years has seen some insane lapses in QC in the US auto industry. I mean what's the difference between a Chinese engineer/worker who is instructed to cut corners to save money and a US engineer/autoworker who just can't be bothered to do it the correct way?

 

[Oliveoil2]

As someone who grew up dirt poor I can tell you for sure poor people don't buy brand new cars. Not even the $25K ones. More like the $5K one at the back of the lot. Being poor is expensive.

Sorry to burst your bubble.

Exactly!! Being poor limits one’s choices, for everything. Poor people don’t have the luxury of having extra money in their bank account. You have to have been poor once to understand. People without a lot of money spend all of what they earn. That’s why being poor can be considered expensive!

 

[PWMDMD]

Yeah, that is an option. Doesn't sound much like the American dream though!

IMHO something in our political and financial systems are broken, to have the cost of living increase so dramatically, in spite of continual improvements in manufacturing, farming, and technological efficiencies.

We can still have billionaires, but also some rejigging should be done to make a few more people able to afford a practical car and a house too if they want.

Just saw a Daniel Tosh comedy skit where he points out it's called the American DREAM for a reason - only a few people are expected to ever reach it.

What's broken? Capitalism! It's the best of what's available but it's not perfect and it also inherently leads to wealth concentration which then leads to those with money pulling all the political strings.

 

[edhackett]

They make it work exactly how I explained it.
I know few engineers working for Apple and they can go on nice vacations simply from the points collected for their company travel to China. To overlook all aspects of production.

I have a friend who was(now retired) the head engineer for the audio division at Apple. He was one of those engineers making frequent trips to China. The monitoring of QA/QC was not just engineers checking in occasionally. There were people there full time. He said that you couldn't take your eyes off of them long enough to get a cup of coffee or they would substitute cheaper parts. I didn't sense that he was was being hyperbolic about that time frame.

Ed

 

[KrisZ]

I guess I'd also say the rest of the world also seems to be in a race to the bottom as far as QC/QA and if we keep going there isn't going to be much of difference between Chinese made and everything else. The last 5 years has seen some insane lapses in QC in the US auto industry. I mean what's the difference between a Chinese engineer/worker who is instructed to cut corners to save money and a US engineer/autoworker who just can't be bothered to do it the correct way?

It's not all a race to the bottom and china can manufacture very high quality components as well as whole products, all while providing, usually a western corp, a healthy profit margin.

As far as the difference between the West and China? We still don't have that "cheat at all cost" attitude here and we still care about reputation and what the customer opinion. Over there, since everything is state owned, even partially, the state can mandate things on a whim, so hard work may be all for nothing. What matters is appeasing the ruling party and making sure they are happy, not the customers. There is simply no quality culture because it's not normally rewarded. Soviet union communism operated pretty much the same way, people had no incentive to do above the bare minimum. In fact, if you stood out, you oftentimes got punished.

 

[2strokeNorthstar]

sorry, I keep forgetting the economy is doing great, prices are down and affordability is rising every day!

For a certain small class of people